Switching in and out of ACA Plans

[modhatter]

Was thinking about this the other day. I have never considered a "high deductible" type policy in the past. Maybe because I purchased my policies a long time ago, before these were being pushed so hard by the insurance companies. I can see pluses and minuses to these plans. The most obvious is if you don't get some serious re-occurring illness requiring on going expensive medicine (say develop diabetes, or a heart condition) that requires you to have on going care year after year - you could save money with a high deductible plan.

(I am all ready retired, so no income other than investment income, so HSA not considered at this point)

So assuming you don't have any of these conditions and your medications currently are inexpensive generic drugs. What's to prevent someone from signing up for one of these high deductible plans, but if you get sick and you know it is going to be on-going - then switching over the following year to a different type low deductible plan.

Has this issue been addressed? It's nearly the same as not getting insurance until you get sick type of scenario. (though I am aware you have to wait until enrollment time) With the pre-existing condition eliminated, it seems people could do this.

 

[NW-Bound]

I have not seen anything that will prevent you from doing so, just from Web surfing.

But then, I did not read through the 2500 pages of the actual law.

 

[GrayHare]

With many chronic illnesses the out of pocket max is more important than the deductable, and under the ACA all plans share the same OOP max ($6,350 for individuals, double that for families).

 

[donheff]

This is a feature of the program. It has always been a feature of the Federal Employees Health Benefits Program -- you can switch to any plan you want during the annual open season. The cost to allow this is baked in. When you think about it do we want people to have to make a choice once and then live with it forever? Just another form of pre-existing condition.

 

[modhatter]

With many chronic illnesses the out of pocket max is more important than the deductable, and under the ACA all plans share the same OOP max ($6,350 for individuals, double that for families).

Yes, I agree the OOP max is very important to protect people from losing all their savings, home etc. or having to declare bankruptcy. But most people do not have major surgeries every year. So the lack of affordability of a high deductible would come into play if you developed a chronic condition, in which you must pay year after year, and have to take expensive medications. If that were to happen, you would probably want out of those high deductible plans real quick.

 

[GrayHare]

If that were to happen, you would probably want out of those high deductible plans real quick.

Premiums and/or co-pays of a non-HDHP are sure to be higher such that, at the end of the year, it may not be a much cheaper plan than the HDHP. With the ACA standardizing things, I imagine for the chronically ill the total annual cost difference between HDHP and non-HDHP plans will decrease compared to that now.

 

[modhatter]

Premiums and/or co-pays of a non-HDHP are sure to be higher such that, at the end of the year, it may not be a much cheaper plan than the HDHP. With the ACA standardizing things, I imagine for the chronically ill the total annual cost difference between HDHP and non-HDHP plans will decrease compared to that now.

In my state the difference is about $120 a month ($360 vs $240) with a $750 deductible and lower co-pays as opposed to a $4-$5,000 deductible and higher co-pays. So you would have to spend over $2,200 between medical and prescription before the higher cost plan with low deductible starts to make sense. Of course you can do that quickly with one MRI or even an out patient surgical procedure. Decisions, decisions.

 

[Alan]

This is a feature of the program. It has always been a feature of the Federal Employees Health Benefits Program -- you can switch to any plan you want during the annual open season. The cost to allow this is baked in. When you think about it do we want people to have to make a choice once and then live with it forever? Just another form of pre-existing condition.

Similarly with my work (and now retiree) group insurance. There are cheaper options with lower premiums and much higher deductibles that younger and/or healthier folks choose, but you can always switch plans once a year during open enrollment.

 

[Accidental Retiree]

(I am all ready retired, so no income other than investment income, so HSA not considered at this point)

So assuming you don't have any of these conditions and your medications currently are inexpensive generic drugs. What's to prevent someone from signing up for one of these high deductible plans, but if you get sick and you know it is going to be on-going - then switching over the following year to a different type low deductible plan.

Having only investment income does not preclude one from having an HSA plan, according to what I've read here and elsewhere. But maybe I've missed something.

 

[modhatter]

Well maybe I'm wrong. I thought it had to be earned income.

 

[Accidental Retiree]

There are several threads here on this topic, but I just googled this:

Qualifying for a Health Savings Account - washingtonpost.com


"You don't need income from a job to take advantage of the tax deduction. "They can deduct their contributions from any type of taxable income, such as earnings from investments, even if it is not earned income," says Roy Ramthun, president of HSA Consulting Services in Washington, D.C."

