Health Insurance Q&A

May 5, 2015
By Andrew Elder After my last post, The Best Defense is Good Insurance, I received an email from a recently diagnosed gentleman (we’ll call him “Mike”) through LinkedIN with several excellent follow-up questions. I replied, but it seemed that his connection in LinkedIN wasn’t working. So to be sure Mike receives my response, and to hopefully answer some questions others of you may have had, I’m including his questions and my answers below. Bear in mind, I'm giving my personal and professional opinion, basically what I would do if I were in this fellow’s shoes. For some of this, there isn’t a pat answer so I’m giving some basic guidelines and he (or you!) will have to make the call that works best for his (or your!) situation. It’s also important to note that Mike currently has COBRA coverage through his old employer, so some of the questions deal with that specific coverage. If you have other questions, please post them below and I’ll respond! 1.) Are you a colon cancer survivor yourself?

Yes, I was diagnosed with stage 3c colon cancer in June 2007 (click here to read my bio post). I am grateful and proud to say I am coming up on 8 years NED!

2.) What level plan do you recommend?

Essentially, the higher the plan level, the "richer" the benefit (meaning the less you pay out of pocket for care) but the more you'll pay monthly in ongoing premiums. So a Platinum plan would cost you the most per month, but give you the cheapest costs at the doctors. Bronze would be the opposite. Personally, I lean toward a Bronze plan since the monthly premium is a SET cost you can't get away from, but the medical costs you incur can vary, and will typically go down over the years as you remain healthy. I like that possibility of "owning" part of my medical and financial destiny. If you stay healthy, work on your nutrition and fitness, you can dramatically lower your need for ongoing bills over time. In that case the Bronze plans will save you a bundle in the long run. Bronze plans are usually High-Deductible plans as well, meaning you'd pay a few thousand (depending on the specific plan) up front for any costs, but once you meet the deductible your costs drop dramatically (and when you hit the out-of-pocket maximum (OOPM) they stop completely for the remainder of the year!). That would be very different from what it sounds like you have now, so you'd want to make sure you have some savings to cover any initial service costs while you build up savings. If you DO go Bronze and get an HDHP, you'd be able to pair it with an HSA (Health Savings Account) which allows you to save money tax-free (and spend it tax free) for medical costs, without the danger of the money "expiring" as it would with an FSA.

3.) Do I stay with my current carrier?

The ACA regulations have flattened a lot of the differences between provider offerings on the Exchanges, in terms of benefits offered and cost to members, so stay with your current carrier if you like them, certainly. One potential difference to look at would be if the plan you're considering includes your preferred providers (primary doc, oncologist, etc) in their network. If so, who carries your insurance won't make a huge difference. Just bear in mind, depending on where you are, your current carrier may or may not be available on your state's Health Care Exchange. But you'll be able to find a variety of insurance carriers that provide equivalent plans.

4.) How do I find the customer satisfaction of the available plans?

One advantage of the Exchanges is that they allow you to compare disparate carriers and plans truly apples-to-apples with a standardized rating system. The rating includes factors like customer service, provider quality, and size of network. You might also check consumer watchdog groups like Consumer Reports.

5.) Do the tax deductions/credits apply to all metal levels?

One does and one doesn't. The Premium Subsidy (which helps pay to HAVE insurance) applies to any plan on the Exchange regardless of metal level. The Cost Sharing Reduction (help reduce out of pocket costs to USE your insurance) only applies if you purchase a Silver level plan. Both have income requirements with CSR being available only at lower income levels (the chart on my blog article shows the breakdown of both). And bear in mind, if you DON'T buy on the Exchange (for example through an employer or direct from an insurer), you can't get either subsidy.

6.) How can I make sure my COBRA plan includes my providers?

For any plan, just check their provider network, usually very easy to do online through their website. Most providers can also provide you with a hard copy of the provider network on request. Remember that COBRA is not a separate provider, it's merely the way you're purchasing the same health plan you used to have from the same provider.

7.) When should I make the switch from COBRA?

Look at the costs, but you'll probably want to switch as soon as possible. Typically, Exchange plans are less expensive than COBRA offerings, and the added subsidies make them even more cost effective. Most industry experts feel that COBRA will eventually be wiped out as Exchanges provide far more coverage options and usually at a much better price point. IMPORTANT!! Just be careful about "special enrollment" periods. Since it's not Open Enrollment season on the Exchanges right now, you'll have to have a “qualifying event” to be able to sign up. Confirm with a broker or Exchange Advisor in your state BEFORE you make any changes that dropping COBRA coverage qualifies you to sign up for direct insurance. If not, the next Open Enrollment begins Nov 1 this year, at which point it's open season!

8.) Can you suggest any plans I should consider?

There's no point in me recommending specific plans since plan availability varies widely from state to state, and even within each state. I would highly recommend you find a good insurance broker near you to give you advice specific to you area and tailored to your needs. If you have a family this becomes even more important. My personal leaning is towards a high-deductible health plan paired with an HSA (it's what I have myself). As a personal finance "nerd", the math makes the most sense to me. The ceiling (OOPM) is lower with HDHPs, meaning if you have HUGE bills you'll pay less overall, and if you stay healthy, you have the opportunity to save big-time, tax-free in the HSA (which are only available with HDHPs) due to the lowered premium. Bear in mind, without an employer providing coverage, other "ancillary" funding plans like FSAs and HRAs are unavailable. So the HSA is the only tax-advantaged funding plan for individual health care consumers, but again, only if purchasing an HDHP.