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Any reason not to abandon employer heath insurance?
Old 12-18-2010, 09:21 AM   #1
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Any reason not to abandon employer heath insurance?

I assume a lot of people here get their health insurance on the open market? Where I work, I can continue to get retiree health insurance after I retire. I assume the purpose of doing it this way is to take advantage of group rates? Most of the people I talk to who are retiring are afraid to not continue with the employer heath insurance because once you stop using it, you can never go back and they are afraid of what the rates may be one day. Personally I dont understand this thinking since our rates are going up as fast as everyone elses.

If my wife and I retired right now (we both work at the same place), the rate for retiree insurance for us and one child would be $850 per month with a $3000 deductible and a 70/30 split

I went to eHeathinsurance and found a very comparable policy for $543 / month thru AARP. Actually its a $3000 deduct with a 80/20 split so its a bit better.

Has anyone encountered reasons why they wished they hadn't switched to insurance on the open market under circumstances like mine?
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Old 12-18-2010, 09:38 AM   #2
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With all the possible health insurance changes possible in the next few years, I would not worry about the question - unless you are close to retirement.

As for my DW/me? She has always been under my company coverage (her company's policy is quite expensive) and I had a co-pay charge every month, while wo*king.

When I retired (early '07), we continued our coverage under my former company's retirement plan.

For 2008, our rate went up $4.00 for each of us (yes, that is correct).
For 2009 and 2010, our rate remained the same.
For 2011, our combined rate is going up 14% (assumed due to the pending government changes - whatever they may be).

We only face one more possible large annual increase after that, since in 2013, we will both be on Medicare. My retirement coverage will continue, but be greatly reduced in price. At that time, the company's plan will act as Part D, and medi-gap coverage. Of course, we will have to add back in our future Part B monthly premium to see what the real comparison is.

At this time, we have no plans on changing our provider (e.g. former company). Additionally, since the company is "Euro Owned" (e.g. it was a U.S. firm, but bought out by two different Euro firms over the years) and they are a bit more "socially conscious" (read as social bent) I believe our coverage will continue - especially since the U.S. division is a small part of their overall global presence.

Just our story...
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Old 12-18-2010, 10:56 AM   #3
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Originally Posted by utrecht View Post
I assume a lot of people here get their health insurance on the open market? Where I work, I can continue to get retiree health insurance after I retire. I assume the purpose of doing it this way is to take advantage of group rates? Most of the people I talk to who are retiring are afraid to not continue with the employer heath insurance because once you stop using it, you can never go back and they are afraid of what the rates may be one day. Personally I dont understand this thinking since our rates are going up as fast as everyone elses.

If my wife and I retired right now (we both work at the same place), the rate for retiree insurance for us and one child would be $850 per month with a $3000 deductible and a 70/30 split

I went to eHeathinsurance and found a very comparable policy for $543 / month thru AARP. Actually its a $3000 deduct with a 80/20 split so its a bit better.

Has anyone encountered reasons why they wished they hadn't switched to insurance on the open market under circumstances like mine?
Will be real interested in seeing responses to this post. We are presently enrolled in my company's retiree medical plan(with UHC). $4,000 / $8,000 deductible. $8,000 max out of pocket. 80/20 split. For my family (wife and son), it is $899 per month plus dental of $136 per month.

Would be curious on people's experience/costs obtaining policies in open market.
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Old 12-18-2010, 11:11 AM   #4
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It seems to me the question is the carriers and their plans. If the AARP plan is with a reputable carrier that has been around a while and you have only the one, more expensive, retiree option it would seem like a good deal to switch. On the other hand, if I saw a private sector plan that appeared better and cheaper than my Federal plan (possible when I reach Medicare age) I would still hesitate to switch (at least until all of the current confusion is resolved) because the Federal plan has a good open season with options to change among many plans every year. I would lose that permanently (as things stand today) with a private plan.
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Old 12-18-2010, 11:18 AM   #5
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In our situation we could look for health insurance elsewhere, but the way things are now, DH pays nothing for his coverage with the Megacorp retirement benefits. We do pay a premium for me but it is substantially lower than the open market and we don't have to worry about pre-existing conditions.
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Old 12-18-2010, 11:54 AM   #6
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I would order the booklets for the insurance and read them line by line . Where they usually get you is on preexisting conditions which can be basically anything . For example say in 2006 your wife had a mammogram that required extra films and was termed suspicious after testing they decide she has a benign lump and no treatment is needed . You change health plans and suddenly she has breast cancer . They will pull the preexisting condition card and probably not cover it . So my advice to you is be careful very careful . A savings of a few thousand dollars may end up costing you a lot more .
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Old 12-18-2010, 11:58 AM   #7
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we don't have to worry about pre-existing conditions.
+1 best reason to stay with employer plan imho. In my case it is also subsidized so doubtful private plan could be competitive.
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Old 12-18-2010, 11:59 AM   #8
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I dont know which company AARP uses, but I found a better plan anyway. Its through Cigna. It has a $3000 deduct, 70/30 with a $40 office visit co-pay. This one also has prescription coverage which the AARP one didnt have (I didnt notice that until now).

