A Quick Guide for Better Your Understanding Health Insurance Options for 2020
Lots has changed...but other areas remain the same!
Let's face it: Health insurance can be complicated.
And while it certainly wasn't meant to be that way...
But the sheer volume of codes, laws and revisions are enough to make even the smartest people throw up their hands! So with that in mind, we put together a quick little tutorial that can help you sort out your options for 2020. Now it's important to note that there are several good reasons for having health insurance, first it can keep you alive, but from the financial aspect, it can bankrupt you. Unpaid medical bills are the number one reason for bankruptcies in this country! Many providers will not treat patients without health insurance, or cash payment, so it really can be a matter of life or death. So let's dig in and find the best coverage for you and your family.
Group Plans vs. Individual & Family Coverage
When getting started, it's important to know that there's only two types of basic health insurance coverage. You can get Health Insurance through your work, (Group Coverage), or you can buy Individual Health Insurance for yourself and your family. That's it.
So let's take a quick look at each.
Group Health Insurance
Group health insurance is commonly offered by employers to attract good employees and increase employee retention. Large companies can negotiate much better rates, and have access to much better plans than if you're buying it on your own. In Georgia, it only takes two full time employees to establish a group plan, and the employer is required to pay at least 50% of the employee’s premiums. Other requirements differ with Insurance Companies, e.g. how many plans you can offer, minimum participation requirements etc.. Health & Life Strategies LLC can help you determine what coverage might be best for you and your employees. Some Insurance Companies allow "Carve Outs", so coverage needn't be offered to every employee. There are several different types of Group Coverage that you can choose, some allow you to go out of network (PPO's), and other require that you stay in network (HMO's).
What are "Health Savings Account" (HSA's) and how do I know if that's right for me?
That's a good question, since health savings accounts can be another little wrinkle that throws people off. So first off, it's important to understand that a health savings account is like a 401(k) retirement account, but it's strictly for medical expenses. And you can only have an Health Savings Account (HSA) if you enroll in an HSA-compatible health plan. These are also typically referred to as High Deductible Plans. With these plans, you don't get any first dollar benefits (aside from preventative services), until you meet your deductible.
They’re part of what’s called consumer-directed health care, where "consumer directed” means you manage more of the money you spend on health care costs.
Alright, so far so good.
Now from there, you actually have two more options.
Health reimbursement arrangement (HRA): A health reimbursement arrangement is a benefit fund set up by your employer. They contribute a certain amount of money each year for you to use for medical expenses not covered by your health plan, such as deductibles or coinsurance. Only your employer can fund an HRA.
Flexible spending account (FSA): A flexible spending account is set up by your employer. They own the account, but you get to decide which qualified medical expenses to pay for with your FSA. Before the Patient Protection and Affordable Care Act, one significant disadvantage to using an FSA was that funds not used by the end of the plan year were forfeited to the employer, known as the "use it or lose it" rule. Under the terms of the Affordable Care Act, a plan may permit an employee to carry over up to $500 into the following year without losing the funds.
So what's the difference between the HSA, HRA & FSA Plans?
Another great question. And the answer can be a little complex, but let me give you the short answer on that first, then you can take a "deep dive" into the chart below for more detail.
WHAT THEY HAVE IN COMMON: Money is deposited in these accounts tax free, and is taken out tax free or tax-deductible. You can use it to pay for qualified medical expenses, such as deductibles and co pays. A debit card may also be available depending on your plan.
WHERE THEY DIFFER: Where they differ is the kind of health plan they work with, who owns the account, who controls it and who can put money into it.
|You can use it to pay your deductibles or copays.||*||*||*|
|You can use the money in the account before it's fully funded.||*|
|You own the account.||*|
|Your employer owns the account.||*||*|
|Money put into the account that’s already been taxed (for example, money that was a gift) is tax deductible.||*||*|
|It could be deposited as an untaxed payroll deduction or it could also be after tax.||*||*|
|You can invest the money.||*|
|A debit card may be available, but it won't be for all plans.||*||*||*|
As I mentioned before, a health savings account (HSA), is a kind of health spending account. It can be paired with any qualifying plan. It's like a 401(k) and a checking account combined that you can use for your medical expenses.
Most people put money into their HSA by having it deposited from their paycheck before taxes. But you can put money into your HSA at any time. You can also deposit post-tax money into your HSA and deduct your contributions from your income tax. Then, when you have a medical expense, you can use the money in your HSA.
The HSA works hand in hand with your insurance so that you can cover your part of medical expenses. You can even use it to cover the expenses of your spouse and dependents, even if they aren’t on your plan. For more information about everything you can do with a health savings account, read "How can I use my HSA?"
Who can have an HSA?
