The New Health Insurance Landscape (CA)

The ACA or “Affordable Care Act” has dramatically changed the way people obtain their health care coverage. The following are some common questions I have gotten and my best guess at the correct answer.


Q:        Shopping for insurance in the past was complicated by the complex benefits, co-pays, deductible, and provider network carriers offered. Do I have the same challenge with the new plans or is it just a question of metal plan choices and provider networks?

Answer:

All individual, family, and small employer group health plans offer a similar package of comprehensive services that cover 10 so-called essential health benefits and cover certain types of preventive care at 100 percent or zero cost to you. Within each metal category benefits, co-pay, and deductibles are identical to make comparisons easier than the old health care plans. The main distinction is cost and the provider network each plan offers. Make sure your doctors are in the network of the carrier you choose although in some cases such as specialists, providers don’t accept any health plans.


Q:        I have heard so many bad things about “Obamacare” so I don’t want it because it sounds really bad for my family and our country. Is there regular health insurance available that is not “Obamacare?”

Answer:         

All of the health plans now comply with the “Affordable Care Act” of 2010 except some of the older employer plans or group plans that are grandfathered in until 2016. So a silver metal plan with Blue Shield, is exactly the same whether it is subsidized via Covered California or “off the exchange” which means it is not subsidized. If people qualify for premium assistance through Covered California and choose not to take that assistance they can go directly to the insurance carriers but the plan and cost will be the same. I can help obtain “off exchange” health insurance and do when I have determined that a person does not qualify for any subsidy.


Q:        How do I know what subsidy I qualify for if any?

Answer:

Your agent can run the cost calculator or you can go to the Covered California website cost calculator.  Subsidies are available for household income up to 400% of the poverty level in your zip code. The result will indicate your share of the premium as well as the amount of subsidy.


Q:        I don’t want to lose my doctor, how do I know if a plan will cover his services?

Answer:

The best method is to call your doctor’s office and ask if they accept a plan you are considering. There is an online listing at Covered California as well as at the carrier’s web sites but these lists are not always accurate. Check directly with your doctor or provider including any hospital you might use.


Q:        How does the cost assistance or subsidy work with regard to my premium payment for the health coverage I choose?

Answer:

The subsidy is stated when you enter your information into the cost calculator. It will tell you the total cost, your subsidy, and the net cost. When you are billed by the insurance carrier you only pay the net amount due. The Federal government is paying your subsidy amount directly to the insurance carriers.


Q:        I am offered a health plan at work but the cost for my contribution is high, can I get a cheaper plan through Covered California?

Answer:

In this instance if the plan at work costs more than 9.5% of your gross wages you qualify for a subsidy. However, you should check the cost calculator to see how much subsidy you would get. More importantly, many of the old health plans have not had to switch over to the metal plans now available. That means there may be lower out of pocket costs with your work plan and it may be better to stay on it until the benefits are the same as the new metal health plans. Although all metal plans are equal, employers can improve some of the benefits and out of pocket expenses within their plans.


Q:        I signed up for Covered California already but my income has changed and I may qualify for more benefits or less benefits. How do I know and what do I do?

Answer:

Your agent can make the change within his agent portal or you can go into your account with Covered California and “update” your information. When you put in your new income you will be asked to select a plan again and this selection will let you know the new cost and subsidy.


Q:        I missed the sign up for coverage, can I still obtain coverage during 2014 or must I wait until 2015 to get coverage?

Answer:

The enrollment period is over. However, if you meet one of the special exceptions such as newly married or divorced, new baby, moved into CA recently, lost your old coverage, etc you can get coverage in the month after you sign up. If you don’t qualify for an exception, temporary coverage is available until new coverage is open for 2015. Sign up for 2015 coverage begins November 15th.


Q:        I am expecting to get a new job which will offer me health coverage, should I get coverage now or wait?

Answer:

If coverage at work is imminent then waiting might make sense although some people don’t want to be vulnerable for even one month. You should also check to see if there is a waiting period for the work plan. With the new plans you can drop out once you get cheaper or better coverage such as work plans.


