This is a long post but worth reading if you are concerned about your health care coverage.
Sometime in the next few weeks you will have the opportunity to select a health plan for 2015. Your tendency may be to leave things as they are now and ignore the enrollment material you receive from your employer, Medicare or your current carrier. That may be a mistake!
The best advice I can give is to read every piece of information you receive. The offerings you have for 2015 and the cost to you probably changed, keeping what you have now may not even be an option. If you do nothing, you could be placed in a default plan possibly resulting in a nasty surprise with your first expense in 2015.
Health insurance literacy (or lack thereof) is a real problem. Don’t believe me? Check out this article.
If you are enrolled through a Marketplace plan, the Open Enrollment period for 2015 coverage is November 15, 2014 to February 15, 2015.
If you haven’t enrolled in coverage by then, you generally can’t buy Marketplace health coverage for 2015 until the next Open Enrollment period for coverage the following year.
If you’re enrolled in a 2014 Marketplace plan, your benefit year ends December 31, 2014. To continue health coverage in 2015, you can renew your current health plan or choose a new health plan through the Marketplace during the 2015 Open Enrollment period.
If you don’t have health coverage during 2015, you may have to pay a fee. The fee in 2015 is higher than it was in 2014 — 2% of your income or $325 per adult/$162.50 per child, whichever is more.
If you are enrolled in Medicare, take the time to evaluate your supplemental coverage and your Part D coverage. Are you paying only for what you need?
Keep in mind that if you are enrolled in a Marketplace plan, you must update your income information to receive the correct tax subsidies for 2015. You will receive information from your insurance company.
If you are enrolled through a Marketplace, you will face new challenges during the enrollment period. It’s a bit complicated but depending on the premium change for the benchmark silver plan, your premiums may increase simply because of a change in the federal subsidy. Here is a description of the situation from the Kaiser Family Foundation. Bottom line is you need to check what is happening to your premiums for 2015.
Modest changes in premiums would be a boon for the federal budget, but for consumers the picture is more complex
The second-lowest-cost silver plan in each state is closely watched because it is the benchmark that helps determine how much assistance eligible individuals (those with incomes from 100 percent to 400 percent of the poverty level) can receive in the form of federal tax credits to help them buy coverage.
If early trends hold and average premiums for the benchmark silver plans decline across the country, the federal government could end up paying out less than expected in tax credit subsidies overall for 2015. Lower benchmark silver plan premiums would mean savings for taxpayers.
For Marketplace consumers, however, the implications are more complicated. On the one hand, the availability of tax credits can cushion eligible individuals from having to pay more even in areas where premiums will rise. The analysis finds, for example, that in nearly all of the 16 areas studied, a single 40-year-old with income of $30,000 a year would pay 0.8 percent less in premiums in 2015 than in 2014 to enroll in the second-lowest-cost silver plan, after taking tax credits into account.
On the other hand, even people who receive federal financial help may face large premium increases if they simply re-enroll in the same plan in 2015, since in many cases the lower-cost plans in 2015 will no longer be among the low-cost offerings next year. This is because people receiving tax credits must pay the full difference in premium between the plan they choose and the second-lowest-cost silver plan in their area. In 12 of the 16 cities, at least one of the insurers that had offered one of the two lowest-cost silver plans in 2014 is no longer offering a low-cost silver plan in 2015.
“Consumers should go into the open enrollment period prepared to shop for the best deal all over again,” said Kaiser Senior Vice President Larry Levitt, co-executive director of the Foundation’s Program for the Study of Health Reform and Private Insurance. “You could end up paying more if your insurer is no longer offering one of the low-cost plans, so you should look carefully at your options.”
Insurance and your out-of-pocket risk
In making your decision, take a 10,000 foot view. What is health insurance? Are you truly looking for insurance or is your goal to find something that will cover as many of your health care costs as possible? True insurance is going to protect you from unforeseen, large health care costs, but may leave you to pay for more routine, more manageable costs.
While most people can be objective when buying other types of insurance such as auto and property and casualty, where they will seek higher deductibles to save money, such objectivity may not come into play when it comes to health insurance. So, what kind of buyer are you?
