INDIVIDUAL MAJOR MEDICAL HEALTH INSURANCE (UNDER 65)

A lot of people are confused when we use the term individual insurance. Individual coverage is health insurance you purchase on your own outside of health insurance offered by an employer. In other words, it’s “NON-Group” plans. The industry term is IFP, (Individual and Family Plans).

Individuals can purchase health insurance for themselves and family members from insurance companies directly (Off Exchange), or indirectly via the Marketplace (On Exchange), or Direct Enrollment Pathways. In SD, IA, and NE we use the Federal Exchange at Healtchare.gov. MN uses their own state-based exchange called MNsure.

The main purpose of the Marketplace or exchange is to connect consumers to tax credits to reduce the cost of premiums and in some cases eliminate them if they are within income and eligibility guidelines. Premium Tax Credits (PTC) eligibility is determined by Household income, family size, tax household (family members on your tax return), and the availability/offer of affordable or unaffordable employer coverage.

All actual Major Medical plans sold today must follow the rules of the Affordable Care Act (ACA).  Here are some of the changes the ACA mandates.

1. Eliminated Underwriting
2. Created Open Enrollment Periods
3. Eliminated Spending Caps
4. Eliminated Pre-Existing Conditions Limitations
5. Preventive and Wellness Benefits at No Cost to Members 
6. Required Coverage for Mental Health and Substance Use Disorder Services 
7. Required Coverage for Pediatric Services Including Oral and Vision Care

The ACA standardized and defined the coverage, so plans are very similar from carrier to carrier.  The biggest difference is the provider networks, where you can use coverage, and where you can’t.  You should always know BEFORE you go.

Under the rules of the Affordable Care Act, people under 65 can enroll during the Open Enrollment Period each fall. The Open Enrollment Period begins on November 1 and continues through December 15th for coverage that begins on January 1 of the new year.

Qualifying life events create a Special Enrollment Period (SEP) for people losing coverage and, in some cases, to obtain coverage outside of Open Enrollment even though they have been without coverage. Typically, you have 60 days from loss of coverage to obtain new coverage or 90 days from a loss of Medicaid coverage.

If you miss the deadline to choose and enroll into coverage in a timely manner, you can find yourself without coverage and will have to wait until the next Open Enrollment Period for coverage that will start January 1 of the following year.

Sudden illness and pregnancy are NOT qualifying life events or Special Election Periods, unfortunately.

Plan termination for NON-PAYMENT is also NOT a qualifying event. It is extremely important to pay premiums on time to avoid LOSS of COVERAGE.

At Pernell Insurance Agency, we have years of experience helping families understand and determine eligibility for tax credits or subsidies. Subsidies offset or reduce the cost of health insurance premiums. The subsidy goes to the carrier, and consumers are responsible for the balance. CMS or (Centers for Medicare and Medicaid Services) establish rules each year. The amount of help received is on a sliding scale and is a percentage of household income depending upon family size. (If you are married, you must file jointly to be eligible.) The less you earn, the more help you can receive. The more you earn, the less help you receive. The subsidy is based on a consumer’s estimation of income (Modified Adjusted Gross Income) for the current year a person or family is insuring. Anyone who receives tax credits must file a tax return to verify income and reconcile Premium Tax Credits that were advanced to the carrier on your behalf. When the reconcile happens at filing, they may be eligible for more tax credits if they overestimated income. They may have to pay back tax credits they were NOT eligible for if they underestimated their income. It is best to estimate honestly and as accurately as possible. The correction happens both ways.

Marketplace Cost-Sharing Reductions (CSRs), also known as “extra savings,” are a provision of the Affordable Care Act (ACA) that lowers out-of-pocket costs for eligible individuals by reducing deductibles, copayments, and coinsurance. To qualify, you must enroll in a Silver-tier health plan through the marketplace and have a household income between 100% and 250% of the Federal Poverty Level (FPL). This is also on a sliding scale. The lower your income within this range, the greater the cost-sharing reductions you receive, effectively turning a standard Silver plan into a Gold or Platinum plan in terms of its actuarial value and reduced patient costs. Many people who enroll on their own without an agent don’t understand this and easily miss out on the opportunity for reduced out-of-pocket costs. Unfortunately, this can lead to them being responsible for claims they might have had coverage for had they chosen a Silver plan instead of a Bronze option.

Many people believe they must accept coverage offered by their employer. This is not the case. You can choose to insure outside of a group health plan, but you must understand the consequences if you choose to waive the offer of coverage from your employer.

You should consider:
You might not have an opportunity to enroll again until your employer’s Open Enrollment.
You could miss out on the benefit of the employer’s contribution toward your premium.
You may not be eligible for a subsidy in the Marketplace if your employer offers you affordable coverage. This means you purchase individual coverage at full price.

Affordable coverage on the Marketplace is primarily determined by your estimated household income for the year as it dictates your eligibility for premium tax credits (PTC) and cost-sharing reductions. The Affordable Care Act (ACA) sets an affordability percentage, which is the maximum percentage of your income that your required premium contribution should be. If your employer-sponsored coverage is considered unaffordable (meaning your share of the premium for the least expensive plan exceeds this percentage), you may still qualify for Marketplace savings. 

It may be wise to shop and compare individual insurance for your dependents. Many times, we see the employer contribute toward the employee’s premium but offer NO help for the dependents. If the cost of insurance for the dependents is unaffordable, these dependents may benefit from individual insurance if the dependents qualify for a PTC or subsidy.

We can help you with these affordability tests to determine if you may be eligible.