Q:        My child just turned 26 and was taken off my health plan, can I get him/her on their own plan?

Answer:

Yes, this would qualify as a special enrollment event because your child lost their coverage.


Q:        I or my spouse will turn 65 during the current health plan year. Am I required to move off my Covered California plan and onto medicare and if so, what impact does that have on the cost of my plan for other family members?

Answer:

You are required to update your application online anytime you are offered “affordable” coverage outside of Covered CA. The logic is similar to a big pay raise where you no longer qualify for assistance. If you stay on your subsidized plan after medicare was available to you, you might have to repay the premium subsidy you received after that point. This is not a concern where your coverage is through work or is “off exchange” where you receive no premium assistance. Those events fall under medicare’s enrollment rules.

Once you have removed the medicare eligible person from the family coverage your cost should be lower because that person no longer requires coverage. If you are on a subsidized plan it will also lower the premium assistance you receive but the net cost may be close to the same. In general, it is better to have medicare coverage than the new metal health plans because the out of pocket expense is usually lower.


Q:        I or a family member am unemployed or underemployed and have no health coverage. What are my options to obtain coverage?

Answer:

If your income or your expected income is over the poverty level for your geographic area, you should qualify for Covered Cal. coverage. Otherwise you would be eligible for Medi-cal, our state version of the federal Medicaid program.


Q:        I and/or my spouse am on social security or disability. Does that income count towards the calculation to determine subsidy eligibility?

Answer:

Yes, most income does count in the calculation for subsidy eligibility. Some items that are NOT included as gross income for your income tax return ARE included in determining subsidy calculation.


Q:        I am a small business owner, a contractor, or self employed. How do I estimate eligibility for Covered California?

Answer:

This category of applicant is often well positioned to obtain a subsidy because they are able to write off so many expenses to reduce their adjusted gross income. However, the expenses you report must comply with those that are used on your tax return. You cannot create a different set of expenses or else your application will not conform to your tax return. If your income is so great that you exceed the limit of 400% of poverty after business expenses, you will not qualify for a subsidy.


Q:        How does an “HSA” or Health Savings Account work?

Answer:

You should check with your accountant or tax preparer to see if this makes sense for you but in essence, it is a way of putting before tax funds towards health expenses such as co-pays and deductibles so that you save money on taxes.


Q:        How do I know if I can get  coverage though Medi-Cal and what is the difference between Medi-Cal and the new metal health plans?

Answer:

When you or your agent enter the data required for the cost estimator for Covered Cal, it will tell you if you qualify for a subsidy, medi-cal, or nothing. In broad terms, you will qualify for medi-cal if your “modified adjusted gross income” is under the poverty level, qualify for a Covered California subsidy if you are above poverty and below 400% of poverty, and are on your own if your income is over 400% of poverty.


Q:        How do I know if I qualify for an “enhanced” silver plan to lower my co-payments, out of pocket costs, and deductibles?

Answer:

The enhanced silver plans give you more benefits than a standard silver plan, which in broad terms pays 70% of your healthcare costs while you pay 30%. Enhanced silver levels are 73%, 87%, and a maximum of 94% depending on how close to the poverty level you fall.  You’re eligible for enhanced silver if your income is between poverty and 250% of poverty.


Q:        What if my spouse has affordable coverage at work but I don’t have coverage?

Answer:

This situation may fall under what is called the “family glitch” and allow you to obtain coverage but no subsidy because one member of the household has affordable coverage. Check with your agent or Covered California.


October 2014 – CA Health Insurance Newsletter

Welcome to our quarterly Newsletter with information on healthcare insurance, long term care, and other strategies to protect your family’s financial future. This edition will focus on healthcare for those under age 65 as well as those over age 65 because we are just starting the open enrollment period for both age categories (November 15th through February 15th for under age 65 and October 15th through December 7th for age over 65). We understand that most of you already have health insurance through your job, but you may have children or family that don’t have coverage or are paying too much for an old health plan.  In some cases you or a family member may be able to obtain a quality health plan for little cost.

