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Covered California Q&A

Covered California and Obamacare related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.


February 2012 Archives


HRA as Secondary Insurance?

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Question: I am the fortunate position that I am covered under my spouse’s insurance at a fantastic rate (group health PPO). I’m about to start a fulltime job which offers an HRA “health plan” as a medical benefit option. If I enroll in that plan, will I receive medical care under the PPO as usual and then use the HRA for copays, etc. like I do for an FSA? Or will the HRA qualify as my “primary insurance”? There are levels which are for myself only, myself + spouse, myself + family. My birthday comes first in the calendar year, and will my children also be treated with my insurance as primary if I include my family members?

Answer: HRA plans are very flexible and I’d have to know more about how your employer’s plan is structured to give you a precise answer. But I’ll step out on a limb here and say that you can continue to use your wife’s health insurance coverage primarily and utilize your employer’s HRA plan to reimburse your (and your dependents’ if you add them) out-of-pocket medical expenses. This would be a win-win for both you and your employer, though not for your spouse’s employer.


Continuation of Coverage

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Question: If you loose insurance coverage due to layoff and you are being treated at the time does company have to cover you?

Answer: Yes. Upon termination, your company is responsible for making COBRA coverage available to you. However, it is your responsibility to make the entire premium payment to maintain that coverage. If you do so, coverage for your ongoing treatment will be seamless.


Question: Why can’t i choose to be the primary health insurance for my children if my coverage is better than my husband’s?

Answer: It’s not up to you to decide which plan is primary. When dependents are covered on both parents health insurance, Coordination of Benefits (COB) rules come into play. Most states have adopted these rules though they can vary some from state to state. In general, when deciding which parent’s health insurance coverage is primary on claims for double-covered dependents, the “birthday rule” applies. That is, the plan covering the parent whose birthday falls earlier in the year pays first, and the plan of the parent whose birthday falls later in the year is secondary. And if these parents have the same birthday, the plan covering the parent the longer period of time is primary.


Group Health Opt-Out Rules

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Question: My husband has a new job. Can I cancel my current health insurance with my company and enroll with his new health insurance plan?

Answer: Your husband’s new job is not an acceptable reason for you to opt out of your own employer-sponsored health plan. You may do that at the next open enrollment period. However, you can’t be added to your husband’s health plan until his plan’s open enrollment period unless you have a “qualifying event” like loosing your coverage through termination. These rules may seem arbitrary are in place to protect employers and insurers against adverse selection.


Question: Are large employers expected to use the exchanges?

Answer: Yes. William E. Kramer, Executive Director for National Health Policy at the Pacific Business Group on Health (PBGH) pointed out in a recent paper, “In the short term, from 2014 to 2016, many of these employers are giving serious consideration to using the exchanges to help provide coverage for part-time workers and for retirees not yet eligible for Medicare. In the long term, beginning in 2017, some large employers are considering using the exchanges to provide coverage for all of their employees. Costs, human resources strategies, and competitive pressures, as well as state and federal policy, will be the likely drivers of large employers’ decisions about whether—and how—to use the exchanges.”

We know that some large employers have already asked their health benefit advisers to “run the numbers” on various scenarios that involve paying the play of pay tax and directing some or all of their employees to the individual Exchange in 2014.


Question: If i am terminated from my job and have to go onto my husbands insurance will my cancer diagnosis be considered pre existing?

Answer: Your cancer diagnosis is a pre-existing condition for any insurance you would apply for going forward. If your husband’s coverage is group health insurance, your pre-existing condition will not prevent you from becoming insured on his plan. If his coverage is individual health insurance then your cancer diagnosis will cause you to be denied coverage. If that is the case, you have 2 other options COBRA and HIPAA health insurance coverage.


Does employer contribute to COBRA?

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Question: Is an employer responsible for a portion of a terminated individual’s deductible in a group HDHP?

Answer: The employer is not responsible for any part of your COBRA premium, but you asked about the deductible which adds an interesting angle. If your employer was reimbursing some portion of your out-of-pocket medical expenses (below the annual deductible) while you were employed, it’s possible that there is a Health Reimbursement Arrangement (HRA) in place which would spell out whether former employees are to be covered by the HRA while on COBRA.


Question: I have a question about the new health care reform. I have a son that just graduated from college and he was on my health insurance where I work (in massachusetts). He will be accepting a new job in california but his company has a "waiting period" of 180 days. So my question is can he remain on my health insurance under the "age 26" law even if he is moving to another state and the fact that even tho hie employer offers health benefits..he cannot get the insurance till the waiting period of 180 days has been completed? Thank you in advance.

