If you don’t have employer sponsored health insurance, are not enrolled in Medi-Cal, and even if you do get a subsidy from Covered California, families are looking for ways to lower their monthly health insurance in the face of steep rate increases in 2019. There are many options available to families in California that can help them reduce their health insurance premiums. Some may entail more risk, but should be weighed against reduction of the overall monthly health insurance bill they must pay every month.
Splitting Up Family Members To Save On Health Insurance
Not everyone in the family has to be on the same health insurance plan. Some members who need more health care services can be on a benefit rich plan like Gold or Platinum, while other family members can be in a Bronze or Silver plan. I have one family where the mom in on Gold, dad is in a Silver plan, and their son is on a Bronze plan. You can split family members into different plans if you are in Covered California or enroll off-exchange directly with a health insurance company.
The Covered California system makes it easy to create different enrollment units. Each family member can be their own unit. The monthly subsidy is apportioned to each individual based on their age. The older family members will get more of the total monthly subsidy to reduce their health insurance premium than the younger members. If you enroll in health insurance directly with the carrier, you will have to submit a separate application for each of the groups of family members.
The net result is that if everyone is on a Gold plan, and you shift some individuals to Silver or Bronze for 2019, the overall health insurance premium will decrease.
Not all family members have to have the same carrier either. Some family members can enroll with a more expensive PPO plan while other individuals enroll in an HMO from the same company or completely different carrier. I have clients where some family members have chosen the Blue Shield PPO plan and other household members are with a less expensive Kaiser plan. Some family members can be on Covered California health insurance while another member can have an off-exchange health plan. Only Health Net’s IFP PPO has certain doctors and hospitals in-network. It may be critical to have those providers for that family member. This doesn’t preclude the other family members from getting the tax credit subsidy from Covered California.
The downside to splitting the family up into different plan is the billing and family plan benefits. Each health plan enrollment will generally have a separate invoice. If some members are in a Blue Shield HMO and others are in an Oscar EPO plan, there will be two separate invoices each month. Even if the two different plans are with the same carrier, don’t assume the billing will be combined. If the new plans are to be effective January 1, each new plan usually needs a separate binder payment to make the plan effective.
The other issue is the family benefit structure. Under a family plan, when two plan members meet their deductible or maximum out-of-pocket amount, the benefits rollover to the other family members. If mom has a Gold plan, and the rest of the family is on Silver, if the family Silver plan deductible is met, it will not have any influence on mom’s Gold plan.
Insurance As Asset Protection
One of the nice aspects of the Silver plans are set copayment amounts for a variety of health care services such as office visits, labs, and X-rays. But the Silver 70 maximum out-of-pocket amount is exactly the same as the Bronze 60 – $7,550. I’m often asked about catastrophic health insurance plans. The Bronze is about as close as you will get to a catastrophic plan in California.
If your primary purpose for health insurance is asset protection then the Bronze is as good as the Silver. Health insurance is not indemnification where the insurance pays to have your house rebuilt after a fire. Health insurance, in one sense, is there as a backstop to high, catastrophic, bankruptcy inducing medical bills. Once you hit the maximum out-of-pocket amount, all services covered by the health plan for in-network providers is paid 100% by the health plan. Both Bronze and Silver plans include the no cost preventive health care services.
A Silver plan may actually prevent you from hitting the maximum out-of-pocket amount because of the copayments and coinsurance cost sharing. If you hit your maximum out-of-pocket with a Bronze plan, all health care services are covered for the remainder of the year and you are paying a premium lower than the Silver plan for the rest of the year.
Get Off Of Covered California
If you are not getting a subsidy from Covered California because your household income is too high, and you have a Silver plan, you are over paying for health insurance. Covered California Silver plans are artificially inflated by 10% to 15%. You can get an almost identical plan off-exchange (look for Silver 70 Off Exchange Plan name) and easily save 10%. This may be true even for younger adults who receive very little monthly subsidy. You need to look at how much subsidy you receive versus the savings of the Silver 70 Off Exchange plan.
Several of the health insurance companies offer lower cost health plans off-exchange, in addition to the Silver 70 OE, that are not offered through Covered California. These plans, usually Bronze and Silver metal tiers, are almost always less expensive than the standard benefit design plans offered by Covered California.
I Don’t Want To Lose My Doctors
It can be problematic if switching to a HMO plan or different carrier means your doctor is no longer in-network. This is where splitting the family up onto different plans can help. The family member with special doctors can keep that plan while the other individuals can enroll in a plan at a lower cost. But you need to consider how often you see that doctor. Could you pay out of pocket $500 each year for a couple visits to see that doctor if switching plans saved you over $1,000?
There are people who have Medi-Cal, but still pay out-of-pocket to see certain specialist not in the Medi-Cal network. I have clients enrolled in Kaiser health plans because they are the least expensive. They have the Kaiser plan, not for health care services, but asset protection in case an accident sends them to the emergency room. Otherwise, they pay out of pocket to see their old doctors, who might not accept any insurance plans at all.
Check Your Income
Because health insurance premiums have gone up so much, even upper income households are looking at Covered California. The question is how they get their income low enough to qualify for the subsidies. For families with self-employed income earners there may be some relief. The 2017 tax reform legislation is giving self-employed individuals and small business owners a 20% reduction from their net income. There are some restrictions and limitations, but the 20% deduction may be enough to squeak into Covered California for 2019. (See also Trump Tax Reform May Cut Your Subsidy)
Families need to start approaching health insurance more strategically, just like the health insurance companies. The health insurance companies look for ways to reduce paying claims within the plan benefit structure. Most PPO plan out-of-network benefits start with a $5,000 deductible and $20,000 maximum out-of-pocket amount. These amounts are high so the health plan can avoid paying for out-of-network services. Health plans often have skinny networks with limited numbers of doctors and hospitals compared to employer group plans. The health plans are just trying to limit their exposure and maximize the profit potential.
There is no reason a family has to have all the household members in a Gold plan and feed the insurance company plan premiums for benefits most of the family don’t use. There is nothing wrong with family members having different carriers either. If you are willing to sacrifice the convenience of having one bill for your health insurance every month for the whole family, you can easily save some money in 2019.
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