You're eligible if you:
- Are enrolled in an HSA-compatible, high-deductible health plan
- Can't be claimed as a dependent on someone else's tax return
- Aren't covered by or already enrolled in another health care plan that isn't HSA-compatible
- Aren't enrolled in Medicare
How does a health reimbursement arrangement work?
A health reimbursement arrangement is usually paired with a high-deductible plan, but it can be used with any insurance plan. It can even be offered by your employer as a stand-alone benefit.
Your employer contributes a set amount of money to your HRA each year for your use. Unlike other health spending accounts, only your employer can put money into your HRA. Your employer owns the account.
When you go to the doctor or hospital, the money in your HRA will cover eligible expenses, like your deductible or copay.
If you use up all the funds in your HRA before the end of the year, you'll have to pay any additional out-of-pocket costs. If you have money left over, your employer may let it roll over to the next year.
If you are unsure if your employer offers an HRA, contact your Human Resources department.
What are some advantages of an HRA?
Health reimbursement arrangements have some benefits that can help you save in health care costs.
Affordability: Premiums for health insurance plans offered with an HRA are generally less per month than other plans.
Employer contributions: Your employer fully funds your HRA with no contributions from you.
Potential tax savings: Money that goes in and out of these accounts can be tax exempt or tax deductible.
How does a flexible spending account (FSA) work?
A flexible spending account, or FSA, is a way for you to set aside money for qualified medical, dental or vision expenses or dependent care.
You fund an FSA through pre-tax deductions from your paycheck. The total amount you choose to deposit is taken out of your paycheck over time, but you get the full amount for use at the beginning of the year. Your employer owns the account, but you are the one who funds it and decides how to spend the money. Only you and your employer can contribute to the FSA.
Flexible spending accounts also help you save on taxes. The amount you put into the account is deducted from your pre-tax income, which could put you in a lower tax bracket. And the money you put in is not taxed, either.
There are three kinds of FSAs:
HEALTH CARE FSA: Pays for qualified medical expenses, including insurance copays and deductibles.
DEPENDENT CARE FSA: Pays for the care of a dependent child or adult so that you can work.
LIMITED-PURPOSE FSA: Pairs with a health savings account to help you pay for dental and vision expenses.
Individual & Family Health Insurance
Individual Insurance (Qualified Health Plans) can only be purchased (or changed) during Open enrollment unless you qualify for a Special Enrollment Period (SEP). For 2019 coverage, Open enroll will begin on November 1, 2018 and run through December 15th, 2018. If you miss that, you're out of luck unless you qualify for a Special Enrollment Period. The Companies offering Individual Coverage in Georgia for 2019 are Ambetter, Kaiser, Blue Cross Blue Shield, and Alliant. I represent all these companies and will be happy to help you make an informed selection. I'm compensated by the insurance companies, so there is no cost to you.
What is included in Qualified Health Coverage?
To be a Qualified Health Plan, it must cover the following services:
- Ambulatory patient services (outpatient care you get without being admitted to a hospital)
- Emergency services
- Hospitalization (like surgery and overnight stays)
- Pregnancy, maternity, and newborn care (both before and after birth)
- Mental health and substance use disorder services, including behavioral health treatment (this includes counseling and psychotherapy)
- Prescription drugs
- Rehabilitative and habilitative services and devices (services and devices to help people with injuries, disabilities, or chronic conditions gain or recover mental and physical skills)
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care (but adult dental and vision coverage aren’t essential health benefits)
AFFORDABLE CARE ACT (Obamacare)
Signed by President Obama in 2014, the Affordable Care Act (ACA) is still alive and kicking for the most part. Although it required everyone have a Qualified Health Insurance Plan, or pay a penalty, that part of it is going away in 2019. Qualified Health Plans can only be purchased during Open Enrollment unless there is a Qualifying Life Event – for example a Marriage, Divorce, Birth of a Child, Loss of Employer Coverage and others. Although the penalty has been eliminated for 2019, the rules are still in place regarding the time periods you can buy a Qualified Health Insurance Plan.
Am I Eligible for a Premium Tax Credit?
The Premium Tax Credit, or subsidy, is the amount of financial help you can get paying your health insurance. It is determined by your family size and family income. Give us a call and we can estimate how much help you're eligible for, and what, if any other Cost Sharing Reductions (reduced deductible, copays and out of pocket costs) you could get.
The Penalty is Gone!
When the TAX CUTS AND JOBS ACT of 2017 was signed, the monetary penalty that required all Americans under 65 to have health insurance or pay a penalty will be gone in 2019.
As a recognized ELITE Agent, I enrolled 100+ Marketplace clients for 2020..
Give me a call at 678-493-2115 and we'll work out a plan for you.