We appreciate that we all have so much information available to us and such limited time to look at it so feel free to opt out by using the unsubscribe feature.

THE NEW HEALTCARE LANDSCAPE

Is “Obamacare” or ACA -the “Affordable Healthcare Act” here to stay?  For those that hate it, there is still a chance it could be derailed, There are two opposite decisions in the courts that say 1) only persons residing in states such as California with a health exchange are allowed to receive a premium cost tax subsidy, and 2) all U.S. citizens are allowed to receive a tax subsidy including those outside state health exchanges. Each decision will go to the full appeals court and then probably the Supreme Court for a final decision. My guess is this process will take until 2016 to resolve itself and regardless of what happens in the courts, we will probably keep the ACA structure with possible modifications.

THE GOOD PARTS OF ACA

It’s interesting that polls show most people dislike the new health law, but the majority like their own current health plan. The two good features of the new law are that all who apply for health coverage are guaranteed acceptance and all plans have a maximum out of pocket cost to the insured ($6,350 for an individual) such that a catastrophe does not bankrupt a family. All plans are comprehensive and must offer 10 essential health benefits and cover certain types of preventative care at no cost including an annual checkup. It makes sense that if more screening and preventative medicine takes place, costly and deadly diseases will be reduced which will lower our nation’s healthcare costs.  For those with lower income or near the poverty level, premium costs are subsidized such that healthcare is “affordable.” Plans are divided into 4 tiers called bronze, silver, gold, and platinum so that tiers of all insurance company’s plan have identical co-pays and deductible costs.  The insured’s share of the cost ranges from 10% with platinum to 40% with bronze. Unlike in the past with many different variables that each plan offered, the only decision with the new plans is cost and whether you like the provider network of each insurance company.

THE BAD PARTS OF ACA

The worst part of the new law is that everyone must get health insurance or pay a penalty. As a result, the healthy will subsidize the unhealthy. Also the wealthy will subsidize the poor because they won’t get any cost subsidy. Fortunately, the claims paid experience of the health insurance industry was good enough in the first 7 months of the program to allow minimal cost increases in many areas. Even though sick people may receive treatment, many young and healthy people are paying premiums and use very little medical services. Another negative for those receiving a subsidy  is that the provider networks available to treat the insured has been narrowed down such that some people might not find a plan that  their doctor accepts and must find a new doctor. Finally, the law was somewhat modeled after “medicare”  over age 65 coverage and therefore the lower cost plans have considerable co-pay costs for brand drugs, urgent care center use, etc.

ACA SUBSIDIZED EXCHANGE PLANS VERSUS “OFF” EXCHANGE PLANS

However, it is worth explaining the different types of under age 65 health plans because there is confusion over this topic. There are 3 categories of health plans for individuals and 2 categories for small employers. The individual plans are based on the adjusted gross income from your tax return. Those below poverty (about $18,000 for an individual in California) qualify for the Federal Medicaid program which has been around since 1965. This program is called “medi-cal” in California because it is run by the state. The doctor network for Medicaid/Medi-cal is limited due to low reimbursement.

For those with income above poverty up to 400% above poverty, a subsidy is available either from your state health exchange such as Covered California or from the Federal government exchange. There are usually 4 or 5 insurance carriers in each market area that offer metal level plans. These plans are called “exchange” plans because they allow a subsidy. For those that make over 400% of poverty, no subsidy is available so that person or family has to go to the “off exchange” market. Given equal income the premium cost subsidy is much greater for older insured compared to the younger. The good news is the off exchange plans include all of the plans that are on the exchange but with no subsidy, plus additional plans that may have greater provider networks such as PPO plans.

“MEDICARE” OR OVER AGE 65 HEALTHCARE

Like Medicaid for the poor, the Medicare program to provide senior citizens with health insurance has been around since 1965. In my opinion anyone who is eligible should get on this type of coverage as soon as possible unless they have work health insurance 100% paid for by their employer.  The premium costs are cheaper than under age 65 health coverage ($104 to $400 per month) and the coverage is robust because the program has been in place for decades. There are instances where it makes sense to get off work insurance or a plan you have for your family and get on medicare because the cost may be lower. An example would be where an employee pays for his dependent coverage through work but his coverage is paid by work. It may cost less to get his family their own ACA plan while he gets Medicare coverage.

