Decision Time for Coverage Options is Almost Upon Us

Options and Deadlines for Individual Coverage

Q: I bought a new individual insurance policy for 2014. Should I be looking at my options for 2015?

A: We believe that everyone should do some minimum due diligence to verify the network status of doctors and the prescription drugs on the insurer’s formulary.

If money is no object AND you are totally healthy and don’t expect to use medical services, you might consider letting your 2014 plan simply renew. But even if you’re that fortunate, remember this: not all plans are renewing. That’s why it’s very important to “keep an eye on the mail” for correspondence from your insurer.

For the rest of us, the message is clear: we should definitely shop around for a 2015 policy. Most consumers will have additional options to consider for next year’s coverage. So look carefully at premiums, but also at the Plan benefits, referral requirements, and other rules, and at the Plan’s network. Many new Plans have narrower networks in terms of geographic territory and all types of providers, including hospitals. Choosing a narrower Plan is fine, as long as you make a deliberate decision whose consequences you understand.

Remember, in 45 of 50 states prior to 2014, individual insurance required a health questionnaire, and the insurer could deny one’s application based on pre-existing conditions. Hence, the members of the “risk pool” (those who had individual insurance in the private marketplace) were fairly healthy, and that allowed for relatively low insurance premiums. (New York, New Jersey, Massachusetts, Maine, and Vermont did not deny coverage based on health, but all had different approaches as well.)

Because the Affordable Care Act (“Obamacare”) represents such a significant change, there isn’t much data on which to base premiums yet. As a result, there’s more guesswork in projecting premiums than usual. Some insurance companies are more cautious in this type of environment; others are more aggressive. Most consumers will have more choice than they are well prepared to deal with. Information on 2015 plans is not available yet, but should be available soon.

2015 Individual (Non-Medicare) Sign-Up Dates

Q: When should I be shopping for insurance?

A: For those in the individual (non-Medicare) market, the annual open enrollment period is November 15, 2014, through February 15, 2015. If you are changing plans and want your coverage to be effective on January 1, 2015, you must apply for coverage by December 15, 2014. Deductibles are accumulating on an annual calendar basis now, so it doesn’t make sense to wait.

For example, waiting to enroll in a new plan for February 1, 2015, would be undesirable because any medical expenses in January would effectively be “lost” in the sense of accumulating towards your 2015 deductible.   Your old plan’s deductible was refreshed for January 1, 2015, regardless of the date you enrolled in the plan, so any services you may use in January 2015 would go towards a deductible for a plan that you don’t intend on keeping.

Those on COBRA should be deciding whether they want to remain on COBRA or go onto individual insurance. If they stay on COBRA beyond the individual enrollment period, they need to remain on COBRA until a future annual enrollment period or until COBRA ends.

Q: The thought of shopping around for insurance again is upsetting. Will things settle down?

A: The individual insurance environment will likely become more stable eventually, but we are definitely in a new era and there will be winners and losers. Technological issues were a major problem last year; this year’s experience should be better.

Q: Who can help me?

A: Brokers sell individual insurance products and get paid a commission by the insurance company. We are consultants who don’t accept commissions; we advise clients for a fee. Of course, you can always go online and use various websites, but your decision is important because you are locked in until 2016 unless you move or have some other type of qualifying event.

If you are purchasing individual insurance for 2015 and earn between 138% and 400% of the federal poverty level, you must buy your coverage through either one of the nineteen state-based exchanges or through Healthcare.gov if your state did not set up their own exchange in order to obtain an advanced premium tax credit (subsidy).

Medicare Part D Options for 2015

Q: Should those on Medicare Part D look at their options for 2015?

A: Medicare Part D is a more stable marketplace now, but if you are taking expensive drugs and/or going into the donut hole or gap, you should always review Part D options for the upcoming year.  Also, AARP/United Healthcare is not continuing its AARP Medicare Enhanced product into 2015, so everyone on that plan most definitely should review their options.

The Annual Enrollment Period for Medicare

Q: When should I be looking at options if I’m on Medicare?

A: For those on Medicare, the annual enrollment period is October 15 through December 7. This is when you can change your Part D or Advantage Plan (or change from Original Medicare to a Medicare Advantage plan) for January 1, 2015. Those on Medicare Advantage Plans can also decide to return to original Medicare between January 1 and February 14, 2015, but we advise trying to make a sound decision by December 7, 2014, for January 1, 2015. If you have retiree medical benefits through a former employer, the employer determines the schedule of benefit renewals and changes.

Private Exchanges

Q: What is all this I’m reading about Private Exchanges?

A: Private exchanges are totally different from the state or federal marketplaces established under Obamacare. Private exchanges, which are managed by benefit companies for employers, can be for both active workers and retirees. A very significant recent development is the trend toward those with retiree medical benefits being moved on to coverage choices available through an exchange.  Providing coverage through an exchange is very appealing to employers, because it makes benefits administration simpler.  The employer can outsource the open enrollment process and pay a fixed amount per employee or retiree rather than be at risk for medical expenses.

Group Coverage

Q: I have active group coverage through an employer. What do I have to do?

A: That depends on the anniversary date of your plan. If you have choices, you will typically receive a packet two or three months before the anniversary date. Although most plans renew on January 1, we see renewal dates for every other month of the year.

Since it is now federal law that one have insurance coverage or pay a penalty, more people who once waived coverage at work are electing it. You are locked in to the choice you make until the next year, so make a wise decision or get help.

Healthcare coverage in the United States is complex. If you are going to need help with a coverage decision, plan in advance so that you can get competent advice, make a good decision, and not miss any deadlines.