New post on Retirement Cafe regarding ACA and OOP maximums

[Tandemlovers]

I read about Dick Cotton's blog on this forum and subscribed to his blog a few weeks ago.

He has a new post up today about his forays into purchasing health care insurance in NC and
how he came to decide upon a policy. Though he is not applying on the exchange, I thought
his reasoning on how he chose a policy was a worthwhile read.

http://theretirementcafe.blogspot.com

 

[NoMoreJob]

I'm always a bit confused when reading about some people's elaborate spreadsheet analysis of insurance policy choices and figure I must be missing something or just be lazy. Reading this article gives me some comfort that maybe that's not the case.

My wife and I have always looked at it from the bigger picture standpoint of what we can afford in a worst case scenario coupled with the lowest possible premiums. The premiums are a known but a health care catastrophe is unlikely, so we tend to weight the premium cost more highly while making sure we are in a position to financially weather a worst case scenario without lasting damage. Needless to say, we come to the same basic conclusion as the author.

We typically do not consume much health care but have had a couple of years (one for each of us) when relatively minor surgeries were needed and we hit our OOP maximum.

One difference for us is that we travel often and for months at a time so having access to a large, nationwide network carries more weight in our case. Another is that for tax, investment and other reasons we prefer an HSA policy so that helps narrow the field for us also.

 

[haha]

I read about Dick Cotton's blog on this forum and subscribed to his blog a few weeks ago.

He has a new post up today about his forays into purchasing health care insurance in NC and
how he came to decide upon a policy. Though he is not applying on the exchange, I thought
his reasoning on how he chose a policy was a worthwhile read.

The Retirement Cafe

Excellent article, and as usual he writes like a human being. Best personal finance writer out there, by a mile.

Ha

 

[Brett_Cameron]

good article, well written. His method matches the process I have used for years in selecting employer provided health care insurance and now with retiree-benefit health care insurance. I always budget for the worst case reaching maximum out of pocket every year. We usually reach the max oop every year. My lowest cost policy has been high deductible policy ($3k deductible, $10k max oop) that does not ever have co-pays for prescriptions or office visits. We have large prescription costs. YMMV

 

[ERhoosier]

Interesting article with generally decent analysis of overall HC costs. Far too many, inc politicians, focus only on net (post-subsidy) HI premiums without considering deductibles/co-pays, OOP max. And great he points out that some grandfathered plans are BETTER than Exchange alternatives. HOWEVER.....
- He states he "didn't need HC.gov". Poor advice for someone who would/might qualify for subsidy, which is available only for Exchange Plans.
- Good he mentioned HI plan networks, but focusing only on current (primary care?) docs vs specialty care options violates his logic on HI being mainly for catastrophic protection. What good is keeping your family doc if you need bypass surgery and the only heart program(s) in your network have the worst outcomes

 

[haha]

He states he "didn't need HC.gov". Poor advice for someone who would/might qualify for subsidy, which is available only for Exchange Plans.

How is this advice? He said that he didn't need the government site, not that no one might need it.

Ha

 

[W2R]

Interesting article, and well written! It is fascinating to read about the factors that led to his health insurance decisions. He makes some very good points concerning the very different roles of OOP max and co-pay in this decision making process.

 

[FIREd]

Thanks for posting this.

As someone who has always had health insurance through either my or DW's employer, I tend to be attracted to policies that replicate what I have always known. Those are policies with low deductibles and co-pays, but also high premiums. Perfectly fine when you are not paying the premiums, but seemingly not the best choice when one buys individual health insurance. The other thing is that I feel completely disconnected from the true costs of healthcare. I've been paying 10 bucks to see a doctor for so long that I have no idea what a visit to the doctor's office truly costs. It makes it difficult to determine how much healthcare the OOP max can buy and how likely I am to hit it in any given year. So I like this simple approach.

 

[JoeWras]

What I like about the article is the realism on the OOP price. I've been telling people I'm planning for $24k per year. (I'm in NC, maybe I need to bump that to $28k.) For many of my friends who have very affordable lifetime insurance from their employers or state, they think I'm joking. It is not a joke.

