This week, I respond to reader questions about coverage subsidies for families under the Affordable Care Act, filling the gaps in Medicare coverage and laws governing health plans in companies that conduct business in more than one state.
Q. I expect the annual premium for my company’s group plan to be about $24,000, or 50 percent of my family’s income. Will my family be eligible for subsidized coverage on the state insurance exchanges in 2014, provided we meet the poverty-level requirements?
A. It depends. Under the Affordable Care Act, companies with 50 or more workers must offer health insurance coverage that is both affordable and adequate; otherwise, their workers may be eligible for subsidized coverage on the online health insurance exchanges if their income is less than 400 percent of the federal poverty level ($94,200 for a family of four in 2013).
A plan is considered adequate if it covers at least 60 percent of an employee’s covered medical expenses and affordable if the cost for employee-only coverage doesn’t exceed 9.5 percent of a worker’s income.
Some consumer advocates argued that the 9.5 percent test should also apply to the cost of family coverage, which is generally much more expensive than employee-only coverage. But in a final rule issued in February, the Internal Revenue Service said that it would not consider the premium for family coverage in determining affordability.
If the premium for employee-only coverage at your company is less than 9.5 percent of your income, your family may be out of luck.
“The whole family could be barred from premium tax credits on the exchange,” says Edwin Park, vice president for health policy at the Center on Budget and Policy Priorities. Depending on family income and size, however, the kids could be eligible for coverage under their state’s Medicaid or CHIP program, Park says.
Q. I am turning 65 in October. I will be selecting a Medigap policy to cover the cost of the coinsurance for charges not covered by Medicare. Are there changes planned in 2014 to govern Medigap costs? And what happens if I choose to change my Medigap policy after one year? Will insurers examine my medical history to determine whether to cover me?
A. Approximately one in four Medicare beneficiaries has a Medigap supplemental policy to cover the gaps in Medicare coverage, including deductibles and 20 percent coinsurance for many charges. Several of the most popular policies cover all of beneficiaries’ deductibles.
In recent years, as part of the effort to bring down the federal deficit, federal officials and policy experts have made several proposals to increase cost-sharing on supplemental policies. The thinking is that if seniors had to pay for some of the costs of care, they would be more careful in their medical decisions, thus saving Medicare money. To date, none of those plans has been adopted, and experts say they don’t anticipate major changes anytime soon.
“We do not see any significant changes…in 2014,” says Dan Mendelson, CEO of Avalere Health, a research and consulting firm with experience in Medicare.
After you turn 65 and enroll in Medicare Part B, there’s a six-month open enrollment period during which beneficiaries can sign up for a Medigap policy without having medical conditions taken into account. If you decide to switch plans later on, however, insurers don’t necessarily have to issue you a policy.
Q. I work for a company that is based in one state but has stores in several states. I belong to the company’s group health plan. Which state laws govern my policy — that of the home office or that of the state where I work?
A. Chances are good that your company plan is self-funded, meaning your employer pays for workers’ health-care claims directly rather than contracting with an insurer. The bigger the company, the more likely it is to be self-funded. Eighty-one percent of workers at companies with 200 or more employees are in a self-funded plan, compared with 15 percent of workers at smaller firms, according to the Kaiser Family Foundation’s 2012 survey of employer-sponsored health benefits. (Kaiser Health News is an editorially independent project of the Kaiser Family Foundation.)
If your company is self-funded, it doesn’t matter where it’s based because self-funded health plans are not subject to state insurance laws. So, for example, it wouldn’t have to comply with state coverage mandates that require health plans to provide certain benefits, such as treatment for autism or infertility. Because large companies often provide relatively generous benefit packages anyway, the impact of those exceptions on workers may be small, say experts.
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