As I stated yesterday, Open Season  has started.    But, just being able to sign up for a PPACA (Obamacare) Plan is different from being able to choose the best plan.

You do remember that PPACA plans use the precious metal analogy, right?  We have the Bronze, Silver, Gold, and Platinum choices.  As the metal gets more precious  (ok, the insurance plan covers more of our out-of-pocket expenses), the premiums increase.  Basically, the Bronze Plan will cover 60% of the costs of one’s health needs, Silver ups that level to 70%, Gold covers 80%, and Platinum reaches the 90% cost level.

No matter the tier, there are minimum essential healthcare benefits, as seen above.  And, while the bronze and silver plans cover our healthcare needs, we still have higher out-of-pocket costs and lower premiums than those that exist in the higher tiered plans.

The choice among the plans- not only the range from Bronze to Platinum- but the choices among the four different levels- is highly individual.  First of all, there are subsidies for those whose income is less than 400% of the poverty line.   (Don’t scoff- a family of 4 can be subsidized if the family income does not exceed $ 100,400!)  Those subsidies are available ONLY for the silver echelon plans.  So, if your income level affords the subsidy, you need to look at the subsidized cost and then evaluate what that means for your total out-of-pocket PLUS the premium costs.  Sometimes, the subsidy for the lower plan plus the cost for your drugs means a higher cost, unsubsidized plan would be the better option.

That;s why a higher tiered plan, with its lower out-of-pocket costs, can be cheaper on an annual basis than that lower tiered plan.  And, then, there’s this fact- the silver plans (considered the “benchmark” plan) is actually more expensive than the higher tiered, gold plan in about 1200 counties across the US.

Why?  Because most of the folks who opt for the silver plan are going to obtain a subsidy.  And, that subsidy means the silver plan costs are substantially cheaper than the list price.  However, if you are not entitled to the subsidy- the gold plan would be the better choice.  (You do remember that TheDonald ended the reimbursement to the insurers for those mandated discounts.  So, the insurers simply upped the plan’s costs to cover some of their lost revenue.)

Another aside- this one for millennials. If you are under the age of 30- you can opt for catastrophic coverage.  That is  the kind of plan that won’t cover the essential healthcare costs, but will cover you should you be involved in a major accident or develop a major illness.  (In other words, having this coverage means you wont have to file what has become known as ‘medical bankruptcy’- your medical bills [especially since you didn’t join the buying club that health insurance really provides] won’t exceed your ability to pay.)

You must have noticed by now that you need to look into each plan.  Is your doctor included in their coverage?  If you take drugs (so many of us take cholesterol-reducing and blood-pressure-maintenance drugs), are those pharmaceuticals available at a very low cost or free in the plan you are choosing?  You must choose your plan based upon the real cost- not the sticker price of monthly premiums.

That becomes more important when you realize that some of the plans have cost-sharing (a co-payment) before one reaches the deductible, for certain medical services. A bronze plan may not cover routine doctor visits, while the silver plan will- without a co-payment.  Those cost-sharing bills add up- and it often means you can end up spending the entire out-of-pocket maximum!

 

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And, now TheDonald has allowed Healthcare.gov (and the individual states that run their own program) to offer short-term medical plans and MEWA’s  (insurance pools that provide lesser benefits).  But don’t fall for the hype that these plans will save you (I say you, because I am an old fart, covered by Medicare, not PPACA) money.

These plans simply suck.  Yes, folks will tell us that the larger firms use these routinely to insure their employees.  Surprise- that’s absolutely true.  Because those firms only rely on these plans to re-insure their programs (that means there is also a stop-gap, a safety net, that these firms also have- and you, as an individual, do not have!).

These can cover some of the potential losses- for firms, not individuals.  Those bigger firms that self-insure have computed that they can save money by covering the initial health care costs and defer to the insurers to pick up the tab for larger bills.  That keeps their premiums low.  (I did discuss yesterday that WalMart is actually sending employees diagnosed with cancer to the Mayo Clinic- so a cost-effective (and health-effective) plan can be developed.  Walmart recognizes this additional step will save them a ton of money in the long run.)

