What is a Health Insurance Exchange Notice and Why is it Important?

With the health insurance exchanges, also known as health insurance marketplaces, set to open for business on October 1, 2013, the world of health insurance is about to change dramatically.  Through these exchanges individuals will be able to purchase medical insurance by comparing plans, insurance companies, and premiums side by side on their computer screen.

One of the advantages of buying insurance through the marketplace is the possibility of obtaining a tax credit subsidy to help pay for the cost of the coverage.  However, not everyone is eligible for the subsidy.  One of the ways to not be eligible is to be offered affordable coverage with a certain level of benefits through your employer.  But how do you know if your group coverage makes you ineligible for the tax credits?  Your employer will provide you with a health insurance exchange notice.

What is the Health Insurance Exchange Notice?

The health insurance exchange notice will explain to you whether or not your coverage eliminates you from the subsidy.  Employers are required to provide this notice to existing employees by October 1, 2013 and to new employees within 14 days of employment.

There has been some confusion about possible penalties given to employers who do not comply with the requirement to provide a health insurance exchange notice.  Some reports suggested that there would be a $100 per day per employee penalty.  The Department of Labor came out later and confirmed that there would not be a penalty for lack of compliance.  Still, employees are encouraged to send the notice.

If your employer does not provide a notice, it is still important to find out if you are offered coverage that will keep you from being able to access the tax subsidy.

Why is the Health Insurance Exchange Notice Important?

The Patient Protection and Affordable Care Act requires every American to purchase health insurance or else face a tax.  Since health insurance is an expensive addition to the budgets of many people, the law allows for subsidies to help pay for the premiums.  However, if medical coverage is available through an employer, the subsidy is not available.

When an individual applies for coverage through the exchanges, the site will ask if group coverage is offered.  To be accurate in answering this question, people can rely on the health insurance exchange notice provided by their employer.

Are Model Notices Available?

Model notices are available through the Department of Labor’s website.

Model notice for employers that offer a plan

Model notice for employers that do not offer a plan

Group Coverage can be an Inexpensive Option

Even if you are not eligible for a subsidy because of employer sponsored coverage, the group coverage is still a great option.  The Affordable Care Act mandates that employers cannot charge employees more than 9.5% of their salary for coverage.  In many cases, this premium will be less expensive than coverage purchased through an exchange, even with a subsidy in place.  Therefore, not being able to get the tax credits because of available group coverage is not necessarily a bad thing.

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How to Find Health Insurance That Is Affordable Under Obamacare

Beginning on January 1, 2014, most of the provisions of the Patient Protection and Affordable Care Act (PPACA), also known as Obamacare will go into full effect.  One of these provisions is the requirement that every American have health insurance or pay a fine.  Therefore, it is very important to find health insurance that gives you the coverage you need at a price you can afford.  But how do you do this?  Despite the controversy about the overall cost of the Affordable Care Act, there are some new ways to find affordable health insurance on an individual level.  Here are 4 ways that you can find health insurance that fits your budget and medical needs.

Reformed Group Insurance through an Employer

Obamacare has reformed the group insurance model.  While originally set to be implemented in 2014, the employer mandate to provide health insurance has been postponed until 2015.  Still, once it is put in place, you will be able to find health insurance through your employer that puts limits on what you pay for the plan and what your out of pocket limits will be.

The Affordable Care Act requires that employers with more than 50 full-time employees offer medical insurance to all of their full-time employees.  Full-time is defined as anyone who works at least 30 hours per week.  There are different calculations that go into the full-time definition, but just know that if you average 30 hours per week, you must be offered coverage.

The coverage that you are offered must have at least a 60% actuarial value, meaning that on average, for every dollar that the insurance covers, the insurance plan must pay for at least 60 cents.  One of the ways this is achieved is by limiting the individual’s out of pocket maximum.  In 2014, the limit is $6,350 and includes deductible, coinsurance, and copays.

Also, the employer cannot make an employee pay more than 9.5% of their salary to participate in the plan.  If you make $2,000 per month, the most you can pay for your insurance is $190.  Having said this, there is no cap on the cost of insurance for a dependent.

Still, with these provisions in place, you can find health insurance that is probably cheaper and better than before.

Health Insurance Marketplaces

Obamacare created health insurance marketplaces – originally called exchanges – to help people find health insurance plans quickly and efficiently online.  The marketplaces will make the search for a good plan easier than looking for individual insurance on your own.  Everything will be in one place.

