With open season in full gear for many workers, Michelle Andrews, who writes a weekly column for Kaiser Health News on health insurance issues, answered questions submitted online by readers of The Washington Post Tuesday. Here are some of the questions and answers:
Q: A friend of mine said that there will be a new line on his W-2 which will tax the health care coverage he gets from his company employer. He earns about $60k / year. I thought the tax would only be for very expensive plans offered to executives. Can you clarify?
A: Starting next year, employers have to report the value of the health benefits they provide to employees on W-2 forms. But it’s for information purposes only. You won’t be taxed on that amount.
Q: I understand that those with pre-existing conditions will be able to receive coverage, but will there also be no limit to the amount they can be charged for their monthly premium?
A: In 2014 and beyond, the health reform law prohibits health plans from refusing to cover anyone because of pre-existing conditions. And beginning now, new employer plans can’t refuse to cover kids under age 19 because they have a pre-existing condition.
Until 2014, adults who’ve been refused coverage on the private market and have been uninsured for at least six months can get coverage through pre-existing condition insurance plans that are now up and running in each state. You can find out about what’s available in your state at www.pcip.gov. Premiums vary based on a number of factors, but in general they can’t be higher than the price of a standard individual policy in that area.
Q: I’m self-employed, married with a toddler son, and my wife, who has a more traditional job carries the health insurance for our family. We’re thinking about having another kid, and if we do, my wife would like to reduce her hours to care for the newborn. We might have to give up her health insurance. What options do we have?
A: If you give up your wife’s policy, you’d probably end up looking for coverage on the individual insurance market. That can be a dicey proposition because, except in a handful of states that require insurers to offer coverage to all applicants, you can be turned down for any number of health conditions. In addition, insurance prices are often higher in the individual market. Before you give up your employer coverage, you might want to check out available individual policies in your area. Websites like www.ehealthinsurance.com can give you an idea, or you can contact a health insurance broker.
One detail to keep in mind: Individual insurance policies typically don’t cover maternity care, so you wouldn’t want to give up your job-based coverage before having another child.
Q: I’ve read that it may be less expensive for big companies to drop health care coverage for employees and pay the penalties than it will be for them to continue coverage at the same level. Is that an unintended consequence of the new law?
A: It’s too soon to talk about consequences of this provision, unintended or otherwise, since companies won’t have to begin paying penalties for failing to offer adequate coverage until 2014. Legislative analyses haven’t projected a significant reduction in employer-based coverage as a result of the penalties. Some experts point out that offering good health insurance continues to be a powerful recruitment tool, and companies that drop coverage may find themselves at a competitive disadvantage.
Q: I’ve never used a FSA but am thinking of having one for next year. Can you explain to me what I can use this money for? I know you can’t use over-the-counter medications but I haven’t been able to find a site that says what you can pay for with this account. What else besides co-pays and prescriptions? I’m at a loss and hope you can help. Thank you!
A: You can use an FSA for your out-of-pocket share of many medical, dental, vision and other expenses. Check with your insurer and your HR department for specifics.
One clarification: You can still use your FSA for over-the-counter medicines and drugs next year. But you’ll have to have a prescription from your doctor to do so.
Q: Open season started yesterday. I am amazed by the increases in out-of-pocket costs in most plans this year. Co-pays on some plans have gone up 20 percent and more. Can you explain why this is happening? All of this can’t be blamed on the new health care legislation enacted this year. Any advice on deciding which plans are better buys even though most plans have increased both premiums and co-pays?
A: As health care costs continue to rise, employees are increasingly expected to pay a greater proportion of their own health care costs. That trend is well established. Some say it’s a good thing for employees to have more “skin in the game,” that it leads to less wasteful spending. Others say that leads to people skipping necessary care as well as unnecessary care.
As for picking the best plan, it’s going to be different for everyone. Take a look at what you spent on health care last year and what you expect this year, and see how the different plans would cover those expenses. And make sure to look at the out-of-pocket maximum, the maximum amount you’d have to pay if you get sick. You should be comfortable that you can afford that.
Q: Do you have any guidance to offer in reviewing the individual plans? Any pitfalls we should avoid?
A: It’s always tempting to pick the plan with the lowest premium, but that may not provide the best coverage for you. If you take certain drugs, make sure they’re on the plan’s formulary, or list of covered drugs, and examine what your costs will be. Look at the deductibles and out-of-pocket maximums for in-network and out-of-network care. Plans are increasingly moving toward co-insurance for services, in which you’ll be required to pay a percentage of the costs rather than a flat copayment. That can add significantly to your costs. That doesn’t mean you shouldn’t sign up for a plan with coinsurance, but it’s important to understand what your financial liability might be.