 

[NoMoreJob]

What I like about the article is the realism on the OOP price. I've been telling people I'm planning for $24k per year. (I'm in NC, maybe I need to bump that to $28k.) For many of my friends who have very affordable lifetime insurance from their employers or state, they think I'm joking. It is not a joke.

And therein lies the problem for controlling future health care costs. As long as the vast majority of Americans are disconnected from the true cost of care it's not likely to be controlled. As long as health care is viewed as being basically free, the cost will not be questioned and the country will continue to demand more and more of it.

If the market isn't allowed to ration it, either the insurance companies or the government will - which you prefer is just a matter of who you think is the better 'bad guy.'

 

[FIREd]

What I like about the article is the realism on the OOP price. I've been telling people I'm planning for $24k per year. (I'm in NC, maybe I need to bump that to $28k.) For many of my friends who have very affordable lifetime insurance from their employers or state, they think I'm joking. It is not a joke.

No, it's not. I was thinking the other day day that, even with ACA, there is still much financial benefit in keeping employment-based health insurance.

 

[rbmrtn]

Good article. I'm going through the same process now and coming to the same conclusion, Lowest cost Bronze plan. My OOPM is the same regardless of metal so you are just paying them to adjust how much you pay from your deductible to OOPM.

 

[ziggy29]

Good article. I'm going through the same process now and coming to the same conclusion, Lowest cost Bronze plan. My OOPM is the same regardless of metal so you are just paying them to adjust how much you pay from your deductible to OOPM.

Just remember that the "lowest cost" Bronze plan may be an HMO instead of a PPO. It may not matter much in your case, but that often means a smaller network of providers and "gated" access to specialists.

 

[rbmrtn]

Just remember that the "lowest cost" Bronze plan may be an HMO instead of a PPO. It may not matter much in your case, but that often means a smaller network of providers and "gated" access to specialists.

No, it doesn't matter. I have only one carrier to chose from, two if you count the one not in the exchange

 

[ziggy29]

No, it doesn't matter. I have only one carrier to chose from, two if you count the one not in the exchange

Even among the same insurer, *sometimes* HMO networks are more restricted than PPO networks. (Not always, but do confirm it!) And again, in an HMO you generally need to be referred to a specialist by a GP, but if these aren't problems and concerns for you, then sure, go the HMO route.

 

[bamsphd]

HOWEVER.....
- He states he "didn't need HC.gov". Poor advice for someone who would/might qualify for subsidy, which is available only for Exchange Plans.

I read it differently. In my state like in NC there is only one insurance company offering exchange medical policies. My state did not pre-release price information, so I was on healthcare.gov day one trying to determine my policy costs. After a few days of no joy, I eventually tried going directly to the insurance company's website and found that I could see exchange prices there. I will eventually sign up via healthcare.gov for insurance effective January 1st, 2014. However, like Dirk Cotton, I don't need access to healthcare.gov for planning purposes. Note that the insurance company did not exactly have their act entirely together either. Policy detail links were broken, and many sections said talk to your representative. When I talked with a representative, he said they had not been informed yet, and suggested I call back in November!

There was one statement in Dirk Cotton's post which may be true in NC, but is not true in my state.

By the way, more expensive “Silver” and “Gold” policies don’t lower your OOP Max and give you more protection against bankruptcy.

In my state all the bronze family plans appear to have a $12,700 OOP max, but the silver HSA family plan has an $8,000 OOP max. So if hitting the OOP max is a concern one would want to pay an extra $1,538 in premiums for the Silver HSA plan to drop the OOP max by $4,700. Thus in my state, Dirk would presumably have chosen the Silver HSA plan, which would have changed the second half of his post!

 

[daylatedollarshort]

My state exchange has a calculator for estimating total likely cost, deductibles + premiums. We come out ahead under the Bronze plan under most scenarios, the same conclusion I came to from my own spreadsheets. Most importantly, if we decide to do some 401K withdrawals, the Bronze plan is the least punitive on losing subsidies if we end up having a MAGI closer to 400% of FPL.