Answer: Health care reform - the Affordable Care Act - allows insured parents to keep their sons and daughters on the their health insurance plan (individual or group) to age 26. Since it's a federal law it affects all states equally. When your son moves to California he can stay on your health plan for a few months until he is covered by his CA employer. However, if you have an HMO in MA it will only cover emergencies in CA. PPO works fine out of state. He can get the in-network coverage in CA if he is careful to select the right provider. If HMO, I recommend he purchase short-term health insurance coverage in CA. It's relatively cheap and easy to qualify.


Qualifying Event: Loss of Coverage

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Question: My husband voluntarily left his job and was offered COBRA for both of us. I am employed by a different company and now want to apply for their health insurance, when do I qualify for coverage. Do I have to wait until the Cobra enrollment period (65 days) runs out?

Answer: Your loss of health insurance due to your husband’s termination of employment is considered a “qualifying event” which allows you to join your own employer’s group health plan on the first of the month after loss of your husband’s coverage. COBRA is an option for people who do not have another employer-sposored option as you do.


Question: My husband works for a large mechanic shop. He was offered insurance and was told that I his wife am ineligible for any plan cheaper than $500 a month. Individual plans are much cheaper than this and I find that amount preposterous and the reasoning even more absurd. The employer stated “26 is a time to have babies and thats why it is so elevated”.I have no inclination of having kids and find this frankly ridiculous. Other employee have family members covered for less and some are not covered at all and are not offered free coverage as my husband was offered (maybe due to the fact his been there 2 yrs?) Is this even legal what he is doing? Putting everyone in different groups and classifications of his morbid idealisms and basing his coverage on this?

Answer: I get a lot of these “is it legal” what my employer is doing and the answer is “yes” in most cases. So it is with your situation. First, the employer is allowed to make a greater contribution some employees’ health plan premium by classification. For example, a greater contribution to salaried workers than hourly workers, or management and non-management. Secondly, it is common for employers to make no contribution to the coverage of spouses and children. Finally, group health insurance is usually more comprehensive - includes maternity coverage for example. On average, group health insurance will cover 80% or more of your average medical expenses (actuarial value) versus 60% or less for individual health insurance. But that’s why individual health insurance can be cheaper and if you don’t need the extra coverage (maternity in your case) why pay for it. Click here to compare rates now. I think you’ll be surprised how much you can save.


Question: Can grandparents cover a baby with insurance?

Answer: If you mean, can you add your grandchild to your individual or group health insurance coverage the answer is no unless you are the child’s legal guardian. You certainly can purchase individual coverage for your grandchild - referred to as child-only health insurance. Unfortunately, due to the law of unintended consequences, child-only coverage is impossible to get in most states. The Affordable Care Act (ACA) legislated that no exclusions of coverage would be allowed for children through age 18. The intent of the law was to make health insurance for children guaranteed-issue - meaning they can’t be turned down because of pre-existing conditions.In most states child-only health insurance is no longer available (California being one of the exceptions) because the insurers refuse to comply with the law’s intent. Quite possible, this stalemate will continue until January 2014, when all health insurance is guaranteed issue.


Question: Does my employer have to pay part of my health insurance in California?

Answer: Yes, but only if your employer already sponsors a group health plan for its employees. If so the law says, they must pay 50% of the employees’ premium for the lowest priced plan available. If your employer does not already have a group health plan for its employees, they are not required to pay any part of your individual health insurance expense.


HRA Reimbursement for Dependent?

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Question: I have a healthcare reinbursement account. Our son is 24 and on our insurance. We pay for his out of pocket medicine expenses($330 a month after insurance) because he does not make enough money to afford these medications. We do not claim him as a dependant on our tax return. Can I use my reinbursement account for his medical expenses if we are paying for them?

*Answer: * Your health reimbursement arrangement should allow the reimbursement of prescription drugs for your son. The fact that he is covered on your health plan is key in determining his eligibility fro reimbursement. The fact that you do not claim him for tax purposes is not a factor. I can’t say for certain because HRAs are very flexible and it is possible (though highly unlikely) that prescription drugs are not included as a reimbursable expense on your specific plan or that dependents are specifically excluded.


Question: I am in middle management for a large industrial company and pay for a family plan that covers me and my two children. My wife is a teacher whose school board provides single coverage for her (for a fee) that’s nowhere near as good as mine - she can’t opt out. My employer recently announced that effective May 1, if any of us have a spouse with health care coverage, we need to enroll our children on their plan and be covered only as “single” on our own existing plan. No explanation was given although I suspect that in my industry which is predominantly male, the company wants to save costs by not covering child delivery and other costs not directly incurred by the actual employee. Switching to my wife’s plan would be a) more expensive and b) provide less coverage than my children have now. Is this legal?

