Health Insurance Holes & Gaps – A Flagrant Foul!
When Steph Curry, Klay Thompson or Andre Iguodala find the gaps in the defense and make a brilliant pass for an assist that ends in an easy layup or an inspiring dunk, it a pleasure to behold. When a health insurance subscriber discovers a hole or a gap in their coverage it feels more like a flagrant foul.
As a result of the Affordable Care Act more people are insured. Unfortunately, as those people begin to use the coverage they are learning about the unexpected challenges and disappointing gaps with the coverage.
There are gaps in the networks of physicians. Some doctors will participate in group networks, but not in individual networks. Some refuse to work in the Covered California market.
The deductibles and out-of-pocket expenses are higher on plans that are considered more affordable. Remember the new plans for small groups and individuals are called metallic level plans: Platinum, Gold, Silver and Bronze? For some, because the deductible and out-of-pocket expense is so high on a Bronze level plan, it feels as if they don’t have any coverage at all.
For an individual purchasing health insurance through an individual/family plan, the calendar year in-network worst case scenario, also called the out-of-pocket expense (which includes the deductible), can range from $4,000 for a Platinum plan to $6,500 for a Bronze plan. That is a tough pill to swallow.
For a small group participant, the scenario is a little better. The worst case on a Platinum plan could be $2,500 or $6,500 for a Bronze plan. Keep in mind those figures would be doubled for a family.
So what can you do? Just as Coach Kerr evaluates the strengths of his players and develops plays that highlight those skills, insurance coaching will begin with an evaluation of the needs. The right insurance plan is intended to be suitable to your needs.
Employers: If you are an employer and you have selected a Bronze plan for your employees, those on your team who have maternity claims or ongoing treatment might not be very pleased with the coverage. One solution might be to offer supplemental insurance, which employees can purchase to fill the gaps. Additionally, for 2016 many insurance companies have improved their plans so it is definitely worth the time to conduct the review before the end of the year rush. In most cases, employees can receive credit for any deductibles they have met; there is a method for transferring to the new insurance company. We are performing mid-year reviews for our clients now.
If you are a high earner, consider a higher benefit plan, which could have some tax benefits to you, but please consult your tax professional before making a decision. If your claims are not above 10% of your adjusted gross income you likely will not get a deduction.
The Health Savings Account (HSA) deduction is still attractive. For those with HSA-compatible health insurance plans you can deposit funds into a separate account and use those funds to pay for medical expenses. Since they are tax-advantaged and balances accumulate over time, HSAs can also be used to accumulate savings. There is no use it or lose it issue, once the money is in the account it is yours to keep or spend on allowable medical expenses.
Each year the IRS changes the maximum annual contribution for HSA plans. For 2016 the maximum is $3,350 for individuals and $6,750 for families. Catch-up contributions of $1,000 can be made by individuals 55 and over.
HSA funds are tax advantaged and can be used to pay for a variety of healthcare services, including many that are not traditionally allowed under other plans. For example, dental and vision care services, long term care insurance premiums and medical insurance premiums during periods of unemployment can all be paid for with HSA funds.
Be careful, though, if you have an HSA and will be turning 65 this year. Individuals age 65 and older are eligible to open and contribute to an HSA as long as they have not elected Medicare Parts A, B, C or D. It is tricky. Remember when turning 65 a person is eligible for Part A the first of the month they turn 65. Part B normally requires that you enroll.
Retiring at age 65 or older – Please be certain you apply for Part B of Medicare right away. COBRA is not your best option. Make an appointment with a licensed agent to discuss your Medicare options before you retire. It will help to make the transition smoother. You must have Parts A and B of Medicare to obtain a Medicare Supplement. The supplement is necessary to fill different gaps. Medicare Part A for hospital services has a deductible and Part B for physician services also has a deductible. Additionally, Medicare pays 80% of what they deem allowable. If you do not purchase a gap plan you would be responsible for the balance of the 20%.
Between jobs – Make sure to research options to avoid a gap in coverage and a potential tax penalty. All individuals are required to have health insurance. If you have lost coverage with your employer and the COBRA premium is sky-high, be certain to look into an individual plan right away. Once you accept COBRA you are stuck until the next open enrollment period or until you obtain coverage with a new employer. Another often overlooked gap is in the area of life insurance. If the only life insurance you had was through your employer, you will want to consider an individual plan to protect your family. In many cases you can buy more coverage for less money and the premium could be guaranteed for 10, 15 or 20 years.
Vacation Plans – Make sure to check with your insurance company to see what coverage you will have in another state or in a foreign country. Medicare has a very limited foreign travel benefit.
Travel plans are easy to obtain and the mobile apps are very helpful.
These days it is important to play strong defense to close the gaps in health insurance.
Learn more about Medicare in an educational presentation on Tuesday, July 26, 2016 by Colleen Callahan, titled, “The A, B, C’s and D of Turning 65.” See the CCCBA calendar here.