Health insurance quandry

[Rich_by_the_Bay]

When I FIRE in the not too distant future, I will have the option of continuing my current BCBS policy on my own nickel at standard group rates. I'm grateful for access to this policy, though it is expensive. I 'll probably do a high deductible/HSA deal. This group policy covers the whole state government and is unlikely to be terminated (and if it is, the incoming carrier would likely have to protect the current policyholders). I believe they will cover me if I move elsewhere, though I don't entirely trust my source on that.

Problem is, once I let it lapse for any reason, I'm out. Is it even worth looking for an individua/family policy independently to save a few grand a year, or in this day and age should I just bite the bullet and stick with the "sure thing" meaning my old BCBS policy? I realize that carriers can't summarily drop you because you were sick but I do have concerns about getting stranded if they stop writing the whole product line or if premiums rise inordinately.

In other words, is it worth a few K per year to keep the volume and bargaining power of the state on my side?

 

[d]

i'd doubt that an "independent" policy of equivalent coverage would come close in terms of cost.

 

[REWahoo]

When I FIRE in the not too distant future, I will have the option of continuing my current BCBS policy on my own nickel at standard group rates. I'm grateful for access to this policy, though it is expensive....

In other words, is it worth a few K per year to keep the volume and bargaining power of the state on my side?

Doc, if I were in your shoes I think I would buy myself some peace of mind and stay with the group BCBS policy, pay the difference and not worry any more about medical coverage. I suspect you can afford the 'few K per year' without doing any real damage to your retirement lifestyle.

It's not like you have to pay the extra from now on, only until you are eligible for Medicare, right?

 

[Rich_by_the_Bay]

It's not like you have to pay the extra from now on, only until you are eligible for Medicare, right?

Right. I guess if I can confirm its portability in the event we choose to move out of the area, that would clinch it for me. I'll need it for about 6-7 years if all goes according to plan.

 

[mykidslovedogs]

Rich,

Are you with a large group or a small group? Large group benefits are ERISA regulated and not necessarily subject to state law, so the policy could easily be portable. Your HR people should know. Large group benefits are typically defined by the large company that is offering the benefit plan, and then the large company is usually self-insured. The large company contracts with a carrier in order to use the carrier's administrators and networks. The large groups then also contract with re-insurers in case they have claims that exceed what they can self-insure. Your contract should detail portability of coverage.

If your company offers benefits to retirees, and if the premiums are affordable to you AND you like the options that you have to choose from, I would just stick with your retiree benefits until you are Medicare eligible. The group rates probably won't be much higher than an individual plan, because large group rates are typically community rated, which means that the younger folks are picking up some of the slack for the older folks as far as premiums go.

Large group is a whole different animal than small group or individual coverage.

 

[Rich_by_the_Bay]

Are you with a large group or a small group? ...
Large group is a whole different animal than small group or individual coverage.

It's got to be large, I assume - the Florida government policy. I looked for the actual policy in the material given to me when I was hired, but it's not there. I'll ask for a copy from HR. I think one reason if feels high is that we are a family of two paying the same as a family of 6. The only break is for individual coverage (one person).

Thanks for the info. Useful to know that premiums are probably not that different from individual. Still a bit far out to start price comparisons, but I'll do my homework when the time comes. Gonna crank up that high-deductible option next year to get a jumpstart on the HSA balance while we are healthy.

 

[mykidslovedogs]

Oh - I see. When rates are only two-tiered, it can be more expensive for a two-person family. I like it much better when rates are three or four-tiered.

Don't forget that you are now allowed (as of 1/1/07) to make a one-time rollover from an IRA to an HSA equal to the maximum allowable amount for that year. This rule was put into place in order to help people get a headstart on saving for their deductible. It's also a way to be able to start using some of your IRA savings without having to pay any penalties or taxes before age 65.

 

[Rich_by_the_Bay]

Don't forget that you are now allowed (as of 1/1/07) to make a one-time rollover from an IRA to an HSA equal to the maximum allowable amount for that year. This rule was put into place in order to help people get a headstart on saving for their deductible. It's also a way to be able to start using some of your IRA savings without having to pay any penalties or taxes before age 65.

