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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.

May 2012 Archives

Question: My employer has told me that he is changing to a defined contribution plan in July. He said that my healthcare it will cost me the same as it did this year but that I will have more choice of plans. Is it a good deal for me or am I getting screwed?

Answer: Compared to the old “defined benefit” plan where employers determined a set of health-insurance benefits, under “defined contribution” plans employers pay a fixed amount for each employee, and employees use the money to buy or help pay for insurance they choose themselves. It’s a good deal for employees in the sense that it puts you in the driver’s seat as far as selecting the plan you want, but if the defined contribution amount doesn’t go up to match the inevitable premium increases for health insurance, it will leave the employee holding the bag for more and more of the costs. It’s a better deal for employers because it puts them in control of their health benefit outlay regardless of health plan rate increases.

Health-Care Reform will push the transition to defined-contribution health insurance in 2014. If most employers do retain their health plans, the state health insurance exchanges created under the law will make the basic idea of a defined-contribution health plan more prevalent, and thus may speed its adoption. If defined-contribution plans that are sufficiently generous count as employer-based coverage — as is generally expected — the trend toward such plans will probably accelerate.

Question: Have you heard if the SHOP will offer the same qualified health plans as the individual exchange?

Answer: The Exchange Board is currently considering how closely aligned the Qualified Health Plans (QHPs) should be between the two Exchanges. Two general issues arise from the alignment question - one is the alignment of insurers and the other the alignment of benefit plans. It looks like the Exchange will go with “partial” alignment in both cases.

The following options are available for alignment of insurers between exchanges:

  • Option A1: Full alignment: Health plan issuers submit qualified health plan applications for participation in both individual and SHOP exchanges in the same geographic coverage regions, and contracts are only awarded to issuers that can serve both markets.
  • Option A2: Partial alignment: Health plan issuers submit applications for participation in both the individual and SHOP exchanges. However, the Exchange would permit health plans that only want to participate in one exchange on an exception basis.
  • Option A3: No required alignment: Health plans may participate in either Exchange.

The following options are available for the alignment of benefit plan offerings between exchanges:

  • Option B1: Full alignment: Benefit plan offerings would be identical in both exchanges.
  • Option B2: Partial alignment: Benefit plan offerings would generally be consistent in both exchanges, with the possibility of some differences to meet the needs of Individual and Small Group enrollees.
  • Option B3: No required alignment: Benefit plan offerings are unique to each Exchange.

The Exchange staff and consultants have made their preliminary recommendation to pursue partial alignment for both plans and benefit design (A2 and B2).

*Question: *My sister is fortunate to work for a company that offers several medical plans to choose from. She was thinking of switching plans at the next open enrollment time but she has been diagnosed with fybroid tumors. At this point they are large enough that medical would cover her for the removal but not critical enough that she has to have them out this very minute. If she waits and changes medical plans during open enrollment time at her company could the new plan refuse to cover the surgery claiming a preexisting condition?

Answer: If as you say the new health plan is a group health plan that has been offered as an option by your sister’s employer, then once enrolled in the new health plan any preexisting condition will be covered. In most states there would be no waiting period either, but just to be safe your sister should check with the new plan to make see if there is a waiting period for any specific conditions.

Question: As an employer with 25 employees, do I have to equally contribute towards health insurance premiums for my employees. Currently I pay for single coverage for all employees. I have some very valuable employees that have been here for over 20 years and I would like to give them employee/spouse coverage without a cost to the employee.

Answer: You may vary your employer contribution to the employees’ premium under your company’s group health plan in several ways. You can contribute different amounts (1) for different classes of employees - hourly vs salaried vs management, for example. (2) for different age groups because rates are higher for older employees, (3) for different locations if rates are higher for some because of ZIP codes, (4) for family status - those with dependents more than single employees. You will have to find another way to provide additional benefits on the basis of length of service alone.

Question: I am planning to retire soon. I been with the same company and on the same insurance plan for 25 years. Can I change my insurance from a company group coverage to an individual coverage. I was told recently that I could not. Can you help.

*Answer: * When you retire (assuming you are not yet 65), you’ll be offered COBRA health insurance. It’s the same coverage you had on the group plan but your employer will no longer be paying for it. It usually comes as a shock to most people when they find out just how much the full premium is. You can stay on COBRA for up to 18 months. Alternatively, you can decide to apply for individual health insurance instead of COBRA. Unlike COBRA, you may choose coverage that’s in line with your budget. Here’s the big obstacle - you must pass the stringent underwriting guidelines to qualify for individual health insurance. It’s been my experience that people of retirement age very often fail to qualify for individual coverage.

One way or another, if you can make it to January 2014, when the guaranteed issue and community rating provisions of the Affordable Care Act (ACA) take affect, you will no longer have to worry about preexisting conditions. You will be able to purchase individual health insurance coverage at the same rate as everyone else in your age and ZIP code demographic. In addition, you may qualify for a federal subsidy that will pay some of your premium. So do what you have to do to get through the next few months. Things will get better.

Question: My 24-year-old son is on my insurance. He gets married and stays on my insurance. His wife is covered on her father’s insurance. She gets pregnant. Her insurance has no maternity coverage. How do they get maternity coverage? How does the baby get insurance for post-delivery?

Answer: Getting maternity coverage for your daughter-in-law is impossible once she is pregnant. The baby is covered for the first 30 days after birth by her insurance coverage. Thereafter, the newborn can be insured under his or her own child-only health insurance coverage within the first month after birth.

Question: I am currently covered by the VA. My benefits will stop in 2013 due to income. I have pre-existing conditions, high blood pressure and cholesterol. My spouse checked with her employer and can get me coverage for around $650/ mo. Will this be the best and most inexpensive choice for me with my conditions?

Answer: When your VA healthcare benefits end in 2013, you probably will not have any other health insurance options than your spouse’s group plan because of your preexisting conditions. Your wife’s employer-sponsored health plan is expensive because it’s probably very comprehensive coverage and that’s why the monthly premium is so high. If you had other coverage options, you would probably choose less comprehensive coverage - a high deductible plan with potentially more out-of-pocket expenses - for a lower monthly premium.

Fortunately, you will not have to pay such a high premium for very long. Thanks to the Affordable Care Act, you will be able to purchase individual health insurance through your state health insurance exchange in January 2014 without being declined or rated-up for your preexisting conditions.

Question: We own a small business and in Alaska and want to have a baby. There doesn’t seem to be any maternity insurance available though. We do not qualify for the state funded Denali Kid Care. Is there any options for us? Thank you.

Answer: You didn’t mention whether you had health insurance or not. If you do not, get some, that would be the first step. Major medical insurance coverage (without maternity) will cover any extraordinary costs connected with having a baby - pretty much everything beyond prenatal tests and normal delivery. Once you are insured against catastrophic loss, you need to start saving for the predictable costs associated with normal delivery, perhaps $10,000.

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