- Shopping for health insurance is confusing. What do these terms mean?
- Does the ADA protect me even when I am looking for a job?
- I am under the age of 26, what are my health insurance options?
- How can I buy health insurance?
- Is there any financial assistance available to help me purchase a plan in the Marketplace?
- I have a lower income and cannot afford to buy insurance in the Marketplace. What options do I have?
- I am over 65 years old or I have a disability, what are my health insurance options?
- Parts of Medicare
- Supplemental Insurance Policies (aka Medigap Plans)
- Applying for Medicare
- Assistance with Medicare
- I am losing my employer-sponsored health insurance coverage. What options do I have?
Shopping for health insurance is confusing. What do these terms mean?
Below are some of the basic health insurance terms that you will run into regardless of what type of insurance plan you have.
• Deductible: The amount you will owe for health care services your health insurance or plan covers before the health insurance or plan begins to pay. For example, if Rachel’s deductible is $1,000, her plan won’t pay anything until she has paid $1,000 for covered health care services subject to the deductible. This is also referred to as “meeting the deductible.” However, it is important to note that deductible may not apply to all services (e.g., some preventative services).
• Coinsurance or Cost-Share: The share of the costs between the health insurance company and the consumer. The consumer is responsible for paying their coinsurance plus any deductibles. For example, Ross has an 80/20 plan that has an allowed amount for an office visit of $100. If Ross has met his deductible, his coinsurance payment of 20% would be $20. The health insurance plan pays the remaining 80%.
• Copayment: A fixed amount the consumer pays for a covered health care service, usually when they receive the service (e.g., visit the doctor or receive a prescription drug). The amount can vary by the type of covered health care service and can be anywhere from $5 to upwards of $150.
• Out-of-Pocket Maximums: The most a consumer is responsible for paying out of pocket during a policy period (usually one year) before your health insurance or plan starts to pay 100% for covered essential health benefits. This limit must include deductibles, coinsurance, copayments, or similar charges and any other expenditure required of an individual which is a qualified medical expense for the essential health benefits. This limit does not have to count premiums, balance billing amounts for non-network providers and other out-of-network cost-sharing, or spending for non-essential health benefits. With some limited exceptions, the maximum out-of-pocket cost limit for any individual Marketplace plan for 2014 can be no more than $6,350 for an individual plan and $12,700 for a family plan.
There are also different types of plans available – for example, HMOs or PPOs.
• Indemnity or Fee for Service Plans: An indemnity plan is a type of medical plan that reimburses the patient and/or provider as expenses are incurred. These are also referred to as Fee for Service plans. Under these types of plans, a provider is paid a fee for each particular service rendered. These are the types of plans that primarily existed before the rise of HMOs, IPAs, and PPOs. With indemnity plans, the individual pays a pre-determined percentage of the cost of health care services, and the insurance company (or self-insured employer) pays the other percentage. For example, an individual might pay 20% for services and the insurance company pays 80%. The fees for services are defined by the providers and vary from physician to physician. Indemnity health plans offer individuals the freedom to choose their health care professionals.
• HMO: Health maintenance organizations represent “pre-paid” or “capitated” insurance plans in which individuals or their employers pay a fixed monthly fee for services instead of a separate charge for each visit or service. The monthly fees remain the same, regardless of types or levels of services provided. Services are provided by physicians who are employed by, or under contract with the HMO. HMOs vary in design. Depending on the type of the HMO, services may be provided in a central facility or in a physician’s own office. The benefits to an HMO can be that they are generally less expensive. The downside is the choice of providers may be limited and the policyholder may be required to see your primary care physician in order to get a referral for any type of specialist.
• PPO: A type of health plan that contracts with medical providers, such as hospitals and doctors, to create a network of participating providers. Policyholders pay less if they use providers that belong to the plan’s network. However, they have the option to use doctors, hospitals, and providers outside of the network for an additional cost. Generally, the benefits of a PPO are that policyholders have more choice of providers and they do not need as many referrals. The downside is that typically PPOs have higher premiums and deductibles when compared with HMOs.