This plan is even cheaper at $498 / month.

Its basically the same as the only retiree plan available through my employer except for the extra benefit of the office visit co-pay which is a BIG advantage in my mind.

Basically, every plan available thru eHeathinsurance is as good as or better than the one through my employer. So much for group rates.
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Old 12-18-2010, 12:03 PM   #9
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I dont know which company AARP uses, but I found a better plan anyway. Its through Cigna. It has a $3000 deduct, 70/30 with a $40 office visit co-pay. This one also has prescription coverage which the AARP one didnt have (I didnt notice that until now).

This plan is even cheaper at $498 / month.

Its basically the same as the only retiree plan available through my employer except for the extra benefit of the office visit co-pay which is a BIG advantage in my mind.

Basically, every plan available thru eHeathinsurance is as good as or better than the one through my employer. So much for group rates.
What is the annual max out of pocket?
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Old 12-18-2010, 12:19 PM   #10
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Max out of pocket through employer is $7500 per person ($22,500 if all 3 of us got hit hard). Max out of pocket through this Cigna family plan says "$10000 (not including deductible)."

I might add that none of us is sickly at this point. None of us has been to a doctor for anything other than checkups for several years. I've had several surgeries (neck, shoulder and elbow) 10-15 years ago. Everything is healed up now. Would that be considered a pre-existing condition if I needed another neck surgery down the road?
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Old 12-18-2010, 12:22 PM   #11
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If you are relatively young, and healthy, buying insurance on the private market can be very affordable. That is because they do underwriting and insure healthy people. In contrast, the group market has to take everyone in the group.
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Old 12-18-2010, 12:46 PM   #12
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Will be real interested in seeing responses to this post. We are presently enrolled in my company's retiree medical plan(with UHC). $4,000 / $8,000 deductible. $8,000 max out of pocket. 80/20 split. For my family (wife and son), it is $899 per month plus dental of $136 per month.

Would be curious on people's experience/costs obtaining policies in open market.
Is $136/mo for dental correct? This seems very high.
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Old 12-18-2010, 12:56 PM   #13
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I might add that none of us is sickly at this point. None of us has been to a doctor for anything other than checkups for several years. I've had several surgeries (neck, shoulder and elbow) 10-15 years ago. Everything is healed up now. Would that be considered a pre-existing condition if I needed another neck surgery down the road?

Each plan is different in how far back they look & what they exclude .Plus the advertised rates are for the healthiest people and slightly unrealistic . I would pick a plan I like and apply that way you will see the real rates and be able to make an informed decision. Gary recently changed health care and the quote we started out with ended up being $250 more a month after the application .
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Old 12-18-2010, 01:32 PM   #14
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Individual insurance policy rates are underwritten so they are almost always the least expensive option - until they are not.

In other words, when you don't really need health insurance the individual policy is cheaper. As your need for health insurance increases due to health or age, so rises the premium, until your need is such that your policy is simply canceled or becomes unaffordable.

This cannot happen with group rates.
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Old 12-18-2010, 06:55 PM   #15
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If you are relatively young, and healthy, buying insurance on the private market can be very affordable. That is because they do underwriting and insure healthy people. In contrast, the group market has to take everyone in the group.
Agreed. On the other hand, I'm hearing a lot of individual plan premiums rising 25-40% a year, and group plans often no more than 10% or so. It's said that much of this is because younger (and usually healthier and more insurable) folks are increasingly dropping out of their individual plans because of the economy and unemployment. The lack of younger/healthier people opting out in tough economic times probably add *somewhat* more cost certainty with the group plans, but how much remains to be seen. (Keep in mind that with employer group plans, just about all of the insureds are *employed* -- or retired -- and get large employer subsidies and thus have little or no reason to drop it.)

