Non-Medicare Healthcare Options

The Open Enrollment Period for Obamacare will begin again on November 1st, 2015 and it will end on January 31st, 2016.  If you want a January 1st effective date, you must enroll by December 15th.  If you enroll between December 16th and January 15th, your effective date will be February 1st and, if you enroll between January 16th and January 31st, your effective date will be March 1st.  There will still be opportunities to enroll if you qualify for a Special Enrollment Period (SEP).  Some of the circumstances that will create an SEP for you are as follows:

1. If you gained a dependent due to marriage after January 31st, 2016.

2. If you gained a dependent due to birth, adoption or placement for adoption after January 31st, 2016.

3. If you are no longer eligible as a dependent under your prior health insurance plan due to reaching the maximum age, legal separation, divorce, or death of the policyholder after January 31st, 2016.

4. If you are no longer eligible for your prior health insurance plan due to termination of employment, reduction in number of hours of employment, loss of employer contribution toward your premiums or if you have lost your COBRA benefits after January 31st, 2016.

5. If you gained access to new health plan options because of a permanent move after January 31st, 2016.

6. If you are newly ineligible for advanced payments of the premium tax credit after January 31st, 2016.

7. If you are no longer residing or working in your prior health insurance plan’s HMO service area after January 31st, 2016.

8. If an error occurred in your previous health plan enrollment.

9. If you have adequately demonstrated that your previous health plan or issuer substantially violated a material provision of its contract with you after January 31st, 2016.

10. You and/or your dependent(s) lost minimum essential coverage (due to reason other than non-payment of premium or rescission) after January 31st, 2016.

11. If you have another qualifying event (as required or permitted by applicable laws).

If you qualify under any of the circumstances shown above, you should be able to get coverage under a Special Enrollment Period. I have seen nothing that tells me what period of time that Special Enrollment option will last once it starts for you so, for a whole lot of reasons, I wouldn’t waste a lot of time in getting that done.

What kinds of Insurance are Available for People Under the Age of 65 and Not on Medicare?

There are two basic types of health insurance available for those people not eligible for Medicare, Employer Sponsored Group Health Insurance Plans or ESGHIP’s and Individual plans. Individual plans, by the way can be just for an individual or for an individual and one or more of the individual’s family members. Temporary, or Short Term, Major Medical policies are also available if you only need coverage for a short time, like between jobs or after graduation from High School or College before you get a job.

ESGHIP’s (Employer Sponsored Group Health Insurance Plans)

In most cases, the employees of a company don’t have a lot of input on what plan the employer buys for his or her employees. You may be offered a variety of plans to choose from, several deductibles you can choose from, a choice of copays for Doctors office visits and prescriptions and maybe even an accident rider or a disability (income protection) rider, etc., but, by and large, you pretty much have to take what’s offered. Since the advent of HIPAA (the Health Insurance Portability and Accountability Act) was enacted, Employer sponsored groups of between 2 and 50 employees are guaranteed to be issued. It doesn’t matter what the health conditions are of the employees or any of their family members they want to cover. One result of this has been a meteoric rise in group health insurance premiums.

But, just because the issuance of the coverage is guaranteed, that doesn’t mean there is instant coverage. If an employee or family member is to be covered by an ESGHIP and they have pre-existing health conditions, they may have to wait until they have been on that plan for as much as one year before the plan has to cover that ailment for that person. If the employee or covered family member has had at least 18 months of Other Creditable Coverage, such as coverage under another ESGHIP, the waiting period for preexisting conditions will be waived and then the benefits of the new coverage will be immediately available.

That Other Creditable Coverage does not all have to have been with the same employer or the same insurance company but it does have to span a period of 18 months with no gap in that coverage for longer than 63 days in order to have the waiting period for preexisting conditions waived. When you lose coverage, your employer’s plan is required by law to send you a Certificate of Creditable Coverage. That is a very important document. Keep it in a safe place. Even if your Creditable coverage did not add up to a full 18 months, most plans will give you at least partial credit for some of their waiting period for pre- existing conditions.

Health Maintenance Organizations (HMO’s)

Your ESGHIP may be a Health Maintenance Organization (HMO). An HMO has a (usually smaller) Network of Health Care Providers whom you must see when you need medical care. In almost every case, you must see your Primary Care Provider (PCP) first. If you need specialized care, he or she will refer you to another Physician who is also in that Network.

If you want to see a Healthcare Provider who is NOT in that Network, you must first obtain permission from the HMO before they will cover that expense for you. Sometimes they will grant that permission and sometimes they won’t. They’ll contact the Provider you want to see and ask them if he or she will accept the plan’s payment for their services and not balance bill you. Of course, you can go see any Healthcare Provider you want to but, in order for your HMO to pay for it, that Provider must either be in your HMO’s Network of Providers or the HMO has to agree, in writing, to cover that expense for you. If they don’t cover it for you, you get to pay the entire bill yourself.

