InsurancePickle.com Articles

We already know that the term “Affordable” was used with an excessive amount of creative license. We should not begin to get the words “success” or “successful” anywhere near anything to do with the health insurance exchanges.

As you would see from my other articles, the only real purpose of the exchanges is to facilitate the subsidies. Those folks that do not need subsidies should continue to steer clear of the exchanges. And, clearly some folks that are receiving heavy subsidies, cannot afford to put money out and wait to get money back at tax time. But, what about the folks that can? Should they not be allowed to go to the insurance company directly (directly through their broker, of course), pay the full premium, and just submit that each year on their tax return to get the credit?

The insurance companies’ web sites have been up and working for years. The idea of private exchanges has been working for years. The InsurancePickle.com Private Exchange has been around for ~14 years. We just did not know it was called a “private exchange” until that phrase was invented in the last couple of years.

The idea of the exchange is fine as an idea, but limit its purpose to letting people who qualify for Medicaid and heavier subsidies do their transactions. Let everyone else CHOOSE how they would like to proceed.

This one is easy. If you do not qualify for a subsidy, then do not go through an exchange. It takes you through needless hurdles and background checks that you otherwise do not need to face if you avoid the health insurance exchange. And, right now it is a very slow process due to the demand on the computer servers. In DC, however, you can only go through the exchange as plans are not sold off the exchange there. Otherwise, the exchanges really serve one purpose and that is to facilitate the subsidies. They first determine whether you qualify for a subsidy and what your portion of the premium is. Then they match your payment with the government payment and send that amount to the insurance company that you choose.

For the most part, insurance companies are trying to keep it simple and are offering the same exact plans both on and off the exchange. The plan is the same, the benefits are the same, the cost is the same and the payment to the broker is the same as well. Yes, brokers will still get paid the same whether they take you through the exchange, or whether they take you directly to the carrier. Though, the amount brokers get paid is drastically lower than pre-ACA. So…please be sure to support brokers through this process. The state is otherwise paying money to train people without insurance backgrounds to get licensed to help people on the exchange. Yes, they will be legally able to help folks once they have a license. But, I would not go as far to say that most will actually fall in the category of “qualified” to do so. And, as always, it costs you nothing to use a broker. You are actually put at a disadvantage without a broker because then you have to be completely reliant on the information you get from the customer service representative. You always have the option of calling the company directly, but with a broker, you will gain an advocate and an advisor — not just in picking the plan, but with claim issues, billing issues, canceling a plan, etc.

Moving on…Let us see if you qualify for subsidies. Here is a link to a subsidy calculator if you want to find out the actual, ballpark amount (ballpark, because you are still guessing your income for 2014). Or, you can look in the chart below for a quick glance to see if you qualify.

You qualify for subsidies IF you fall in one of these categories:
$11,490 to $45,960 for individuals
$15,510 to $62,040 for a family of 2
$19,530 to $78,120 for a family of 3
$23,550 to $94,200 for a family of 4
$27,570 to $110,280 for a family of 5
$31,590 to $126,360 for a family of 6
$35,610 to $142,440 for a family of 7
$39,630 to $158,520 for a family of 8

Where you fall in the category is what the calculator will help you with. If you are below the lowest level, then you should qualify for Medicaid (welfare). And, if you are above the highest level, then you exceed 400% of the FPL (Federal Poverty Level) and do not qualify for governmental premium assistance. Towards the lower income levels of that scale, there are additional assistances with deductibles and such as well, but I will not get into that here. Because, if you qualify, you will learn about that as you go through the process.

Your take away here is, if you qualify for a subsidy, call your broker and buy a plan through the health insurance exchange. If you do not qualify for a subsidy, then call your broker and buy a plan off the exchange. And, if you live in DC, just call your broker. Lastly, since it is not worthy of its own separate article here, DC runs their own exchange, Maryland (MD) runs their own exchange, and Virginia (VA) chose to do nothing which gives them the federally operated exchange. There are 26 states, including Virginia and Pennsylvania, that have decided to let the federal government run their exchange. Here is a link to the complete breakdown of state decisions for creating health insurance exchanges.