• Points of Service Plans (POS): POS plans are hybrid HMO and PPO plans. It combines the cost-saving in-network features of an HMO but still reimbursed a certain amount if you went out of network. Essentially, it is a type of plan in which you pay less if you use doctors, hospitals, and other health care providers that belong to the plan’s network. POS plans also require you to get a referral from your primary care doctor in order to see a specialist.
• Exclusive Provider Organization (EPO): Is similar to an HMO where one can use the doctors and hospitals within the EPO network. The difference is that there is not an option to go outside of the network and have the plan cover anything. In other words, there are no out-of-network benefits.
• Consumer Directed Health Plans (CDHP): CDHPs use a High Deductible Health Plan (HDHP) and match it with a pre-tax saving account – usually a health savings account (HSA). HDHPs typically feature lower premiums and higher deductibles than traditional insurance plans. As of 2013, HDHPs are plans with a minimum deductible of $1,250 per year for individual coverage and $2,500 for family coverage. Typically, a policyholder has to pay their deductible before the plan pays anything. After one meets their deductible, their benefits could still be subject to other cost-sharing requirements (e.g., 80/20 coverage) until they meet their out of pocket maximum, which at that point the plan will pay 100% of benefits that are afforded under the plan. There are exceptions, however, as certain preventative care services will be paid fully, and will not be subject to the deductible.
I am under the age of 26, what are my health insurance options?
Under the ACA, eligible young adults now have the option of staying on their parents’ health insurance plans until they are twenty-six years old. These young adults do not have to be dependents under Internal Revenue Service (IRS) standards, can live on their own, be married, and even have their own children. This rule gives young adults additional options and helps to bridge the gap that may occur between leaving school and finding a job that offers health insurance benefits. Just keep in mind if your parents have a “retiree-only” plan, this rule does not apply and you will likely have to find an alternative source of health insurance.
For more information about this rule, visit https://www.healthcare.gov/young-adults/children-under-26/
If you aren’t sure what your options may be, this Step-by-Step Guide to Health Insurance Options from Triage Cancer may be useful.
How can I buy health insurance?
There is now a new way for individuals, families, and small businesses to get health insurance: the Health Insurance Marketplace. These Marketplaces also are referred to as Exchanges.
Whether an individual is uninsured or just wants to explore new options, the Marketplace is designed to give consumers more choice and control over their health insurance coverage by helping them find health insurance that fits their budget, with less confusion and hassle. Every health insurance plan in the Marketplaces must offer comprehensive coverage of Essential Health Benefits (EHBs). EHBs include items and services in the following categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services; chronic disease management; and pediatric services, including oral and vision care.
The Marketplace is supposed to help consumers compare all of their insurance options based on price, benefits, and other features that may be important to them, in plain language that makes sense, so they will get a clear picture of what they will pay and what they will get before they make a choice.
All plans must show that information in a new document called the Summary of Benefits and Coverage (SBC), an easy-to-read, standardized chart that explains the key information for each health insurance plan. Because every plan will provide its information in the same format, it will be easier to compare choices. For more information about the SBC requirements, see www.healthcare.gov/law/features/rights/sbc.
Almost everyone who does not have insurance through an employer can use the Health Insurance Marketplace to explore health insurance options. There are only three requirements to get insurance through the Marketplace are as follows:
- Individuals must live in the United States.
- Individuals must be a U.S. citizen or national (or lawfully present).
- Individuals cannot be currently incarcerated.
Consumers will have a choice between purchasing several different plans in these Marketplaces. However, all health insurance companies that want to sell their plans through the must offer the following standardized plan levels: platinum, gold, silver, bronze, and catastrophic. The difference between these plan levels is the amount of money that you pay out of pocket for your health-care costs (i.e., cost sharing). For example,
- Platinum: plan pays 90 %; you pay 10 %
- Gold: plan pays 80 %; you pay 20 %
- Silver: plan pays 70 %; you pay 30 %
- Bronze: plan pays 60 %; you pay 40 %
- Catastrophic plans will be available only to individuals less than thirty years old and those exempt from the individual mandate.
