Healthcare. No matter where we are from or what age we are, healthcare—and how to pay for it—is in the forefront of our minds. We often field questions from clients regarding health insurance. We are more than happy to act as a resource for these types of questions, but the complexity and ever-changing nature of the health insurance industry often requires us to solicit outside help.
We compiled the following list of frequently asked questions and asked one of our most trusted health insurance resources, Emily Bremer of Bremer Conley, LLC, to provide you with the answers. Emily has numerous years of experience in the health, disability, and life insurance industry and specializes in employee benefit plans. To learn more about Emily’s work and experience, check out her bio here.
What are the biggest obstacles your clients face when shopping for health insurance?
“It used to be that the biggest obstacle was getting approved for a policy in the first place. Today, in the post Affordable Care Act (ACA) world, the challenges are still there, but they have changed. Now transparency is the biggest issue. Transparency of benefits and coverage so that policyholders understand how the plan will pay and when, transparency of network providers so that consumers can feel confident that the plan they choose will cover their doctors and hospitals when they need them most, transparency of drug lists so when you go to the pharmacy you can feel confident that your prescription will be covered by your plan, and transparency of provider pricing so that everyone can make the best choices for their family about where to go for care that fits their budget, all provide challenges to choosing the right coverage. Unfortunately, unlike shopping for a plane ticket online, health insurance is a much more complex product with a lot more at stake if you pick the wrong plan. While websites can be helpful tools for researching options, they often don’t tell the whole story and never replace the insight gained from getting professional guidance from someone experienced in the field.”
What are the key things people need to know when going to the Marketplace for health insurance?
“The first thing to know is when to go to the marketplace. The federal website, www.healthcare.gov, is only one option for where to buy a policy. It makes the most sense to go to the marketplace when you qualify for a premium subsidy (reduces your monthly premium costs) and/or cost sharing reductions (reduces your deductibles and out of pocket expenses), want to enroll in a plan that is not offered off of the marketplace, or if you want to go it alone and not use the services of a broker or agent. Plans outside the marketplace, however, provide the same benefits, protections and pricing, but you avoid unnecessary glitches and headaches by removing the government middle man between you and the insurance company. Some carriers only sell their plans off of the marketplace. To see if you may be subsidy eligible, check out https://www.healthcare.gov/lower-costs/ for more information.
If you do choose to go to the marketplace to purchase your coverage, and you are applying for subsidy assistance, make sure to be prepared with all of your tax household’s required information including income from all sources, employer names and phone numbers, social security numbers, dates of birth and contact information. Review your eligibility determination notice carefully to make sure that you do not need to supply additional documents to substantiate your eligibility and if you do, make sure you get them submitted as quickly as possible. The best way to submit additional information is by uploading it through the website. Once it comes time to choose a plan, be careful to check all of your doctors, hospitals and drugs and make sure they are covered by the plan you are interested in. Review the plan’s summary of benefits and coverage (SBC) as not all plan benefits and limitations are clearly outlined on the site. Finally, you must pay in advance to activate your coverage. You will want to go back to the marketplace each year to update your information at annual open enrollment, and may need to go back throughout the year if you have a change to your circumstances like a divorce, marriage, birth of a child, move out of area, gain or loss of a job, or have a change in income.”
Are there any red flags we should be aware of when shopping for health insurance?
“Look out for network indicators like PPO, EPO and HMO. PPOs (preferred provider organizations) traditionally have the most flexibility as they allow for in and out of network access, but choosing a plan that is a PPO no longer guarantees a broad network or reasonable deductibles out of network. It is critical to make sure your doctors and hospitals are covered. EPO (exclusive provider organization) is a relatively new term. EPOs do not have benefits out of network like HMOs (health maintenance organization), but unlike HMOs do allow for deductibles which brings down the cost. They are like a bridge between a PPO and HMO and often require, or strongly advise, members to seek referrals from their primary care physicians before seeing a specialist. It is important to note that many individual policies no longer have nationwide networks (all of the policies offered in the St. Louis area are this way). Only emergencies are covered out of area.
Make sure to always look up your medications and make sure that what you take is covered by the plan you are choosing. Drug formularies can vary from one carrier to another (although not usually from plan to plan offered by the same the carrier), and picking a plan that doesn’t cover your drugs can lead to a lot of additional and unexpected out of pocket expenses.
In addition, keep a close eye on co-pays. Co-pays may be applied instead of the deductible, only after meeting the deductible, or in addition to the deductible. Pharmacy plans may now have separate deductibles for some or all classes of drugs, and in some cases may be subject to the entire medical plan deductible before offering co-pays or co-insurance.
Employer sponsored plans have not incorporated as many of these changes yet and most still offer emergency room and pharmacy co-pays without a deductible. However, even these plans are starting to change under the pressure of increasing health costs so it is essential to keep your eyes open and thoroughly review employee benefit plans as well before making your election.”
What do you see for the future of the healthcare industry?
“It is hard to tell, but if the last few years have shown us nothing else, it is that the pace of change is nowhere near slowing down or coming to a stop. With a change of administration in 2017, we should expect healthcare to be more under the microscope than ever. The bottom line however is that health insurance is so expensive because healthcare is so expensive, and we use a lot of it. The real question is how do we reduce the cost of care to allow for a system that will offer important protections like no waiting period for pre-existing conditions along with affordability and reasonable cost sharing? What we do know is that regulation doesn’t lower costs for most people. Only those now receiving expanded Medicaid (not in Missouri), or federal subsidies, or were previously insured in the high risk pools are seeing cost reductions. For the rest of Americans depending on individual policies, ACA has caused benefits to drop and prices to dramatically increase. Only the policyholders still on old medically underwritten plans under transitional relief have been able to retain nationwide broad networks and reasonable deductibles at affordable prices. Unless something changes, they will be forced to migrate to new plans on January 1, 2018.
The best advice I can give is to be an informed consumer and maintain a position of flexibility. If you can hold out before retiring a little bit longer, or consider reducing hours instead of retiring, be open to changing doctors, consider non-traditional plans like HSAs that allow for account funding, pay a little extra to keep an older grandfathered or grandmothered medical plan, you may find that you were grateful that you did.”
What should an individual do to bridge the gap between retirement and age 65? Are there strategies you would recommend to clients?
This material has been prepared for informational purposes only and should not be used as investment, tax, legal or accounting advice. All investing involves risk. Past performance is no guarantee of future results. Diversification does not ensure a profit or guarantee against a loss. You should consult your own tax, legal and accounting advisors.
This post was written by a member of the Plancorp Women’s Initiative, which strives to advocate for clients and women in the community by addressing topics specific to their financial lives. For more information about the Women’s Initiative and how you can get involved, email firstname.lastname@example.org or visit the Plancorp Women’s Initiative page.
“COBRA, surprisingly, may be the most affordable solution for many that will provide 18 months of coverage. COBRA often provides the least disruption in access to providers. Utilizing health savings accounts (HSAs) prior to retirement to save money for higher than usual out of pocket expenses under individual plans is another strategy. Finally, working with a financial advisor and/or accountant to structure taxable income to allow for subsidies (assets don’t count for eligibility) in the early years of retirement is an option that works for some people. Others may decide to delay full retirement to continue working longer, but at reduced hours (30 hours per week still qualifies for employer coverage), or in a different position with less responsibility, stress, and income, but to retain access to coverage. The key is to work with trusted advisors to develop a plan that will work for you and your family before you put in your notice and make your retirement official.”