“I thought I could keep my insurance” is a common statement that I hear from the phone almost daily. Let me clarify. Many health insurance plans that existed in March 2010 are eligible for grandfathered status; therefore, they do not have to meet all the requirements of the Affordable Care Act (ACA). But if the policyholder, the insurance company, or employer make changes to the plan, then the plan can lose that status.

If you bought a plan or changed your deductible to an existing plan after March 2010, then your plan is NOT grandfathered and you will, between now and the anniversary of your policy, need to get a new plan. If you have a grandfathered plan and it is meeting your needs, then I would strongly consider holding on to that plan as long as possible. If a new plan is cheaper because you are on a HIPAA policy or other high-risk plan, then getting a new plan now would probably be wise.

The Affordable Care Act introduced metal levels of coverage (bronze, silver, gold, and platinum) to hopefully “level the playing field” and make shopping for insurance so much easier. I am not sure why people cannot tell the difference between a $1000 deductible and a $5000 deductible without an additional label on it. I am only sure that the metal plans added an additional level of complexity to an already confusing situation. Because, as brokers, we needed to go through a fair amount of training to be certified to sell insurance through the exchanges. When in training in Maryland, the consultant explained the bronze level plans as covering “60% of the consumer’s bills.” And, that is not how it works. I, of course, tried to explain it to the consultant, and that did not work either. So, if I can explain this to you, then you will know more than the “experts.”

First, before I make your head hurt, let me explain how you can use the metal levels to actually help you. Ultimately there really is one good use, and that is to simply categorize the health plans for budgeting purposes. If you live in Maryland, DC or Northern Virginia, you can go directly to http://carefirst.insurancepickle.com and get rates (Please make sure to use that link when you apply. You can also go to our health insurance quote page and we will email them to you).

You will note that the lowest cost rates tend to be the bronze, followed by the silver, gold, and then platinum. If you are budget conscious, then you can find your home quickly. However, if money is no object, then you DO NOT automatically go to the gold and platinum plans. You should do the math to see if they make sense. Bottom line is that their usefulness is basically to group the plans. You will notice tight ranges of deductibles in each category, so if you compare CareFirst to United Healthcare (which we can help you with), it should make an extremely daunting number of options just a daunting number of options.

Now on to the more difficult part. You will see many metal plans labeled “Bronze 60%,” “Silver 70%,” “Gold 80%,” and “Platinum 90%.” Your best bet is to ignore the percentages, because they have ABSOLUTELY NOTHING to do with how the plan actually works FOR YOU. It ONLY has to do with how the plan works, 1) relative to the other metal plans (but not in accordance with any percentage), and 2) how the plan works ACTUARIALLY speaking.

Actuaries develop plans by knowing that out of a group of people, some people will not use the coverage at all, some will have moderate use, and the smallest percentage will have excessive use of the plans. An actuary’s job is to determine how much that is. You can read this 21 page document on actuarial values to really break it down. Or, to be super nerdy, like me, you can download the actual Excel actuarial value calculator that the insurance companies used to develop the plans.

But, if you want to know a hip shot example that explains it in general terms, just understand what follows. Let us assume you take a group of 100,000 individuals and then assume that group collectively uses $100 million of medical services. With a bronze plan, you would assume that the insurance company would cover around $60 million of those costs (the 60% which is generated by the premiums paid by the policy holders); the other $40 million (40%) would be paid by the policy holders of that plan through deductibles, copays and co-insurance. Just keep in mind that the $40 million is not split equally among the policy holders, because half of them never stepped foot in a doctor’s office, and therefore never paid anything towards their deductible or ever paid a copay.

Why was the consultant wrong when she said “Bronze plans will cover 60% of a consumer’s costs?” If you have a $3,000 deductible and only have $2,500 of medical bills for the year, then you will pay 100% of your costs and the plan will cover ZERO percent of your costs. Going back to what I said earlier, the 60% (or 70%, 80%, 90%) does not have anything to do with you…just you and nearly 40 million of your closest friends…actuarially speaking.