Every state will have a Marketplace, but each state’s Marketplace will operate a little differently. States can create and run their own Marketplace, or have a Marketplace run by HHS. States also may choose to partner with HHS to run their Marketplace. Illinois has a partnership marketplace called Get Covered Illinois. This means that while you may get information and start your application at the state’s website, when it comes time to actually apply for health insurance, you will be redirected to the federal site, www.HealthCare.gov. Please note, that while the federal website is the mechanism you will use to apply, you will still be purchasing state specific health insurance products.
You may find Triage Cancer’s Quick Guide to the Affordable Care Act (ACA) useful.
Is there any financial assistance available to help me purchase a plan in the Marketplace?
Yes, for some people. As of January 1, 2014, tax credits have been available to U.S. citizens—and those who are lawfully present in the United States—who purchase a health insurance policy through their state’s health insurance marketplaces and who have an income up to 400% of the Federal Poverty Level (FPL; $46,680 for an individual or $95,400 for a family of four in 2014). The government’s rationale behind these tax credits is to provide financial help for individuals and families who are middle class to purchase health insurance coverage. To receive a premium tax credit, you cannot be eligible for government coverage (i.e., Medicaid or Medicare) or have access to group health insurance (e.g., through your employer). The only exception is if your employer plan does not cover at least 60% of health-care costs or if the portion that the employee has to pay for your employer-sponsored health insurance policy is more than 9.5 % of their income.
The amount of the premium tax credit you are eligible for will depend on your family size and income. The goal is that the premium consumers will pay will not be more than a certain percentage of their income, ranging from 2% for those with incomes up to 138% of the FPL (about $16,105 for an individual in 2014) to 9.5% for those with incomes between 300% and 400% of the FPL ($35,010 to $46,680 for an individual in 2014). For example, an individual who qualifies for a premium tax credit may choose a policy that is $242 a month, but may only have to pay $40 a month for coverage.
Individuals who have incomes between 138% of the FPL and 250% FPL, may also be eligible for cost sharing subsidies (in 2014, $16,105 and $29,175 for an individual). These subsidies will reduce the cost of health care expenses an individual or family has to pay at the time of medical care (e.g., reducing the co-payment you make when you visit the doctor’s office). Please note that these subsides are only available if you purchase a silver level plan.
This chart from Triage Cancer lays out the various income levels and family sizes for financial assistance.
Please note that the Marketplace will use the FPLs from the previous year. For example, for financial assistance in 2015, the Marketplace will look at the 2014 FPLs.
When you complete an application to purchase a health insurance policy in the Marketplace you will be asked to include some financial information – this is so the marketplace can determine if they are eligible for any of these financial assistance options. You will be asked to project your income for the year ahead. This tool from HealthCare.gov may be helpful as you calculate your income. It is important to be as accurate as possible because if you underestimate, and therefore, receive too much in a tax credit or subsidy, you will have to pay that back at the end of the year. Similarly, if your income status changes mid-year (e.g., you stop working), you should report that change to the Marketplace as soon as possible, so that your financial assistance can be adjusted accordingly.
I have a lower income and cannot afford to buy insurance in the Marketplace. What options do I have?
Medicaid is a federal health insurance program that covers much of the cost of health care for individuals with limited assets and low incomes. As discussed below, the Affordable Care Act may expand eligibility for Medicaid. To avoid confusion, traditional Medicaid refers to the program before January 1, 2014 and Medicaid expansion refers to expansion of the program after January 1, 2014. To be eligible for traditional Medicaid, one must have limited assets, a low income and fall into at least one of the following categories:
- Have a disability1
- Be blind
- Have a minor child or children
- Be a child less than nineteen years old
- Be a pregnant woman (coverage will last until six months after the child is born)
As of January 1, 2014, there is a new way to be eligible for Medicaid in many states, including Illinois. Now individuals who have incomes below 138% of the federal poverty level will be eligible for Medicaid without an asset test or having to fall into an additional category. To apply for Medicaid, simply based on your income level, visit https://getcoveredillinois.gov/ and begin a new application for health insurance. You will be asked some questions about your family size and income level, answer these based on your projected income for the year. If your income falls below 138% of the FPL, you will likely be eligible for Medicaid.