While it will be interesting to see if the actual premiums of the plan are any cheaper than pre-Obamacare, some people will get help paying their premiums by way of tax credits (see here for tax credit eligibility).

If someone can find health insurance and use a tax subsidy, a good plan at a low rate will be available.

Parent’s Plan

The Affordable Care Act requires insurance companies to allow children to enroll in their parent’s insurance plan until age 26.  This is very advantageous because many times the cost to add a dependent to a plan is lower than the cost of an individual plan.  In fact, many times a new dependent can be added at no cost since some plans have one premium rate for all children on a plan.  In that case, someone under age 26 can effectively find health insurance that is free.

Medicaid

When Obamacare was passed, it required Medicaid to be expanded in every state.  This expansion will make it easier for adults to find health insurance through this government program.  The Supreme Court took away the requirement, and as a result, many states will not be expanding this coverage.

However, if you live in a state that is expanding Medicaid, check to see if you are eligible for this low cost way to care for medical needs.

Find Health Insurance at an Affordable Rate

When you try to find health insurance at an affordable rate, make sure to be patient and look at all your options.  Good coverage at a reasonable price is available.

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What are the Best Health Insurance Companies for You?

Purchasing medical insurance is not always an easy task.  Trying to decipher between the best health insurance companies takes time and an understanding of what makes a good benefit plan.  Between the different plan designs and carriers available, finding the right fit for you and your family is not an easy decision.

With the requirement that all Americans have health insurance or else face a fine/tax, there will be many people looking for the best place to buy coverage for their medical services.  Here is what to look for when searching for the best health insurance companies.

A Network That Includes Your Doctor

Most health plans now include networks of doctors and facilities.  These networks offer competitive pricing for medical services through discounts and less out of pocket expenses for the policyholder.  If a provider is not in the network of your insurance plan, you will be required to pay more out of pocket through the health insurance plan.  Plus, the doctor or facility can balance bill you, meaning they can bill you for charges not paid through your insurance plan.  Whether you use Blue Cross Blue Shield, Aetna, Cigna, United Healthcare, or any other of the multitude of health insurance companies, if you use a network provider, what you pay through your benefit plan will be all you owe.

The networks of the best health insurance companies can be investigated on their websites.  Before signing up for a plan, make sure your doctor, hospital, lab, etc. are included in the potential network.

Great Customer Service

Since medical and prescription drug insurance plans are not the easiest contract to understand, you will undoubtedly have a question about your plan or how a claim was processed.  The best health insurance companies will have a friendly and helpful customer service.  This customer service should include an understanding of how your plan, and insurance in general works.

Sometimes, a claim will not be paid the way you think it should.  The insurance company should give you an option to appeal, and if the appeal goes against you, they should be able to provide you with a clear explanation of why.

Mobile Apps

One of the services that the best health insurance companies are now incorporating into their services are mobile apps.  These apps allow individuals and families to keep track of their claims, how much they owe for medical services, and how much they have paid out of pocket.  The apps are free and easy to use.

Great Coverage

Before you fall in love with an insurance plan that has a great premium, make sure that it has all of the necessary coverage for your medical needs.  The Patient Protection and Affordable Care Act, also known as Obamacare, requires minimum coverage in order to avoid the individual mandate penalty, but the minimum coverage isn’t a high bar to reach.  Because of this, some companies are offering inexpensive plans that do not cover much.  The best health insurance companies will give you a great price with great coverage.

Low Premiums and Renewals

The saying “you get what you pay for” definitely applies in health insurance.  However, that does not mean that you should ignore the premium.  If you find a few plans that meet your medical needs and offer great customer service and networks, then by all means, factor in the premium.  That’s what competition and the health insurance exchanges are all about.

Also, the best health insurance companies will not offer a low initial premium only to follow it up with a high renewal.

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Top 5 Things To Know When You Compare Health Insurance Plans

When you are young and new to the world of insurance, it is important to know what to look for when you compare health insurance plans.  There are a ton of plans and companies that want to sell you one of their policies.  If you are not careful, you can end up buying something that is not affordable or comprehensive enough.  With that in mind, here are some things to keep in mind when analyzing the right medical insurance plan for you and your family.

The Premium

The premium will probably be what grabs your attention right off the bat.  You cannot compare health insurance options without knowing the premium.  After all, you may not have a claim, but you definitely will be paying something to the insurance company each month.

The problem with only paying attention to the premiums is that you can buy a bad product from a bad insurance company if you just look at how much a plan costs.  Ever heard the saying, “you get what you paid for?”  The same goes with an insurance plan.