Medicare has 3 types of plans. “Original Medicare”, or part A and B is where your hospital or doctor bills the government for any services provided to you and you must pay a co-pay and deductibles.   “Medicare Advantage” or Part C is a plan the government started where your care is managed by a private insurance company on behalf of the government. These plans are usually HMO type and they comprehensively manage your healthcare often at the same cost as original Medicare. They offer the insured many extra benefits such as a drug plan, gym membership, and sometimes lower co-pays. Both original medicare and the part C Advantage plans must accept all applicants.  Medi-gap or Medicare Supplemental plans are the best plans because they offer to cover many of the co-pays and deductibles required with original Medicare.  Like original Medicare they allow you to see any doctor that takes Medicare anywhere in the United States. The med sup or medi-gap plans do cost extra on top of the cost of basic Medicare part A and B.  Med Sup plans and original Medicare involve separate drug plans at an additional cost. These drug plans have certain costs for brand and special drugs so the plans must be reviewed each year if the insured uses costly drugs in order to make sure their plan is the best cost for the following year. Each year Medicare members are allowed to review their plans and change them if they find better or cheaper plans in the market.

That concludes this edition of our newsletter. Open enrollment for under age 65 and annual enrollment for Medicare members are about to happen. My team will be happy to answer any questions you might have regarding any health plans.

Obamacare – Platinum May Be A Waste of Money

For those who find themselves shopping for health coverage through Covered California or Obamacare in states without their own health plan marketlplace, here’s a general tip: save cash on your premiums and buy the bronze or silver health plan. For most consumers, the gold and platinum options will be a waste of money.

Analysis of dozens of Obamacare plans has shown one striking result. The networks of providers, and in many cases the drug formularies, are the same whether you’re buying a particular insurer’s bronze plan, or purchasing the same insurance option in a gold or platinum offering.

The bottom line is this. When you’re choosing a particular insurance offering, you typically can’t trade up to a better benefit by buying the gold or platinum variety of that plan. It’s usually the exact same benefit regardless of the metal you choose. What varies between these different metal plans? Mostly, just the co-pay structure and deductibles. As you pay higher premiums for a gold or platinum plan, your deductibles and co-pays will decline. The insurer will typically cover 60 percent of expected medical expenses in a bronze plan, 70 percent in a silver plan and 90 percent in a platinum plan. So, by buying the costlier plans, all you’re doing is fronting a higher premium to buy down your anticipated out of pocket costs. You’re not getting a better network of doctors or a better formulary of drugs. (Early indications of plans in California show the network of doctors is more robust for “off exchange” plans although the trend may be more providers are accepting Covered California plans.)

This rule applies to the different level of metal offerings within the same health plan. When you look across the different types health plans that an insurer might offer (its HMO versus its Preferred Provider Organization, or Exclusive Provider Organization) there’s often more variation in the size and quality of the provider networks. But in most markets, this kind of plan variety isn’t available. Insurers offer just a single option. As a result, the primary choice that consumers are making is between the different metal options within a particular insurer’s offering as well as the provider network in each insurer’s plans. The first advice I give clients is to check with their doctors, local hospital, and other medical providers to see if any take any of Covered California plans.

All of this means that unless you plan to use enough healthcare services to spend your entire deductible, for many people, buying the costlier gold or platinum plans will be wasted money. If you’re not sure that you’re going to max out your deductible, you may be better off buying a cheaper bronze plan and using the money saved on premiums to put some cash away to pay for your out of pocket costs. Yet there are some exceptions to this general rule that consumers should be mindful of. Conversely, if you are certain your medical expenses will exceed the deductible levels, then a gold or platinum plan would be cost effective.