1 You may be deemed disabled by the SSA if you cannot do work that you did before; the SSA decides that you cannot adjust to other work because of your medical condition(s); and your disability has lasted or is expected to last for at least one year or result in death. See www.ssa.gov/dibplan/dqualify4.htm.
I am over 65 years old or I have a disability, what are my health insurance options?
Medicare is the government sponsored program that provides health insurance to individuals who are 65 or older, regardless of income or medical history, and individuals under the age sixty-five who have certain disabilities. To be eligible for Medicare, an individual must fall into one of the following three categories:
- be 65 years or older and eligible for Social Security retirement benefits;
- be less than 65 years old, have certain disabilities, and have received Social Security Disability Insurance (SSDI) benefits for twenty-four months; or
- have end-stage renal disease or Amyotrophic Lateral Sclerosis (ALS), also known as Lou Gehrig's disease.
Parts of Medicare
Medicare has four parts (A – D), each providing its own benefits and services. Parts A and B together are typically referred to as Original Medicare. Generally, those who have worked and paid into the system will receive Part A for free and will be automatically enrolled after age 65. A person who wants Part B, Part C (Medicare Advantage) or Part D need to take proactive steps to enroll. There is also a charge for these coverage options.
Part A pays for hospital care, home health care, hospice care, and care in Medicare-certified nursing facilities. If an individual is sixty-five years of age or older, they will typically receive Part A automatically and at no cost. However, if the individual does not have enough of a work history during which time they paid Social Security taxes, they may be required to pay a monthly premium. Although Part A covers nursing care, it is mean to recover those recovering from acute illness or injury and not long term chronic care.
Part B is medical insurance and helps to pay for doctors’ services and medical services and supplies that are not covered by hospital insurance. This includes diagnostic studies, doctors’ services, durable medical equipment used at home, some home care and ambulance transportation. Part B is option and must be opted into to be enrolled. There is a monthly premium that is based on income and a yearly deductible. The deductible for 2014 is $147 a year, after one reaches that they will be responsible for a co-pay of 20% for all services. There is no out-of-pocket limit on what you may be responsible for paying under Part B.
Part C is a combination of Part A and Part B and is referred to as Medicare Advantage. Medicare Advantage plans are plans that are provided through private insurers and operate more like a traditional HMO, PPO, or fee-for-service plan. The private insurance companies must be approved and must provide all hospital and medical benefits covered by Medicare Parts A and B. The monthly premiums vary between plans and may or may not include prescription coverage through Part D (discussed below). Some Medicare Advantage plans provide extra benefits outside of those traditionally provided by Medicare, such as vision, hearing, and dental coverage. Additionally, many Medicare Advantage plans do have limit on what you will be responsible for paying out-of-pocket per year.
Part D is prescription drug coverage that will pay for medications proscribed by a doctor. Part D is optional and monthly premiums vary by plan (higher-income consumers may pay more). Individuals can enroll in Part D as part of Medicare Advantage plans or can purchase drug coverage if a part of traditional Medicare. There is a higher premium if the individual did not sign up for Part D when they first became eligible, unless drugs were covered by another plan (“creditable” prescription drug coverage). Coverage and cost vary based on the type of drug plan the individual chooses. For example, some plans will offer more coverage and a wider range of drug choices for a higher monthly cost.
Supplemental Insurance Policies (aka Medigap Plans)
If an individual is enrolled in traditional Medicare, they can add more coverage with a Medicare Supplement Insurance policy (commonly call Medigap). These supplemental insurance plans are purchased through a private insurer and cover items and services that Medicare does not cover. For example, some Medigap plans will cover the 20% copay for dental and vision care. All Medigap polices are regulated and standardized by federal and state law. Insurance companies can only sell a standardized Medigap policy.
Keep in mind that Medigap plans only work if you have elected original Medicare (Parts A & B). If you have chosen to purchase a Medicare Advantage plan (Part C) you should not purchase a Medigap plan. For more information about Medigap plans in Illinois, visit https://www.illinois.gov/aging/ship/Pages/default.aspx.
Applying for Medicare
Open enrollment for Medicare occurs each year between October 15 and December 7. However, if you turn 65 mid-year or experience another Qualifying event (e.g., losing your employer sponsored coverage) you will be eligible for a Special Enrollment Period.