In short, I suspect a healthy person can probably get better rates in an individual plan, but they may be exposing themselves to the potential of much higher rate increases in the future.
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Old 12-18-2010, 06:59 PM   #16
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Most of this has already been said - but I'll chime in anyway. If your retiree medical benefit is subsidized by your former employer in any way, then it will likely be cheaper than a comparable policy in the open market. If they don't subsidize it at all, then you might do better in the open market. DH's company no longer subsidizes retiree medical benefits and he knows people who have retired and done better in the open market.

But you do have to be careful when you start looking at the open market. As some people have already said, a lot of people do not get the "advertised" rates. When all the paperwork is filled out and information gathered - the rate is higher.

Then there are rate increases and coverage renewal. With Group coverage you are guaranteed renewal every year. If you get really ill, your rates don't skyrocket. Experience and risk is pooled.....shared across a large group of people. But, yeah, if you are healthier than the average retiress in the pool - your rates could be more or go up at a rate you feel is unreasonable.

I am not completely sure how rate increases are determined if you insure privately. But I would want a real good understanding about what would happen if one of us was diagnosed with cancer? Am I guaranteed renewal every year? How are my new rates determined?

In the end, it is all about how much risk you want to take and how much you are willing to pay to reduce that risk. We will have subsidized retiree health care from my company (I hope) when we retiree, but I have looked into private coverage periodically - and these are the things I have wondered about.
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Old 12-18-2010, 07:01 PM   #17
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I am not completely sure how rate increases are determined if you insure privately. But I would want a real good understanding about what would happen if one of us was diagnosed with cancer? Am I guaranteed renewal every year? How are my new rates determined?
They can't drop you individually and they can't single you out for larger rate increases. But they can work on changing your "group" into a high risk group with huge rate increases. They can't single you out, but they can act on an entire group. So they can certainly manipulate the group over time to reflect current risk of the insureds in the pool and price it accordingly.
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Old 12-18-2010, 07:06 PM   #18
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They can't drop you individually and they can't single you out for larger rate increases. But they can work on changing your "group" into a high risk group with huge rate increases. They can't single you out, but they can act on an entire group. So they can certainly manipulate the group over time to reflect current risk of the insureds in the pool and price it accordingly.
Yeah, I figured that was probably the case, but you read these nightmare stories about people who get sick and the next thing you know, the company has come up with some lame reason to cancel their policy. I suspect these are shady companies to begin with - so if nothing else - if you buy on the private market, you want to be sure you know the reputation of the company you are buying from. Thanks for the info!
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Old 12-18-2010, 10:04 PM   #19
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Get the help of an independent agent that represents all of the major companies in your state. Do NOT buy it through ehealthinsurance. The rates will be exactly the same as through an agent and I can tell you that the people who work in the ehealth call center are dumb as rocks and don't know what the hell they're selling, or they do and are just unethical. You want someone who will be there for you after the sale, not just a wham-bam-thanks-for-the-sale call center person who will be in another job in 4 months.

The AARP plan is probably just the Aetna plan with an AARP logo on it. Don't listen to the talk about pre-existing conditions. If you go with a company that does not specifically put exclusion riders on pre-existing conditions (like United Healthcare), they will be covered. Even United will cover some pre-ex depending on what it is (blood pressure/cholesterol can usually be rated up instead). As an example, Anthem and Aetna here in Virginia both cover all pre-existing conditions if you have at least 12 months of prior coverage and pass underwriting. Instead of excluding conditions, they assign a risk rating (i.e. Level 1, 2, or 3) or a rate up (such as 25 or 50%) to make up for the extra risk. Always read the contract as some companies don't cover mental health (Aetna doesn't in VA and United Healthcare now makes it an optional add-on) or have other potential exclusions as a general part of the policy depending on the state.

The rate you see online is likely not the rate you will end up paying unless your family is in perfect health. A good independent agent will know which company works best for any medical conditions you or your family may have. Ehealth will just tell you to apply with the cheapest company quoted.
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Old 12-19-2010, 08:26 AM   #20
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Great info here that I hadn't considered. Thanks !!
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