For us Bronze is the clear winner.

 

[audreyh1]

I'm always a bit confused when reading about some people's elaborate spreadsheet analysis of insurance policy choices and figure I must be missing something or just be lazy. Reading this article gives me some comfort that maybe that's not the case.

My wife and I have always looked at it from the bigger picture standpoint of what we can afford in a worst case scenario coupled with the lowest possible premiums. The premiums are a known but a health care catastrophe is unlikely, so we tend to weight the premium cost more highly while making sure we are in a position to financially weather a worst case scenario without lasting damage. Needless to say, we come to the same basic conclusion as the author.

We typically do not consume much health care but have had a couple of years (one for each of us) when relatively minor surgeries were needed and we hit our OOP maximum.

This is a very timely article for me (which I still need to read), as I will start working on my spreadsheet tomorrow. I definitely weigh the premiums more than the out-of-pocket expenses. Based on the last few years, we only had one year where I hit the deductible. And I feel confident that even with a few extra doctors visits and maybe even tests, I can come under the annual difference between the premiums. Of course, things can change.

So far, Bronze plans seem to be the way to go for us as well. But I am going through the next level of due diligence and doing the spreadsheet, etc.

I am also evaluating whether my husband should switch to an ACA compliant plan. [How did he get me to do this work for him?]

In terms of budget, we already have dollars set aside in "emergency funds" that get moved to the next years if not used. We will budget the premium difference, but not the max OOP as that is currently already saved.

 

[NoMoreJob]

This is a very timely article for me (which I still need to read), as I will start working on my spreadsheet tomorrow. I definitely weigh the premiums more than the out-of-pocket expenses. Based on the last few years, we only had one year where I hit the deductible. And I feel confident that even with a few extra doctors visits and maybe even tests, I can come under the annual difference between the premiums. Of course, things can change.

So far, Bronze plans seem to be the way to go for us as well. But I am going through the next level of due diligence and doing the spreadsheet, etc.

I am also evaluating whether my husband should switch to an ACA compliant plan. [How did he get me to do this work for him?]

In terms of budget, we already have dollars set aside in "emergency funds" that get moved to the next years if not used. We will budget the premium difference, but not the max OOP as that is currently already saved.

Just FYI (although you probably are already aware), if you can manage your OMAGI below 250% FPL you may be eligible for cost sharing which requires a silver plan.

 

[audreyh1]

Just FYI (although you probably are already aware), if you can manage your OMAGI below 250% FPL you may be eligible for cost sharing which requires a silver plan.

Not a chance, LOL!

 

[sheehs1]

I agree. Good article. His analysis is basically what I have done in analyzing my health care plan the last 10 years, especially when the premiums started going sky high. So I asked myself, "What is my max pain in any one year" and insure for catastrophic or worst case scenario. Mainly because I do not go to the doctor often. So why pay high premiums for something not used often. It's a different story if you do use it often.

I use the same thought process with my homeowners and car insurance by jacking up deductibles for lower premiums. I figure so far I'm ahead of the game and if something bad happens I can absorb the cost for that one year or so.

 

[clifp]

Looking for input on my health plan

I finally gave up on the Hawaii exchange. (been almost 2 weeks waited for my SSN and citizenship to be verified.) I contacted Kaiser, my existing insurance provider and they were finally able to give me enough info about my choices to make an informed decision.

My two choices are my existing plan which is grandfather Premium were hiked to $377 a month from $337 this year and it not ACA compliant. (that is 12% hike the most ever in the last 12 years) The other plan is Kaiser Bronze 50 plan.

I am 54, I have averaged <2 doctor visits a year for the last 12 years. I have normal blood pressure, border line high cholesterol and border line pre diabetic and am 30+ lbs overweight.

