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.
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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.