The first exception relates to certain lower income folks who qualify for special subsidies that reduce someone’s out-of-pocket costs. People with incomes below 250% of the Federal poverty level ($58,000 for a family of four in 2013) will be eligible for special “cost-sharing subsidies” that can reduce deductibles, co-payments, and co-insurance. These subsidies only apply if you buy a silver plan.

In part, Obamacare is fashioned as a vehicle to redistribute income through healthcare benefits. The “cost sharing subsidies” are a key part of this endeavor.

To give you a sense of how much these additional subsidies can reduce out-of-pocket costs for lower-income consumers: A family of four whose income falls between 100 and 150 percent of the federal poverty level ($23,550 to $35,325) will be responsible for paying 6 percent of covered expenses out-of-pocket compared with the 30 percent for a family not getting the special subsidies. A family with an income between 150 and 200 percent of the poverty level ($35,325 to $47,100) will be responsible for 13 percent of expenses, and one with an income between 200 and 250 percent of FPL ($47,100 to $58,875) will be responsible for 27 percent.

In addition, people who earn below 250 percent of the FPL and qualify for the subsidies will also have their maximum out-of-pocket (OOP) spending capped at lower levels. In 2014, the OOP limits for most plans will be $6,350 for an individual and $12,700 for a family. But people qualifying for cost-sharing subsidies will have their maximum OOP spending capped at $2,250 or $4,500 for single or family coverage, respectively, if their incomes are below 200 percent of the poverty level; and $5,200 or $10,400 if their incomes are between 200 and 250 percent of FPL.

Finally, there are some insurers that provide different drug formularies, depending on which metal you choose. Many of the Obamacare plans have closed drug formularies, where there’s no coverage for drugs that aren’t on the insurers formulary list of preferred drugs. But with their costlier gold or platinum plans, some insurers are providing partial coverage for drugs that aren’t on their preferred drug formulary. The summary of benefits that each plan publishes will spell out whether the plan provides some coverage for non-formulary drugs.

As with other aspects of Obamacare, choosing between the different metal plans is not a simple exercise. But it’s important to know that selecting a costlier gold or platinum option doesn’t usually get you a better benefit, just lower out of pocket costs. There are exceptions, as I noted, where buying a costlier offering could make sense. But for most consumers, the cheaper bronze plans may be the best choice.

November 2014 – CA Health Insurance Newsletter

Welcome to our quarterly newsletter with information on healthcare insurance, long term care, and other strategies to protect your family’s financial future. This edition will focus on healthcare for those under age 65 as well as those over age 65 because we are just starting the open enrollment period for both age categories (November 15th through February 15th for under age 65 and October 15th through December 7th for over age 65). Most of you already have health insurance through your job, but you may have children or family that don’t have coverage or are paying too much for an old health plan.  In some cases you or a family member may be able to obtain a quality health plan for little cost.

We appreciate that you have so much information available to you and such limited time to look at it so feel free to opt out by using the unsubscribe feature.

“Obamacare” or the “Affordable Healthcare Act (ACA) has created a new healthcare landscape with mostly new simplified improved options. You may currently have a plan that is not required to follow some of the new laws such as offering preventative health services without co-payment from you or raising your rates based on your health status.

THE GOOD PARTS OF ACA

Two good features of the new law are that all who apply for health coverage are guaranteed acceptance and all plans have a maximum out of pocket cost to the insured ($6,350 for an individual) so that a catastrophe does not bankrupt a family. All plans must offer at least 10 essential health benefits and cover certain types of preventative care at no cost including an annual checkup.  For those with lower income or near the poverty level, premium costs are subsidized so that healthcare is “affordable” meaning less than 9.5% of their gross income. Plans are divided into 4 tiers called bronze, silver, gold, and platinum so that tiers of all insurance company’s plans have identical co-pays and deductible costs.  The insured’s share of the cost ranges from 10% with platinum to 40% with bronze. Unlike the past with many variables that each plan offered, It’s much easier to compare service levels of company health plans. The only decision points with the new plans are premium cost and whether you like the provider network of each insurance company.