When electing Medicare there are two distinct paths you can choose.
Assistance with Medicare
For more information about Medicare and its services, see www.Medicare.gov.
If someone qualifies for Medicare because they are sixty-five years or older and they need assistance, one option is to contact the Senior Health Insurance Program (SHIP). Specifically,
SHIP counselors are trained to:
- Answer questions about Medicare, Medicare supplement insurance, long-term care insurance, Medicare Advantage plans, and other health insurance.
- Answer questions about Part D.
- Organize and assist in filing Medicare and Medicare supplement claims.
- Appeal claim denials.
- Answer questions about and help complete applications for Extra Help, a federal program to assist low-income seniors with the costs associated with Medicare D.
SHIP is not affiliated with any insurance company and does not sell any insurance. To locate the SHIP office in your county visit the Resources page.
I am losing my employer-sponsored health insurance coverage. What options do I have?
One option may be to shop in the Illinois State Marketplace: Get Covered Illinois. If you chose to purchase new coverage, make sure to pick a plan that has adequate benefits and network of doctors and hospitals.
Another option may be to elect to maintain your employer sponsored health insurance coverage through the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA is a federal law that allows qualified beneficiaries the right to continue their health coverage after the occurrence of a qualifying event. To be eligible for COBRA, one must work for a private employer with twenty or more employees or work for the state or federal government. A qualified beneficiary generally is an individual covered by a group health plan on the day before a qualifying event (i.e., an employee, an employee’s spouse or child). A qualifying event is an event that causes a qualified beneficiary to lose coverage, such as voluntary or involuntary termination of employment (excluding termination for gross misconduct) and reduction in the number of hours the employee works.
|COBRA Qualifying Event||Maximum COBRA Coverage*|
|Employment ends or hours reduced||18 months|
|Loss of dependent child status||36 months|
|Employee enrolls in Medicare||36 months|
|Divorce or legal separation||36 months|
|Death of employee||36 months|
COBRA coverage must be substantially similar, if not the exact same coverage, that the employee received while working. However, it is typically going to cost a lot more. Usually when an employee is working the employer pays a portion of the plan premium, but that is generally not the case with employees or ex-employees who are on COBRA. Under COBRA, a plan can charge up to 102% of the applicable premium (i.e., the cost to the plan for coverage plus a 2% administration fee). For example, Phoebe’s premium is $400 per month, and her employer contributed $200 and she contributed $200 per month. Phoebe chose to move to part time and, therefore, no longer qualify for benefits at her job. Phoebe is entitled to elect COBRA coverage for eighteen months. She will now be responsible for paying the entire $400 monthly premium and perhaps an additional $8 per month (2% of $400) for administrative fees. Still, there may be some benefits to electing COBRA coverage, rather than trying to find coverage in the individual market. For example, if someone was in the middle of treatment, they would not have to find insurance that had the same coverage for their doctors, hospitals, and prescription drugs. Additionally, if someone has already met their out-of-pocket maximum or deductible for the year, it may make more sense financially to elect COBRA for the remainder of the plan year rather than finding a new plan.
There are two times when one can extend their COBRA coverage:
- If one experiences a second qualifying event during your first eighteen months of COBRA coverage, they may be entitled to an eighteen-month extension for a maximum total of thirty-six months of coverage.
- If one is deemed to be disabled by the Social Security Administration (SSA) within the first sixty days of COBRA coverage, they may be entitled to an eleven-month extension, for a total of twenty-nine months of COBRA coverage. However, during the eleven-month extension, the premiums may increase to 150% of the cost of coverage.
There are a few instances when COBRA coverage may end early:
- Employee doesn’t pay premiums
- Employee becomes eligible for Medicare (however, dependents can maintain their COBRA coverage)
- Employee commits fraud
- Employer stops offering a health plan to all employees
- Employer goes out of business
It is important to remember that COBRA is not an actual health plan; it is the right to keep the same health insurance you had while you were employed for an additional period of time. This can be extremely beneficial to someone who is in the middle of treatment because he or she would not have to find another health insurance policy that covers the same doctors and has the same prescription drug benefits.