Here at Nefouse & Associates, an Indiana Health Insurance Agency, we still provide individual and family health insurance policies. We were one of the first pioneers in Indiana for providing health insurance coverage under the Affordable Care Act.
The individual health insurance market has changed a great deal under the Affordable Care Act also known as “Obama Care.” When the ACA was first passed there were a great deal of health insurance companies offering individual policies, and most of those companies have exited the individual market.
Before the ACA was passed, individual health insurance required medical underwriting. Medical underwriting would determine if a policy would be issued based on current and past health history. With the ACA individual health insurance companies are prohibited from underwriting and now are required to issue all policies which is called guaranteed issue. Guaranteed issue is one of the most critical aspects of ACA.
In today’s market, there are few options when it comes to individual health insurance. Currently, Indiana has just two insurance companies offering coverage which can only be purchased through the marketplace. With purchasing a policy through the federal exchange, a policyholder may also be eligible for an advanced tax credit (ATC). The ATC is determined by household income, if one qualifies for the tax credit, that can significantly reduce the monthly premium. Under the ACA, a qualified recipient would pay no more than 9.5% of their household income in premiums. To be eligible for the ATC, household income must be under 400% of the federal poverty level. Applying for the federal tax credit has become complicated because one must project what they think their income will be. If the income expected is understated, then you could end up having to pay the tax credit back when you file your taxes.
A popular solution for people who are healthy and do not qualify for assistance on the federal exchange is a short-term health insurance policy. These policies are not considered credible health insurance under the ACA because they require underwriting. With the under the premiums are typically 60%-70% less than a plan purchased through the exchange. A short-term policy does carry considerable risk as it will not cover any pre-existing conditions. Most insurance companies that offer short term will all use a technique called post underwriting. When a claim is submitted, the insurance company will request medical records before paying the claim.
In most situations, short-term policies have a six-month term and then they expire, requiring the insured to apply for a new policy. If the member incurred a diagnosis during that six-month term, then they could be denied coverage and uninsurable. There are a few insurance companies that will offer 4 x 3 short-term policies, whereas there are four their month short-term policies that are issued based on one application.
When someone retires before they are Medicare eligible, health insurance should be addressed prior to making that decision. The cost of the individual policy is based on age and plan design. The cost for people that are in their late 50’s and early 60’s can be significant. It’s important to determine if an early retiree will be eligible for the advanced tax credit through the marketplace. If you qualify then the health insurance premium can be affordable, if you do not qualify for the tax credit, you may be better off taking Cobra for 18 months if that is an option. The time of year you retire is also significant because if you or your spouse has already met your deductible and out-of-pocket max, you may want to delay purchasing the individual policy until open enrollment.
Under the Affordable Care Act, you may only purchase an individual policy during a set time called open enrollment. This typical will start November 1st, and end December 15th and these policies will have an effective date of January 1st. The only exception to this is if you have a qualifying life event (QLE).
A qualifying life event will allow the purchase of an individual health insurance policy outside of open enrollment. A few examples of QLE would be the involuntary loss of prior health insurance coverage, moving to a new state, getting married, and being denied Medicaid or children’s health insurance coverage. Depending on the qualifying event, you may have less than 60 days to apply for coverage.
Individual health insurance policies under the ACA have been designed to cover the essential benefits. Which includes prescription drugs, laboratory services, rehabilitative services, hospitalization, outpatient, emergency room services, mental health, substance abuse, maternity, pediatric, and preventive care services. All health plan is required to provide these services to be considered creditable coverage.
Deductibles under the ACA have continued to rise as permitted by the law. Very few companies offer a deductible lower than $1,000, and most plans have $5,000-$6,000 deductibles. The high deductible reflects the rising cost of healthcare, and it appears they will continue to rise.
The out-of-pocket maximum is the most an insured will pay out of pocket in one year in the network. The current out-of-pocket maximum for an individual is $7,900 and for a family is $15,800. There are plan designs that have lower out-of-pocket costs, but it is rare to see anything less than $6,500 for a single.
Under the essential benefit of the ACA, all creditable individual health insurance must cover prescription drugs. Insurance companies do have a drug formulary which is a list of drugs they cover. This means some drugs they do not have to include, and some brand name drugs may apply toward the deductible. One benefit under the ACA is a medication may be covered at 100% at no cost to the insured.
Prior to the ACA, the PPO network was the most common for Individual insurance policies. In today’s market, EPOs and HMOs are the types of networks the insurance individual insurance companies use. It’s essential to research the network to determine if all your current doctors are in the network.
We do provide insurance to seniors who have turned 65. This segment of personal health insurance can be confusing and overwhelming. Here at Nefouse & Associates, we offer the solution so you will not be inconvenienced when it comes to health care.