 

[Sue J]

Thanks for the link about HSAs. I was just researching these this morning. For 2014 we are considering some of the Obamacare HSA options. The high deductible is a little scary but looking back at our last 5 years of medical expenses we've haven't had more than about $2200 in expenses for me in a year and far less for DH.

Can you contribute a year's worth into the HSA in January and then add additional amounts as needed or do you have to make monthly contributions? Does it have to be invested or can it just be a checking or savings account? If I have enough left over from one year can I make no contribution the following year?

I'd like to set one up that would have a debit card to use for expenses. I looked at Navigate to a Health Savings Account - HSA Bank

Those of you that used HSAs before, what do I need to know?

 

[Accidental Retiree]

SueJ, I have had a BofA HSA, which I got because I have (until 12/31) an HDHP Aetna plan.

I have been really happy with the BofA HSA and its ease of use, but then, I have had nothing else with which to compare.

I deposited funds lump sum one year and incrementally the next year. As long as I keep at least $1000 in the cash account, I can invest the rest in mutual funds.

I have an HSA 'debit' card which I use at my dentist's office (and still get the cash discount, BTW) and at my optometrist.

When I can't use the card, say, at a doctor's office, it is very easy to go online, put in a claim, and have the funds directly deposited into my checking account.

DH has been envious of my HSA, so for 2014, he and I will both select the bronze HSA plan with Kaiser. We will see what HSA investment offerings they may have, but I will also have DH look into the HSAs that offer VG funds. (Mine does not.)

There are also tax advantages to having these plans, and you can find discussions of that around old threads in this forum.

 

[NoMoreJob]

Well maybe I'm wrong. I thought it had to be earned income.

No, it does not have to be earned.

Actually an HSA account (in conjunction with a HDHP of course) can be used by retirees in a similar manner to a 401(k) plan for those who work if it's saved and left to earn rather than spent. Of course you need sufficient other income to cover your medical expenses to do this.

The HSA is actually a better vehicle in that it is not only non-taxable in and non-taxable growth like an IRA, but it's also non-taxable when withdrawn as long as it's used for medical expenses (heaven knows we're all likely to have our share of those as we age). It can eve n be used for Medicare Parts A and B as well as for out-of-pocket expenses such as copays, deductible, medications, etc.

Here's a site with some of this info...... https://www.buckconsultants.com/thriving/HSA/faq.html#seven

 

[walkinwood]

I just learned that you cannot use your HSA funds to pay premiums - except under certain conditions

From hsacenter.com
Can my HSA be used to pay premiums?
No, this would be a nonmedical withdrawal, subject to taxes and penalty.

Exceptions.
No penalty or taxes will apply if the money is withdrawn to pay premiums for:
1) Qualified long-term care insurance; or
2) Health insurance while you are receiving federal or state unemployment compensation; or
3) Continuation of coverage plans, like COBRA, required under any federal law; or
4) Medicare premiums.

 

[Birdie Num Nums]

SueJ, I have had a BofA HSA, which I got because I have (until 12/31) an HDHP Aetna plan.

I have been really happy with the BofA HSA and its ease of use, but then, I have had nothing else with which to compare.

Does BoA really charge a $4.50 monthly maintenance fee, regardless of balance, and $5.00 just to get a batch of contribution slips? I have an HSA account with Bancorp Bank, whose fees appear better (e.g., no monthly maintenance fee if balance is >$2,500).

 

[ERhoosier]

With many chronic illnesses the out of pocket max is more important than the deductable, and under the ACA all plans share the same OOP max ($6,350 for individuals, double that for families).

Not sure this is true. Those figures are maximums, but IIRC carriers may offer lower deductibles/OOP max in specific Exchange Plans if they want. According to my shopping on healthcare.gov, some Silver & Gold Plans in my regions well less than $6350/12,700.

 

[NoMoreJob]

Not sure this is true. Those figures are maximums, but IIRC carriers may offer lower deductibles/OOP max in specific Exchange Plans if they want. According to my shopping on healthcare.gov, some Silver & Gold Plans in my regions well less than $6350/12,700.

Yes, and cost sharing which kicks in below 250% FPL I believe, can bring down both the deductible and OOP max.

 

[jflynn4]

Was thinking about this the other day. I have never considered a "high deductible" type policy in the past. Maybe because I purchased my policies a long time ago, before these were being pushed so hard by the insurance companies. I can see pluses and minuses to these plans. The most obvious is if you don't get some serious re-occurring illness requiring on going expensive medicine (say develop diabetes, or a heart condition) that requires you to have on going care year after year - you could save money with a high deductible plan.