Answer: Employers increase employee cost-sharing to order to deal with the ever increasing cost of providing health care benefits for its employees. Generally, this occurs after the employer has absorbed much of the cost increases themselves. Usually this cost sharing takes the form of requiring a larger employee premium contribution or a reduction in benefits. As far as I know, your employer has the right to insist that a spouse or dependent must opt out of your coverage if they have access to coverage through their own employer. Requiring you spouse to cover your children on her employer’s health plan doesn’t seem fair. There is not yet (2014) any law that says employers have to provide health insurance at all, but if they do they must follow federal ERISA regulations that among other things govern “fairness” in the administration to the plan. For a more definitive answer, you will have to ask an HR attorney.


Double Coverage: Who Pays First?

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Question: I have an individual health insurance policy paid for by my employer. I also have the benefit of being on my husband’s health insurance through his employer. I always thought that MY coverage was primary over the coverage provided by my spouse’s employer. But my carrier said group policies are always primary over individual policies. Is this true? (South Carolina).

Answer: Coordination of Benefit Rules were codified by the National Association of Insurance Commissioner in 1986 and each state uses this model with some modifications. The rules cover how the primary payer is determined when an insured employee or dependent has double coverage. For example the rules state that the group plan covering the insured as an employee pays first. To determine who pays first on dependent children’s claims, the plan covering the parent whose birthday is earlier in the calendar year is primary.

The Coordination of Benefits endorsement on group health policies does not apply to individual health insurance policies so they generally pay their full benefits regardless of other group health policies in force. But there are variations between states, it is important that you review the provisions of your individual health insurance policy because they will sometimes include their own provisions about other insurance.


Mother and Newborn Insurance

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Question: I’m 9.5 months pregnant and currently covered under my husband’s group insurance policy. It’s very expensive, but we obviously needed the maternity coverage, so we opted for adding me to his rather than me getting individual insurance. We’d planned on just adding the baby to our plan, but just found out that the cost of this with our current plan is prohibitive and we can’t downgrade the plan for another 9 months (during open enrollment). I have done some research and think the best bet is for him to drop me from his plan 1 month after the baby is born (so my postnatal visits are covered) and for me and the baby to get individual insurance (which is still substantially cheaper than the family plan through his work) as soon as she’s born. My question is about the timeline with the birth and insurance. Since we wouldn’t be adding the baby to our existing plan and instead starting a new plan (which it looks like I can’t do till she’s born and we have her birth certificate), will we have trouble getting coverage? I know we have 30 days to add her to our group plan, but if we’re opening up a new plan, how does that work? I know it can take up to a few months to get new coverage and obviously can’t go without coverage for my child. We’re in Florida and I have no health concerns (other than currently being pregnant!). I’m nervous since we don’t have much time to sort this out. Thanks for your help!

Answer: I’m guessing at 9.5 months pregnant you don’t have much patience for a long-winded answer so I’ll get right to the point. You can apply for individual health insurance - both you and the child together - about 2 weeks after the baby is born. You will need a copy of the initial physical exam for the baby. If the baby has no health issues, you should be able to get coverage starting within 30 days of the baby’s birth. Your group health insurance will cover the baby for the first 30 days after birth. If you have the energy, click here to start shopping for a health plan now - just enter a birth date of a month ago for your child.


Employer Will Not Let Me Opt Out

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Question: My company pays for half of my premium and I pay the other half along with full coverage for my three year old daughter...the deduction for my health insurance had increased...I told my employer that I would like to opt out of the company policy and purchase individual insurance, because I could get a better policy at a cheaper rate and they advised me that I cannot cancel my insurance until open enrollment in November. I was never advised that my premiums were increasing, there was not a meeting, email, nothing letting me know. Can my employer force me to stay on their company plan until November?

Answer: Yes. Apparently your employer did a lousy job of communicating the increase in your health insurance contribution back in November when you could have opted out. Employees should have the option to decline medical coverage or to purchase individual health insurance as long as their decision does not affect the medical rates of those remaining in the plan. Opt-Out provision are restricted to open-enrollment periods because it was determined that about 20 percent of a plan's participants generate 80 percent of the claimed costs in any given year. In most cases, those who opt out of a medical plan are the healthier population; employees expecting high expenses prefer the extra coverage. Since employees with more medical needs tend to stay in the plan, when employees opt out there are fewer premium dollars coming into the plan, but claim and administrative costs do not go down in the same proportion. This results in higher premiums for those remaining in the plan. That's why restrictions are in place for right to opt out.

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