EPO’s

An EPO is an Exclusive Provider Organization.  I confess I don’t know as much about these plans as I do others but the name, itself, implies that there are fewer Medical Care Providers in an EPO than there are in an HMO and that would make such a plan even more unattractive to me.

PPO’s

Another, and much more popular arrangement is the PPO or Preferred Provider Organization. A PPO is a Network of Doctors, Hospitals and other Health Care Providers (just like the HMO’s but, usually more broad based) which your plan would prefer you go to when you need health care. That’s why it’s called a Preferred Provider Organization. These medical care providers are preferred by your plan because they have signed an agreement with the plan to limit their charges to what the plan considers to be fair and reasonable. This term is also sometimes referred to as Usual, Customary and Reasonable or UCR. The Health Care Provider will write off from your bill the amount of the bill that is above what the insurance company’s PPO said was fair and reasonable if he or she is in your plan’s Network.  With a PPO, you actually can go to any Medical Care Provider you want to but, be very careful.  The Out-of-Network Deductible for almost every PPO plan I have ever seen is twice the amount of the In-Network Deductible.  And, it is a separate deductible.  In other words, no matter how much of your In-Network Deductible you have met, none of it will count towards your Out-of-Network Deductible if you have medical expenses with a medical care provider who is NOT in the Plan’s Network.

This is one of the ways that insurance companies actually to try to keep healthcare costs down and, for the most part, it serves the public pretty well.  Another way they do that is to also reduce the percentage they will pay on an out-of-network medical expense.

Something very significant has happened in recent months that you need to know about.  In 2014, the last full year for which they have the numbers, Blue Cross Blue Shield of Texas paid out $400,000,000 (that’s Four Hundred Million Dollars) more in benefits than they were allowed to collect in premiums on that block of business, i.e. the individual PPO plans they wrote between March 23, 2010, the date the Obamacare Bill was signed into law, and the end of 2014.  Now, in fairness, they didn’t lose all of that money.  All health insurance companies buy what’s called re-insurance policies from much bigger insurance companies.  The way those policies work is quite simple.  If a specific claimant’s covered expenses reached a certain point, Blue Cross was responsible for that client’s expenses up to that point.  Anything over that amount was paid for by the re-insurance companies.  It was those companies that took it on the chin.  They lost a lot of money on this. The cause is also quite simple.  The Obamacare Law mandates that health insurance policies provide unlimited benefits.  That sounded really good to the ill-informed lawmakers who didn’t have a clue how much money that would actually be.

The re-insurance companies notified all of the health insurance companies that were selling individual PPO plans that the losses on those policies were so great that they were not going to renew those re-insurance policies for 2016.  Because of the unlimited benefit mandate in the Obamacare Law, that would mean that all of these companies would then have to be responsible for unlimited losses when they occur.  Well, no insurance company can sustain losses like that and remain in business.  Unlike a government, they can’t just print more money.  Something had to give, and it did.  Blue Cross announced that it was cancelling all Individual PPO policies written on or after March 23rd, 2010 and, for 2016, the only policies they will offer on an individual basis are HMO’s.  Recently, United HealthCare announced that it was withdrawing from the Obamacare market altogether.

The only company still selling a PPO policy in Texas for 2016 is Humana and the only plan they’re offering is a $6,450 deductible plan with no copays for anything.  It pays 100% of the eligible, in-Network medical expense after that for the remainder of the year in which the deductible is met and the claimant does get the advantage of PPO discounts for everything from prescriptions to brain surgery so that will help some.  That policy is also HSA (Health Savings Account) compatible which means the policy owner can accrue some very nice income tax savings with such a plan.

One quick reminder about HSA’s:  You have until April 15th of each year to deposit money into your Health Savings Account and claim it as a deduction on the prior year’s income tax return.

Let me be as real as I can on this.  $6,450 is a lot of money and I am not trying pretend that it is not.  But it is NOT a lot of medical expense.  You can rack up a bill like that in an Emergency Room in an afternoon.  So, this is still a good deal.  It is a better deal than an HMO or an EPO.  But, if you take out a plan like this, you must understand that it is true catastrophic coverage.   What worries me is that Humana may suddenly realize that they are the only company offering a PPO plan in Texas for 2016 and, at some point, they may stop offering it.  That will leave prospective insureds with two choices, bad and worse.

Stop Loss Limit

Most plans pay their percentage until the bills get up to a certain point, $10,000, $15,000 or $25,000 are common examples. Any medical expenses above that limit will be paid at 100% and, since the advent of The Affordable Care Act (better known as Obamacare), it will pay at 100% for the rest of that calendar year. On January 1st, all plans that I’m aware of, except TRS-Care (The Association Group Insurance for members of the Teaching Profession here in Texas) start their deductible all over again. TRS’s policy year runs from September 1st through August 31st and, because it does, that deductible starts anew each September 1st.