(I am all ready retired, so no income other than investment income, so HSA not considered at this point)

So assuming you don't have any of these conditions and your medications currently are inexpensive generic drugs. What's to prevent someone from signing up for one of these high deductible plans, but if you get sick and you know it is going to be on-going - then switching over the following year to a different type low deductible plan.

Has this issue been addressed? It's nearly the same as not getting insurance until you get sick type of scenario. (though I am aware you have to wait until enrollment time) With the pre-existing condition eliminated, it seems people could do this.

I believe what you're asking is whether the ACA is going to effectively work like traditional employer based plans. The short answer is yes. The ACA is set up to offer an "annual enrollment period" that will run from October 1st to December 15th, during which you can shop for coverage on the Marketplace for a plan that will run from January 1st to December 31st of the following year. During that enrollment period, you can sign up to keep the plan you have, if it's still offered into the next year, or change the plan or company if you so choose.

(During this, the first year of ACA, the open enrollment period runs through March 15th but, in the future, only "life changing events" will allow access to coverage post December 15th of each year.)

In many ways, (other than the obvious screw up that we're experiencing with the Marketplace), the use of the Exchange is very, very similar to employer based plans .... even to the point of the "subsidy." Most large employers heavily subsidize the cost of their employee's insurance coverage as, based on income levels, the federal government will do in the private market.

 

[Accidental Retiree]

Does BoA really charge a $4.50 monthly maintenance fee, regardless of balance, and $5.00 just to get a batch of contribution slips? I have an HSA account with Bancorp Bank, whose fees appear better (e.g., no monthly maintenance fee if balance is >$2,500).

I haven't paid the $4.50 monthly maintenance fee; fees were waived because I enrolled with this plan via Aetna. I am not sure what will happen when Aetna is no longer my insurance carrier.

As far as deposit slips, well, I just made copies of the ones they provided to me and used those. They seem to work just fine. However, I can also have funds moved directly from my bank account.

 

[47]

There are several threads here on this topic, but I just googled this:

Qualifying for a Health Savings Account - washingtonpost.com


"You don't need income from a job to take advantage of the tax deduction. "They can deduct their contributions from any type of taxable income, such as earnings from investments, even if it is not earned income," says Roy Ramthun, president of HSA Consulting Services in Washington, D.C."

You don't need earned income to make use of HSA. But I think what the OP meant was that with just the investment income he will qualify for subsidy; and with a subsidy a silver level plan is a much better option than "starving" yourself in a barebones HSA plan just to get the deduction.

And then again, I may be reading too much into his intentions.

But the above line of thinking certainly applies to me and that is the decision I came to. I know for sure HSA deduction is allowed without earned income as I have taken it in the past years with my CPA's blessing.

 

[NoMoreJob]

You don't need earned income to make use of HSA. But I think what the OP meant was that with just the investment income he will qualify for subsidy; and with a subsidy a silver level plan is a much better option than "starving" yourself in a barebones HSA plan just to get the deduction........

Just for others' benefit, not all HSA plans are "barebones." We have a good silver leve HSA option in our state which can become really good if you're eligible for cost sharing. In addition, your HSA contribution is a deduction from income for ACA purposes so may help qualify you for the cost sharing.

 

[frank]

when they say 6350 single for out of pocket maximum on these health insurance plans, does the 6350 include,, prescriptions, copays, premiums? if not and you are paying hypothetically 400 per month. at the end of the year your actual out of pocket will be 4800 plus 6350. is that right?

 

[47]

when they say 6350 single for out of pocket maximum on these health insurance plans, does the 6350 include,, prescriptions, copays, premiums? if not and you are paying hypothetically 400 per month. at the end of the year your actual out of pocket will be 4800 plus 6350. is that right?

Preimums are NEVER included in the out of pocket maximums. It also does not include copays (as far as I know) if the copay is given as a fixed dollar amount and not as a percentage of the actual bill.

For prescriptions -- pre-ACA, if your plan "covered" that prescription, then your share of the payment will be added to the oop calculation, and otherwise not. But as ACA includes prescription coverage, yes your share will count towards oop.

 

[NoMoreJob]

Preimums are NEVER included in the out of pocket maximums. It also does not include copays (as far as I know) if the copay is given as a fixed dollar amount and not as a percentage of the actual bill.

Typically all copays, deductibles and co-insurance do apply toward the out-of-pocket maximum, but you should always read the plan summary which should spell these things out.