While the premium is important, especially with the increase in the cost of medical care, there are other things that must be considered when you compare health insurance plans.

The Benefits Available

Some plans cost less on a monthly basis because they leave more for you to pay out of pocket if you were to get sick or be in an accident.  If you want a plan that leaves you with less of a financial responsibility then you will have to pay more in your premium.

The main benefit provisions to look for are the deductible, coinsurance, copays, and out of pocket maximums.  As you compare health insurance benefits, be sure to take into account what you are willing and able to spend if you were to have a large medical expense.

The Network of the Insurance Company

Most insurance companies have networks of doctors that they contract with to provide lower cost healthcare services.  The billed charges of the services are discounted through the network, but in exchange, doctors and hospitals are able to attract more patients.

As you compare health insurance plans, make sure to choose an insurance company that has a network that your healthcare providers are a part of.  Do not just think of your family doctor.  Remember specialists, labs, and even pharmacies.  You can find yourself having to change doctors or pay big sums of money out of pocket if your provider is not in your new insurance company’s network.

The Health Insurance Marketplaces

The health insurance marketplaces, or exchanges, outlined in the Patient Protection and Affordable Care Act (PPACA), or Obamacare, are online locations where individuals and small businesses can quickly and easily compare health insurance plans.  Do not ignore these marketplaces, as they could have good options for you.

That does not mean that the marketplace is a better choice than other insurance options.  But it might be, so check  it out.

Tax Credits

Something that might make your decision easier is a tax credit.  If you make less than 400% of the poverty level, you are eligible for a tax credit if you purchase medical insurance through an exchange.  Check on this as it can help bring down the cost of a health insurance plan.

Compare Health Insurance Plans to Find the Best Fit

It can be time consuming, but if you want the most affordable and comprehensive plan for you and your family, make sure to take the time to compare health insurance plans in every way possible.  If you look at health insurance marketplaces and take into account premiums, plan designs, and networks, you can find a great fit.

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What is a Summary of Benefits and Coverage (SBC) and Why is it Important?

When you are new to the world of health insurance things can be confusing.  What is my deductible?  What is the most that I have to pay out of pocket?  Do my copays count toward my out of pocket maximum?  With many medical plans, the language of the plan summaries are hard to understand, and is can be difficult to compare plans on an apples-to-apples basis.  Under the rules and regulations of the Patient Protection and Affordable Care Act (PPACA), more commonly referred to as Obamacare, plans can be more easily compared using the Summary of Benefits and Coverage (SBC).

The entity that is insuring the plan is responsible for supplying the SBC.

How Does a Summary of Benefits and Coverage Make Things Easier?

An SBC is no longer than 4 pages (can be front and back, so really it is 8 pages long) and should be written in plain language.  It should also be in 12-point font.

All health insurers (whether insurance companies or self-funded plan sponsors) must insert plan design wording in predetermined rows and columns using the exact same wording, format, and layout.

These two features of the SBC make reading and comparing benefit designs an easier process than it used to be.

What All Must Be Included in a Summary of Benefits and Coverage?

An SBC must also include the following:

  • Coverage examples and expected out of pocket expenses for having a baby and managing Type 2 Diabetes.
  • A glossary of common medical and insurance terms.  This glossary must be provided upon request. <link to my own glossary>
  • A website and phone number where plan subscribers can receive additional information about their medical insurance plan.
  • The exceptions, reductions, or limitations of coverage
  • Provisions of renewability and continuation of coverage

Who Is Responsible for Supplying the Summary of Benefits and Coverage?

The entity that is insuring the plan is responsible for supplying the SBC.  That means that if the plan is an individual plan, then the insurance company provides the SBC.  If the plan is a fully-insured employer group plan, the insurance company provides the SBC.  If the plan is a self-funded employer group plan, then the employer provides the SBC.  If you are not sure if your employer plan is fully-insured or self-funded, ask your benefits department representative.

When Should a Summary of Benefits and Coverage be Supplied?

The SBC must be provided in electronic or paper format.  There are several scenarios about when it should be distributed to plan subscribers, but in all cases it must be provided near enrollment, or within 7 days of being requested.

Why Is a Summary of Benefits and Coverage Important?

One of the biggest complaints about health insurance is that it is too complicated for many people to understand.  With a Summary of Benefits and Coverage, a subscriber to an insurance plan, or someone considering an insurance plan, can easily read the plan benefits available to them.  When the decisions must be made about which plan to choose, the Summary of Benefits and Coverage helps people weigh the plan design and premiums to determine what is right for them and their family.

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