THE BAD PARTS OF ACA

On the flip side the new law requires that everyone must get health insurance or pay a penalty. As a result, the healthy, wealthy and young will subsidize the unhealthy, older and poor. Fortunately, the claims paid experience of the health insurance industry was good enough in the first 7 months of the ACA program to allow only an average cost increase of 5.9% nationwide. Another negative for those receiving a subsidy is that the provider networks available to treat the insured has been narrowed down such that some people might not find a plan that  their doctor accepts and must find a new doctor. Finally, the law was somewhat modeled after “Medicare”  over age 65 coverage and therefore the lower cost plans have considerable co-pay costs for brand drugs, urgent care center use, etc. I believe this is a positive because healthy people save money on premiums but have the ability to upgrade their coverage every year.

ACA SUBSIDIZED EXCHANGE PLANS AND “OFF” EXCHANGE PLANS

We won’t delve into all the healthcare law but here is a link to an article I wrote and posted on our website which covers common questions about the new law and especially about the subsidized plans. CLICK HERE

However, it is worth explaining the different types of under age 65 health plans because there is confusion over this topic. There are 3 categories of health plans for individuals.  The 4 tier metal plans are based on the level of coverage you want. The exchange subsidized plans are based on your adjusted gross income from your tax return. (1) Those below poverty (about $18,000 for an individual in California) qualify for the Federal Medicaid program which has been around since 1965. This program is called “medi-cal” in California because it is run by the state. The doctor network for Medicaid/Medi-cal is limited due to low reimbursement paid to providers. (2)  For those with income above poverty- up to 400% above poverty a subsidy is available either from your state health exchange such as Covered California or from the Federal government exchange. There are usually 4 or 5 insurance carriers in each market area that offer “exchange” plans. Because a person’s health cost should not exceed 9.5% of their gross income, the premium cost subsidy is much greater for older insured compared to the younger. (3)  For those who make over 400% of poverty, no subsidy is available so that person or family has to go to the “off exchange” market.  The good news is the off exchange plans include all of the plans that are on the exchange but with no subsidy, plus additional plans that may have greater provider networks such as PPO plans. We told you it was confusing!

“MEDICARE” OR OVER AGE 65 HEALTHCARE

Like Medicaid for the poor, the Medicare program to provide senior citizens with health insurance has been around since 1965. In my opinion anyone who is eligible should get on this  coverage as soon as possible unless they have work health insurance 100% paid for by their employer.  The premium costs are cheaper than under age 65 health coverage ($104 to $400 per month) and the coverage is robust because the program has been in place for decades. There are instances where it makes sense to get off work insurance or a plan you have for your family and get on medicare because the cost may be lower. An example would be where an employee pays for his dependent coverage through work but his coverage is paid by work. It may cost less to get his family their own ACA plan while he gets Medicare coverage.

Medicare has 3 types of plans. (1) “Original Medicare”, or part A and B is where your hospital or doctor bills the government for any services provided to you and you must pay a co-pay and deductibles.   (2) “Medicare Advantage” or Part C is a plan where your care is managed by a private insurance company on behalf of the government. These plans are usually HMO type and they comprehensively manage your healthcare often at the same cost to the insured as original Medicare. Part C plans usually offer the insured many extra benefits such as a drug plan, gym membership, and sometimes lower co-pays. Both original medicare and the part C Advantage plans must accept all applicants. (3) Medi-gap or Medicare Supplemental plans are the best plans because they offer to cover most of the co-pays and deductibles required with original Medicare.  Like original Medicare they allow you to see any doctor that takes Medicare anywhere in the United States. The med sup or medi-gap plans do cost extra on top of the cost of basic Medicare part A and B.  Med Sup plans and original Medicare involve separate drug plans at an additional cost. These drug plans have higher co-pays for brand and special drugs so the plans should be reviewed each year if the insured uses costly drugs in order to make sure their plan is the best cost for the following year. Each year Medicare members are allowed to review their plans and change them if they find better or cheaper plans in the market.

Open enrollment for under age 65 and annual enrollment for Medicare members are about to happen. There are many details we didn’t go into in that you may have questions about, we will be happy to answer any of your questions.