If you are seen by a Network Provider, all you’ll be responsible for after your In-Network deductible has been met is 20% of the PPO approved charges. Go out of network and you’ll be responsible for a larger deductible, a larger percentage (usually 40%) of the PPO approved charges, in most cases, and 100% of the non-approved charges. Remember, if that Provider is not in your PPO’s Network he or she does not have to write anything off of your bill.

But, if you really want to go to that Provider, your charges at that office won’t be denied out of hand as they would be with an HMO or an EPO.

Individuals and Families

Say you’re on your own. You may be self-employed or your employer may not provide coverage for you. You can still buy major medical insurance and many of the individual plans are very similar to ESGHIP’s. Most are not HMO’s (thank goodness!) but PPO’s are very common. They work the same way for individual and family plans as they do for ESGHIP’;s but , ever since January 1st, 2014-2015, the only coverage available has been either an Off Exchange Plan or an On-Exchange Plan. And the premiums, as well as the deductibles, are really a great deal higher than they used to be before Obamacare.

Temporary Major Medical Insurance

Sometimes you may need a temporary health insurance policy instead of a permanent policy. Such occasions include being between jobs, graduating from High School or College, loss of coverage because of a divorce or death of the original insured family member and others.

There are temporary major medical policies available and, generally speaking, they are cheaper than permanent policies. One of the main reasons they are cheaper is because, unlike Obamacare, they can still be underwritten, which means you would have to answer health questions and you could be turned down if you don’t qualify medically.

Another major reason is that temporary major medical policies do not cover pre-existing conditions, again, unlike Obamacare. Pre-existing conditions are commonly defined as any ailment that manifested itself or for which the applicant received advice or treatment within the five years immediately preceding the effective date of the applicant’s policy. An ailment manifests itself when it would cause an ordinarily prudent person to seek medical advice.

Another reason they are cheaper is that the insurance company knows they are going to be let off the hook, so to speak, fairly quickly since most temporary major medical policies are written for an initial period of 6 to 12 months, though, in most cases, you can buy a temporary major medical policy for as little as one month, if that’s all you need the coverage for.

Another little known fact about temporary major medical policies is that, if you are totally disabled at the end of the term of your temporary major medical policy, the policy can be extended for up to 90 days.

Obamacare

Health Insurance companies have to take all comers now, regardless of any preexisting conditions. That may sound wonderful to those who know nothing about risk management, which is what insurance companies do. But the net effect of accepting all risks with no built in protections for the insurance companies is that the premium rates have to rise. Giving health insurance to absolutely everybody is, indeed, a noble idea. But somebody has to pay for it. That may sound cruel but it is Life and Life is not always fair and Life will never bend to the will of supposedly well-meaning , but terribly misguided, politicians.

An insurance company is a business, like any other. They have to make a profit or else, why would they stay in business? Who wants to work hard every day and, at the end of the day, every day, lose money? It is a prescription for disaster and I fear that, unless something is done to repeal this law (just fixing it won’t do…there are too many inherent problems with it) and replacing it with a more market based and driven system, it will collapse of its own weight and, I fear, take the rest of the Economy with it.

I believe that those who seek national health care will continue their efforts until a certain well-known warm place freezes over. They’ve been at it incrementally for over 100 years and they will never give up. I admire that strength of purpose but why do we have to reinvent the wheel?

We already have a national health care system for our elderly and certain other members of our society. It’s called Medicare. Wouldn’t it have been a whole lot simpler and a great deal less disruptive to simply phase in a constantly reducing age limit on eligibility until, eventually, everyone was covered? The only benefit that would need to be added would have been maternity and, practically speaking, that could be restricted to only women of childbearing age.

The deadline for sign up during the Initial Open Enrollment Period in 2015-2016 will be January 31st, 2016. If you do not already have health insurance in force, either through Obamacare or elsewhere (such as an Employer Sponsored Group Health Insurance Plan or individual coverage that you got before March 23, 2010, when this law was passed or even a plan that you bought after the law was passed and before it was fully implemented) and you don’t sign up by January 31st, you may be subject to a fine of as much as 2.5% of your annual income.

At the beginning of this article I cite several exceptions to that rule. It would be a good idea to review those now if you think you may qualify for one of them.

On Exchange vs Off Exchange Plans

My best advice is to find a reputable insurance agent with years and years of experience in the health insurance business and who has hundreds or maybe even thousands of clients who can vouch for that person’s professionalism, reliability and honesty. Buy through him or her and you are a whole lot less likely to have problems. And, even if you do have problems, that agent already knows how to fix them because, I promise you, you are not the first person to encounter that problem and he or she has dealt with it before.