Remember, the more you expect your insurance to pay, the higher your premium will be. It’s a matter of pay now through premiums or maybe pay later through out-of-pocket costs, and I emphasize the “maybe.”
How much do you spend on health care?
To start your assessment, you should have a good idea of what you are likely to spend on health care in 2015. Unless you have an ongoing health issue or a chronic condition, you may be overestimating your health care expenses. Fifteen percent of the population spends nothing on health care in a given year and far more spend a modest amount, sometimes not even exceeding their plan deductible.
You can’t make an informed decision unless you have the facts. Take a look at what you and family members spent on health care last year. Look over explanation of benefits (EOBs) from your plan, including Medicare to get a true assessment of your spending. Consider health care expenses you know may be coming. Were you told a knee replacement was on the horizon, will one of the children likely need their tonsils out or wisdom teeth extracted? Are you or family members taking a large number of prescription drugs? What coverage is important to you?
Participating providers
Before you start looking at the plans available to you, there is one very important thing to consider and that is your doctors and perhaps other health care facilities. How important is it to you to have access to your current doctors? Is someone in the family using a specialist now? Is your wife attached to her gynecologist, what about the kid’s pediatrician? A lot is happening in health care today that involves provider networks. Some plans use small networks to save money, other plans provide no out-of-network coverage. Even your current plan may have made changes to its network for 2015. Check it out! Look at printed directories, call your plan to confirm and talk to your doctor (better still the office staff) to confirm the doctor is still participating and in what plans. You can’t just ask, “do you take Blue Shield?” There are many types of plans available through one carrier, the doctor may take one type and not another. Be specific when inquiring. This is your responsibility. Don’t reply on one source of information and document all your discussions in the event of a dispute later on. There are ongoing changes to participating providers, what is true today may not be true in three months. Verify the doctors before you pick a plan and double-check before the start of 2015.
Limiting your out-of-pocket risk
As you evaluate the best plan for you and your family, including the cost/benefit of higher premiums versus lower out-of-pocket costs, make sure you consider the flexible spending account (FSA) and the health savings account (HSA). I will talk more about these plans in a following open enrollment post, but for now I encourage you to seriously consider one or both of these programs, if they are available to you.
The risk of forfeiture is overstated. Unless you are just foolish in what you place into a FSA, your risk of losing money is small. In addition, consider this, even if you forfeit $100, you have not really lost $100 because depending on your tax bracket, you may have paid 15%, 20% or more in federal taxes anyway. Align your use of a FSA or HSA with the plan you select and the likelihood of incurring health care expenses and the type of expense you incur.
Private Exchanges
If you hear the words “private exchange” pay very close attention. It means your employer is getting out of the health benefits business and turning your health insurance over to a third party. It may also mean your employer is going from a self-insured plan to an insured plan meaning the employer has less flexibility and influence in determining the benefits and when resolving disputes. But that’s not what really matters. What matters to you is if you are also told your employer will now be making a defined (fixed) contribution toward your coverage. That puts you on the hook for any premium above the employer contribution. That may start out equal to what you pay now, but the way your employer will save money in the long run is by increasing its contribution (if at all) at a lower rate than premiums increase. Bazinga‼️
Wrap up for now
That’s enough to think about for now. But remember, pay attention to the information you are given. Devote some serious time to evaluating your options, involve your family, don’t assume what you have now is right for you in the future … and check carefully on participating doctors and the benefits the plans provide for out-of-network services . . . some plans provide NO out-of-network coverage and many plans are raising the cost-sharing if you do use non-participating providers.
Put down the iPad, the smart phone, turn off the TV and pay attention to something really important . . . selecting the right health insurance is it!
Questions? Put your question in a comment and I will do my best to provide an answer.
Watch for these upcoming posts over the next few weeks:
Preparing for Health Benefits Open Enrollment (Understanding the Basics) Part 2 September 16
Preparing for Health Benefits Open Enrollment (Types of Health Plans) Part 3 September 23
Preparing for Health Benefits Open Enrollment (Using the FSA and HSA) Part 4 September 30
QUINNSCOMMENTARY 