Category long-term health insurance

One question we field almost on a weekly basis is: “What is health insurance going to cost if I retire before 65?” Under the Affordable Care Act, it is not an easy question to answer because everyone’s situation is different.

When trying to budget for individual health insurance it’s important what time of year you decide to retire. Other factors include both incomes, out of pocket expenses, and policy effective date.

medicine, age, health care and people concept - senior woman, man and doctor with tablet pc computer at hospital ward

For Indiana and the rest of the country, an early retiree will have access to the federally facilitated marketplace to purchase an individual insurance policy. One can qualify for premium assistance if their income is under 400% of the federal poverty level. If you retire in the middle of the year, your yearly income could be above that threshold. This would disqualify you for premium assistance. If you retire at the beginning of the year, your taxable income could drop, and you could qualify for assistance. Premium Assistance can be the difference of paying $400 or $1,400 a month per couple depending on when you retire.

The time of year in which you retire could also impact your out of pocket maximum. If you or your spouse have paid toward your deductible or out of pocket maximum. You will want to elect Cobra continuation for the rest of the year. An individual policy will not give you credit for having already paid into your deductible.

From a health insurance standpoint, an early retiree should consider retirement at the beginning of the calendar year.

In 2020, individual health insurance options for Indiana are from just two carriers CareSource & Ambetter. Both carriers only offer their plans through the federally facilitated marketplace. Click here to use our tool to review your options.

If your household income is above 400% of the federal poverty level you will not qualify for premium assistance. With an early retiree, your taxable income may drop below that 400%, which would make the monthly cost more affordable.

For a 60-year-old in Marion County, the lowest costing plan without assistance would cost $716 month. With a projected income of $40,000, your monthly cost drops to $105 for the same plan with assistance. That is a big difference especially if there are two members of the family to be insured.

When it comes to the plan designs, these Indiana health insurance plans have large deductibles and out of pocket maxes. The lowest deductible being offered is $950. This would cost a 60-year-old $1,273 a month without premium assistance. The lowest costing plan would have a $7,700 deductible. Most of the time electing Cobra for 18 months may provide a better plan at a lower cost.

Network access with individual plans may have limitations. It’s important to research each individual carriers’ network. Be sure to confirm you are searing the correct network with your provider. Even if a physician shows in your network, you may want to call their office to confirm. It’s not unusual to have a physician listed as in the network, but who has chosen not to participate anymore. When it comes to retirement, you want to save as much as you can where you can, so it’s important to check all of your options.

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The National Association of Manufacturers (NAM) has launched an association health plan (AHP) that is available in Indiana to start January 1st, 2020. Mercer developed the health plan through UnitedHealthcare.

An association health plan (AHP) is developed specifically for an association and its members. The NAM AHP is operating under the rules where each group/company must go through underwriting to obtain a final rate. This allows for small companies under 50 employees to have an option outside of the Affordable Care Act (ACA) small group market.  

A healthy group could experience a 30% decrease with the AHP vs. the ACA small group plans. The savings come from the underwriting process and how rates are calculated with age bands. The ACA has a restriction on what the scale can be between the youngest and oldest members.

How do I get a proposal on the National Association of Manufacturers (NAM) Association Health Plan here in Indiana?

  • 1st Your company’s nature of business needs to be manufacturing.
  • 2nd You will need an employee census.
  • 3rd Contact Nefouse & Associates, and we can deliver your proposal. 

 Requirements of the AHP

  1. 50% of your full-time employees must elect coverage.
  2. The employer must contribute at least 50% of the employee on premiums.

Do we have to complete applications?

  1. Groups with less than four employees will have to complete applications.
  2. If the group is over 5 employees electing coverage, you do not have to complete applications. UHC is using an underwriting technique to retrieve pharmacy history, which allows them to determine risk.

 The NAM AHP is another group health option for Indiana manufacturing employers with less than 100 employees.  

 

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Short term health insurance has gone through an exciting evolution since the passing of the Affordable Care Act.  Before the ACA going into place, the short term was a health insurance policy that you would use to ensure against major medical claims for a short period.  The most common use was coverage in between jobs.

Affordable Care Act Effect

With the passing of the Affordable Care Act, short term health insurance was becoming a product of the past.  The individual market quickly went to the exchanges, and many people were eligible for premium assistance.   This created very little demand for short term coverage.

By the second year of the ACA, people had real frustrations with the marketplaces, networks, & the skyrocketing premiums. Most people that were not receiving premium assistance started to look for options outside of the health insurance marketplace.

Suddenly, short term health insurance attracted a lot of membership because of costs, PPO network, and what appeared to be low out of pockets. This led to a lot of companies offering short term health insurance.

Short-Term Requirements

To be eligible for a short-term policy, one must go through medical underwriting, and these are where they can get denied for a preexisting condition. The medical underwriting is the reason the insurance coverage is a quarter of the price of ACA policies and why the insurance companies spend less than 50% of the premium collected on actual claims. Low consumer prices and high-profit margins created a short-term market.

In the last few years, there has been a lot of public confusion on short term coverage. This confusion was created by both agent distribution channels and people not willing to read the brochure much less the policy. Typically, the second to last page of the brochure will list most of the exclusions, but there have been additional coverages or situations where there was no coverage. The enrollment process has been a bit suspect where many completed an online enrollment with a couple of questions and a form of payment.

These enrollment procedures and the general public desperate for premium relief led to policyholders having significant issues when it came time to file claims. Post Underwriting became the primary technique of insurance companies to validate a claim. This is when the insurance companies look to deny a claim based on it being preexisting, they would order medical records from the last five to seven years. The medical records would take weeks to be released, which could lead to a disruption in care.

The Future of Short-Term

As we enter 2020, short term coverage has changed from both a coverage standpoint and length of the term. There has also been greater oversight by government bodies like the Indiana Department of Insurance.  The short-term plans must go through an approval process with the state like what permanent insurance plans are required to do.

The new policies have broader coverage and less a gray area exclusions.  In Indiana, you can now purchase a short-term plan that has a term of two years. This is a game-changer.

These policies are no longer just for healthy young people. We are seeing families of five purchase these policies.  The premium saving is enormous for those that do not qualify for premium assistance. A family of five may cost $1,800 a month on the exchange and still have a $6,000 deductible. That upper-middle-class family is spending $21,600 in premium and then potentially another $12,000 in out of the pocket expense. That’s $33K a year in health care! It’s challenging to stay in the middle class with that kind of expense. A short-term policy may cost $600 a month with similar deductibles and out of pockets. The family is taking on additional risk where coverage may be limited or not covered at all, but families have to look at the pros and cons.

The most important is you don’t omit any health conditions on the applications. If the condition is listed and they approve you, there is a much higher chance of getting a denied claim covered.  If you are buying a policy to cover your family, take the time to read the brochure. Purchase the policy from a reputable carrier and broker that is local and cares about their reputation.

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