Hmm. Is that on top of the routine HSA contributions made by my employer and me?

 

[Martha]

Hmm. Is that on top of the routine HSA contributions made by my employer and me?

No.

This is just a one time chance to rollover funds out of an IRA into an HSA without paying tax. Given that HSA contributions are deductible anyway, it isn't that great of a deal.

Let us know what you find out on coverage if you move away from the service area. Here is a guide that has some info on Florida state employee retiree health insurance: http://dms.myflorida.com/human_reso...ance/publications/2007_retiree_benefits_guide

 

[mykidslovedogs]

No.

This is just a one time chance to rollover funds out of an IRA into an HSA without paying tax. Given that HSA contributions are deductible anyway, it isn't that great of a deal.

What do you mean that it isn't that great a deal? Martha, you're missing the whole point on the reason for the new law. They put it into place specifically for people like you who continually complain that HSAs are no good because it takes too long to save for the deductible. Now people have a way of rolling over money from their IRA accounts that they can start using right away for medical expenses without penalty or taxes. The whole purpose was basically to help give people a head start on saving towards their deductible.

Let's say that you have the option, as a family, of purchasing a $4000 family deductible HSA, with 100% coverage after deductible, through your retiree benefit. The $4000 deductible may seem scary, but if you and/or your spouse are over 55 yrs old, you can roll over the max family contribution of $5650 PLUS a catchup contribution for $800.00 from your IRA to your HSA immediately. At this point, you have a healthplan that is covering you at 100% (you've self insured your deductible and after that there are no copays or coinsurance to think about) PLUS you still have $2450 extra left over to start covering your deductible for year #2. Assuming you don't use all of that money, it is earning interest tax free in your HSA account all the while it is left in there, and it continues to grow interest tax free year after year if it is not used. I think that's a pretty good deal!

But true, it is not on top of what you can put away that first year....it is in place of, and since you already have taken the tax deduction, you can't "double dip" so to speak. The rollover is only in place of that year's contribution.

 

[Rich_by_the_Bay]

Let us know what you find out on coverage if you move away from the service area. Here is a guide that has some info on Florida state employee retiree health insurance: http://dms.myflorida.com/human_reso...ance/publications/2007_retiree_benefits_guide

Thanks. I found the policy benefit book on line. Looks like they have a "Blue Options" plan which allows out of state (and even out of country) care. I don't see anything about paying for these features, may be included.

And Florida is self-insured -- BCBS is the third-party admin only. Looks like that'll be the plan. It's a good one for those who have the money to fund the HSA and pick up the deductible; it could be expensive if illness strikes to the tune of several thousand dollars a year in subscriber cost with premiums about 2K per year lower. Works for us, though it's not for the faint of heart or those with little disposable income.

 

[mykidslovedogs]

it could be expensive if illness strikes to the tune of several thousand dollars a year in subscriber cost with premiums about 2K per year lower. Works for us, though it's not for the faint of heart or those with little disposable income.

One thing to think about is that if someone is chronically ill, even on a $500 deductible copay plan, oftentimes, the out of pocket costs end up being more than an HSA deductible. By the time you add up the extra premiums, plus coinsurance splits you pay on top of the deductible (usually about 20% to a certain max OOP), plus prescription drug copays and office visit, hospital and ER copays, oftentimes all of these costs added up each year end up being way more than a $2-4K deductible HSA plan.

 

[KB]

Rich,
The out of area coverage should be included in your current plan. If you go to a BCBS provider in a different state (or country), they will submit your claim to your Home plan (Florida) for processing. You'd still get an EOB from your regular BCBS plan. The 2 plans would work together.

 

[Helena]

BCBS plans have a interplan system
where providers will file their claims
with the BCBS plan in their state.
Then the host plan [provider's
state] and the home plan [member's
BCBS plan] will work together to process
and pay the claim.

The provider will be paid by the host BCBS plan,
the member will get an EOB from their home plan.

This way, members get provider discounts from
providers contracting in other BCBS plans.

This BCBS interplan system is called, Blue Card.