Health Insurance Information
Patient Protection and Affordable Care Act(PPACA)
The PPACA is more commonly known as the Affordable Care Act (ACA) or "Obamacare", and began to take effect back in 2010 as an overhaul to the U.S. healthcare system. This was done in hopes of increasing the quality and affordability of health insurance, lowering the uninsured rate, and lowering the cost of healthcare overall. Most reforms took effect on January 1, 2014, including a mandate for individuals and families to purchase a compliant, private insurance policy or face a financial penalty. Individuals and families are not required to purchase a private plan if they maintain minimum essential coverage through other means, i.e. Employer-sponsored health coverage, Medicare, Medicaid, or Tricare, among others.
While there have been a number of significant changes to what is required as part of a compliant health insurance plan, a few come to mind as being the most important. Individuals can no longer be denied coverage due to pre-existing medical conditions as their coverage is guaranteed-issue. Applicants of the same age and geographic location must receive the same premium rate regardless of gender or pre-existing condition, with the only item impacting premium rate being tobacco use. Additionally, all ACA-compliant health plans must include certain essential health benefits, including but not limited to the following:
- Pregnancy, maternity, and newborn care
- Mental health and substance use disorder services
- Preventive and wellness services
- Prescription drugs
- Emergency services
- Rehabilitative and habilitative services and devices
Plans also follow guidelines with maximum out-of-pocket limits, as well as metallic tier levels (Bronze, Silver, Gold, and Platinum) to distinguish premiums and out-of-pocket costs. This is covered in more detail below.
The ACA also established federal and state-based exchanges to facilitate the sale of health insurance plans to individuals and businesses. The Exchanges, also commonly referred to as Marketplaces, are regulated and administered at either the state or federal level. States can opt-out of setting up a state-based Marketplace and instead utilize the Federal Marketplace. Note: Texas does not have a state-based exchange and uses the Federal Marketplace.
Health insurers in Texas can sell their approved, compliant plans through the Marketplace, or off-Marketplace directly to consumers. Really, the only reason for an individual or family to purchase a plan on-Marketplace is if they qualify for a subsidy or tax credit based on income levels, in order to help pay for their monthly insurance premiums. A subsidy/tax credit can only be used with a plan purchased on-Marketplace. Furthermore, the ACA has defined enrollment periods for individuals and families to apply for coverage or change plans.
For 2016, the Open Enrollment period will run from November 1, 2015 through January 31, 2016. Outside of Open Enrollment, individuals/families can qualify for a Special Enrollment period based on the occurrence of a qualifying life event.
The law itself is close to 1,000 pages long, and a great resource to refer to for most all of the important details is the Kaiser Family Foundation.
Texas Benefits Advisors is certified to sell on- and off-Marketplace plans. Contact Us for details, or view rates at.....
Types of ACA-Compliant Health Insurance Plans
As mentioned above, insurance companies now label plans in metallic tier levels: Bronze, Silver, Gold, Platinum. This helps distinguish general differences in premium and out-of-pocket costs, and should provide more consistency for consumers to help simplify shopping for coverage. Bronze plans will have lower monthly premiums and higher out-of-pocket costs, and vice versa for Platinum plans. Furthermore, each metallic level dictates the percentage the plan pays of the average overall cost of providing essential health benefits to plan members. The percentages the plans will spend on average are....
- Bronze: 60%
- Silver: 70%
- Gold: 80%
- Platinum: 90%
This is not the same as coinsurance, in which you pay a specific percentage of the cost of a specific service and your insurance pays the rest.
Note: Regardless of what metallic level plan you get, there are maximum out-of-pocket limits that reset each calendar year. For 2016, the maximum is $6,850 for an individual and $13,700 for a family plan. **This does not include your insurance premium payments.
There are essentially two types of heath insurance: Fee-for-Service and Managed
Care. Although these plans differ, they both cover an array of medical, surgical
and hospital expenses, and to be considered ACA-compliant they must provide certain minimum essential benefits.