We “little people”  lack those reserves and resources!  So, the big question should we opt for these ‘bait-and-switch’ programs is:  How are we going to cover our initial costs?   Where will we get that money?  We already know that when smaller firms used these programs before, the insurance plans often leaving the firms and their employees with some bills.  Or, worse yet, the plans file for bankruptcy.  Leaving us with the large bill upon which they defaulted.  Oops….

Don’t forget that you (if you are a female) will probably have to check WAY MORE carefully into your choice of plans- since the government killed the requirement that the plans include birth control, too.

Back when I was participating in Obamacare [I told you- I am an old fart, so my health care plan is Medicare and Medicare Advantage], my plan increased by 25% had I decided to stay with the same options for renewal.  But, I examined all the choices (both  in the same tier and a few higher ones) and switched to an alternative plan [having the same doctor choices and coverage] for a few pennies different than I had already been paying.  And, year 3, with a similar price increase on the horizon, I switched back to plan 1- for, actually, a lower price than I paid for health care in year 2.)

Please, please, please do this!   Because you probably don’t realize another shenanigan that has been perpetrated…  If we do nothing, we may find that we’ve been re-enrolled in the same plan.  With those higher rates.  (You probably don’t recall agreeing to automatically re-enroll.  You did.)  And, that re-enrollment this year happens AFTER the open enrollment period has expired.  So, we won’t be notified of our error (it’s OUR error if we do nothing), until it’s too late.  When we can’t get that better or same plan at a lower rate.

One of the vagaries that resulted from TheDonald’s executive order that withheld payments to the insurance companies is that, for at least several states, only the premiums on the silver plans last year went up.   This year, the premium prices have stabilized or dropped.  But you should still look at the other tier plans. The silver plan is the one we are supposed to choose if we are entitled to subsidies.   The lower cost bronze plan (which covers only 60% of the costs), and the two higher benefit plans (gold, which covers 80% and platinum, which covers 90% of the costs) may actually provide lower overall costs for you and/or your family.

So, if we are not getting premium support (an average $ 500 a month), it would be wise to examine what the cost of the gold plan may be.  For significantly better coverage, the premiums may be nearly identical to those of the silver premium plan prices, when you compare what your drugs and doctor visits (for example, I have had to visit Stuart, my doc, at least twice a year).

Another vagary?  Some insurers are offering ZERO cost plans.  And, that’s true for almost all of the 2922 counties across the US.  (To the best of my knowledge, this seems to be happening in about 2700 counties.)  The availability of a “free plan” depends upon family income, household size, age, where we live, and whether we have access to other health care plans.

High-Deductible Plans and HSA’s

Remember that we can also choose a high deductible plan ($1350 for an individual and $ 2700 for a family plan).  Why would we do that?  Because those plans provide us with the legal right to put $ 3500 in a health savings account (HSA).  [That tax-deductible amount is actually $7000 for families].  Oh, if we are older than 55, those limits go up by a grand.

If we don’t need to use the funds in a given year, they can keep accumulating- like a 401(k) or IRA plan.   We can expect to save some $ 1300 to $ 2500 a year (in premiums) for these high deductible plans.  Which savings should be funneled to that HSA, to cover any health costs that are not covered by our plan.)

The HSA’s have been around since 2003, and given a high deductible healthcare plan, the odds are we are eligible to use one.  The funds we put in an HSA are tax-free- at the time of deposit, and as long as we use those funds to pay legal medical bills (deductibles, out-of-pocket max, useful medical therapies that are not included in our insurances) and have a high-deductible health insurance plan, spending that money is also tax-free.  If we use the funds for non-approved items, then we owe taxes on those withdrawals.

If we don’t use all the money we have in a given year, it simply rolls over with no penalties for not using it up.  (Flexible Spending Accounts require all money to be spent by the end of the year.)

Again, it’s not just the fact that we are covered for any illness or accident, as stated above. We are joining a “buying club”.  When we have insurance, our plan has arranged what amounts to discount rates for physician visits and drugs.  That alone makes any real (i.e. not a catastrophic plan) healthcare plan a great deal. 

Good luck.  (You can retain our services to help you choose- but we prefer that solve this for yourselves.)

Did you buy my book yet?  After all, the new tax law affects your life- and your business- as much as does health insurance.  And, if you do own or operate a business, I have a special offer for you- described here.)