I am finding it hard to make a comparison so I thought I'd get input from the smart folks on the forum. Here comparison of the two plans; existing first Bronze second
Plans Existing Bronze
Premium $378 $243
Deductible 0 6350
Max Out Pkt 3000 6350
Doctors visit $25 $50
Tests 50% $50 per visit
X-Ray 50% $50 per image
ER room $100 20% copay
Urgent Care $25 $50
Hospital/Day $250 20% copay

My existing plan has no drug coverage the bronze plan does. In general I find I can get generics and Walmart or Costco for near $25 and take no drugs on regular basis.

Plan pharmacy (up to a 30-day supply) Generic: $25 maint./$25
other Brand: 50% After $750/$1,500 brand deductible, but still if I get sick the drug plan is better than nothing.

So it cost an additional $1500 a year for my existing plan. It seems to me that a a 2-3 nights at the hospital on the bronze plan would almost certainly max out the $6350, but with my existing plan it may only cost $1000. Of course I have no idea if Kaiser will continue to offer this plan next year. (It seems to me though it is hardly junk insurance.)

On other hand if I never spend a day in the hospital, than I'll have saved $15,000 until I am old enough to get Medicare and I can certainly afford a couple of years having to fork out $6350

Thoughts?

 

[MichaelB]

So it cost an additional $1500 a year for my existing plan. It seems to me that a a 2-3 nights at the hospital on the bronze plan would almost certainly max out the $6350, but with my existing plan it may only cost $1000. Of course I have no idea if Kaiser will continue to offer this plan next year. (It seems to me though it is hardly junk insurance.)

On other hand if I never spend a day in the hospital, than I'll have saved $15,000 until I am old enough to get Medicare and I can certainly afford a couple of years having to fork out $6350

Thoughts?

I found the spreadsheet Animorph built (post 85 in this thread http://www.early-retirement.org/for...-and-coinsurance-copay-68965.html#post1374536 ) to be very helpful.

Have you looked at any other insurer? The larger insurers (BCBS, AETNA, etc) have all the ACA policy information available and quotes directly on their websites.

It doesn't matter if Kaiser renews the plan next year, if they don't you get a new one on the exchange. The ACA compliant plans include a group of essential health benefits that may be of interest, including low or no cost health care services that your current plan may not cover.

 

[clifp]

Thanks I checked out spreadsheet. I was too lazy to build one myself, but I can make a few changes on this one to make it a bit more accurate . Interestingly enough at $<2,000 medical expense, the Bronze plan was cheaper than the existing one, at $15K the price difference the existing was being $1,700 a year less and at $6350 worth of medical expense the difference was $3,400 in favor of the existing plan.

Hawaii has only two providers HMSA (BCBS) and Kaiser. Our rates are pretty reasonable compared to what others are paying in other states. I have been looking for things that the ACA covered that my existing one didn't cover and I really couldn't find any I needed. I don't care about maternity benefits, birth control, Viagra etc. My existing plan had better mental health benefits, (useful after we tear our hair out trying to figure everything out.). For everything else the existing plan was even cheaper.

I compared my existing plan to a ACA Platinum plan with Kaiser which cost $406 month ($28/month more.) The Platinum plan had cheaper tests and X-ray, maternity benefits, and drug plan which was $5 or $10 for drugs and Dr visits were $10. But for every thing else my existing plan had lower co pays and max out of pocket of $3,000 vs $4,000 for the platinum.

All I conclude is that maternity benefits and drug benefits are quite expensive.

 

[ERhoosier]

How is this advice? He said that he didn't need the government site, not that no one might need it.

Ha

Agreed. However, I still thought some mention of subsidy would be appropriate in an article focused on total net HC costs. I suspect that next yr we will be reading sad tales of folks paying full HI premiums for plans outside Exchange who otherwise would have been eligible for significant subsidy.

And bamsphd is right that HI/Exchange situation in NC is not same as other states. Last time I checked, for my state info on private HI insurance sites & Exchange (I did get through!) were not always showing same details for specific Exchange Plans (e.g. same name & premium but not same deductible/OOPmax). I suspect (& hope!) both Exchange & private sites are being regularly updated during this initial roll out.