These plans generally assume that the medical professional will be paid a
fee for each service provided to the patient. Patients are seen by a doctor
of their choice and the claim is filed by either the medical provider or the
- Managed Care
The vast majority of Americans have some form of managed-care plan. Various
plans work differently and can include: Health Maintenance Organizations
(HMOs), Preferred Provider Organizations (PPOs) and Point-Of-Service (POS)
plans. These plans provide comprehensive health services to their members
and offer financial incentives to patients who use the providers in the
plan, or 'in-network' providers. These types of plans are offered within the different metallic levels noted above.
An HMO plan typically has a lower monthly premium and per-visit costs compared to a PPO or POS plan, but there are some important differences. A member of an HMO will usually have to select a primary care physician (PCP) to coordinate their care, which usually means getting referrals to see specialists. The network for an HMO is typically within a local, metropolitan area and the plan will usually provide limited or no benefits if a member seeks medical attention outside of that network. As a result, the member may incur the full cost of a medical bill.
Texas Benefits Advisors generally recommends a PPO plan if available and if the premium falls within your budget. They are much more flexible with choice of doctors and facilities and they usually do not require the selection of a PCP and referral to specialists. It is also our opinion that there is less financial exposure with in- and out-of-network benefits provided by the insurance company.
Texas Benefits Advisors represents all major Companies with TX plans. Contact Us for details, or view rates at......
Health Savings Accounts (HSA)
A Health Savings Account (HSA) combines a qualified, high-deductible health insurance plan with a tax-favored savings account to be used for qualified medical expenses. Funds deposited in the savings account can be used to spend down the deductible, and once it is met, the insurance plan starts paying benefits, many times at 100%. The funds you contribute to the savings account are 100% tax-deductible up to a specified limit and they earn interest. The contribution limits for 2016 are $3,350 for an individual and $6,750 for a family. These limits increase by an additional $1,000 if the account holder is 55 years of age or older.
The health insurance component of an HSA also has limits to its deductible and maximum out-of-pocket amounts for the year. The minimum deductible for an individual can be no less than $1,300 and $2,600 for a family. The maximum out-of-pocket amount for an individual is $6,550 and $13,100 for a family, not including premiums.
An HSA can more or less be compared as an IRA for medical expenses. The primary advantages of an HSA are.....
- Contributions are 100% deductible up to the legal limits
- Withdrawals to pay qualified medical expenses are tax-free
- There is no 'use-it or lose-it'. Unused funds carry over year to year.
- Interest earnings accumulate tax-deferred
- Use tax-favored funds to pay for some qualified medical expenses that may not be covered by insurance benefits, i.e. vision and dental
Texas Benefits Advisors offers a variety of HSA-qualified, ACA plans. Contact Us for details, or view rates at.....
Short-Term Medical Plans
These types of plans can provide a good temporary solution for yourself and family to protect against unexpected medical expenses during transition or temporary gaps in coverage. Now that there is a defined Open Enrollment period with the ACA, these plans can come in very handy for those who don't qualify for a Special Enrollment and need protection until Open Enrollment. Plans can be setup for a time frame ranging from 1-11 months, and in many instances they can be renewed for an additional term.
Note: Short-term medical plans are not ACA-compliant and do not meet minimum essential coverage requirements. With this, you could incur a tax penalty by not having an ACA-compliant plan for an extended period of time.
Some scenarios where a short-term medical plan makes sense....
- More affordable than major medical plans, and do not need coverage for existing medical conditions
- Waiting for employer benefits to start
- Outside of temporary or seasonal employment
- Recent college graduate looking for employment
- Recently retired and waiting for Medicare to begin
- Waiting for Open Enrollment and COBRA is too expensive
As noted, short-term medical plans are not ACA-compliant and they are not required to provide the minimum essential benefits that are mandated by the ACA. Please keep in mind these plans are intended to provide temporary financial protection due to an unexpected medical expense. Some limitations and exclusions for these types of plans are as follows....
- Do not cover preventive and wellness services
- Do not cover pre-existing medical conditions
- Can potentially be denied coverage
- Limits on prescription coverage
- Potential for tax penalty as not ACA-compliant
Texas Benefits Advisors offers short-term medical plans through several major Companies. Please Contact Us for information and rates.