ALTERNATIVES TO INDIVIDUAL QUALIFIED HEALTH PLANS
If you missed Open Enrollment, and you don’t have a qualifying life event, you cannot buy or change your Qualified Health Plan until the Open Enrollment for the following year. You can, however, purchase a Short Term Medical Plan, or Health Care Sharing Ministries Plan or Indemnity Plan at any time of year.
HEALTH CARE SHARING MINISTRIES
Health Care Sharing Ministries have been around for around 30 years. Health Care Sharing Ministries are NOT Health Insurance, but in several ways operate similarly. Members are called to abide by a certain set of standards established through the member Guidelines and the application of a Statement of Faith or Statement of Standards to each individual Health Care Sharing Ministry (HCSM). As a member of a HCSM, one is considered by the medical profession to be a self-pay patient. Members have been exempt from the Affordable Care Act penalty. The cost for membership can be significantly lower than a typical Qualified Health Plan, but you have to answer some health questions for these plans, and may not qualify. Call us today to see if a HCSM is a good option for you.
SHORT TERM MEDICAL INSURANCE
Short Term Medical Plans may be a good option to permanent insurance if you have missed Open Enrollment, or are between jobs waiting for your new Employer coverage to begin. Due to the Executive Order President Trump signed in October 2017, beginning October 2, 2018, the length of Short Term Medical policy can been extended for up to 360 days in Georgia (up from three months). Short Term plans do not typically cover any pre-existing conditions, so unless you’re pretty healthy, it may not be a good option for you. These policies do not cover any prescriptions or preventative visits (at no cost like the ACA Plans), or maternity. Now some of these plans may be renewed (stacked) up to 3 years. Why is this significant? Previously when the policy could only last 3 months, you had to reapply for another policy, the deductible would need to be met again, and any medical condition you had in the first 3 month policy time frame would then be considered pre-existing, and not covered. Now with the 360 day term, the plans can be stacked, and although the deductible would need to be met after the first term, any medical condition you developed would be covered in the 2nd and 3rd policy term.
Definitions of Terms – Health Insurance
We understand that insurance can be confusing. The following are a few definitions of terms used in describing health insurance:
Agent or Broker - a licensed individual who represents several insurance companies and sells their products.
benefit - reimbursement for covered medical expenses as specified by the plan
deductible - the dollar amount an insured individual must pay for covered expenses during a calendar year before the plan begins paying co-insurance benefits
dependents - usually the spouse and unmarried children (adopted, step or natural) of an employee
co-pay/co-payment - the amount an insured individual must pay toward the cost of a particular benefit. For example, a plan might require a $ 30 co-pay for each doctor's office visit. This payment is charged before the deductible is met, and does not apply toward the deductible.
co-insurance - the percentage of covered expenses an insured individual shares with the carrier. (i.e., for an 80/20 plan, the health plan member's co-insurance is 20%.) If applicable, co-insurance applies after the insured pays the deductible and is only required up to the plan's out of pocket maximum after which the insurance company will pay 100% of covered expenses
carrier - insurance company insuring the health plan
Health Maintenance Organization (HMO) - An alternative to commercial insurance that stresses preventive care, early diagnosis and treatment on an outpatient basis. HMOs are licensed by the state to provide care for enrollees by contracting with specific health care providers to provide specified benefits. Many HMOs require enrollees to see a particular primary care physician (PCP) who will refer them to a specialist if deemed necessary. (Kaiser Permanente is an HMO)
in-network - describes a provider or health care facility which is part of a health plan's network. When applicable, insured individuals usually pay less when using an in-network provider
network - a group of doctors, hospitals and other providers contracted to provide services to insured individuals for less than their usual fees. Provider networks can cover large geographic markets and/or a wide range of health care services. If a health plan uses a preferred provider network, insured individuals typically pay less for using a network provider.
out-of-network - describes a provider or health care facility which is not part of a health plan's network. Insured individuals usually pay more when using an out-of-network provider, if the plan uses a network.
out-of-pocket maximum - the total of an insured individual's co-insurance payments and co-payments.
point-of-service (POS) - health plan which allows the enrollee to choose HMO, PPO or indemnity coverage at the point of service (time the services are received
pre-existing condition - an illness, injury or condition for which the insured individual received medical advice, treatment, services or supplies; had diagnostic tests done or recommended; had medicines prescribed or recommended; or had symptoms of typically within 12 months (time periods may vary depending on state laws) prior to the effective date of insurance coverage.
Preferred Provider Organization (PPO) - A network or panel of physicians and hospitals that agrees to discount its normal fees in exchange for a high volume of patients. The insured individual can choose from among the physicians on the panel.
premiums - payments to an insurance company providing coverage
short-term medical - temporary health coverage for an individual for a short period of time, usually from 30 -360 days.