Susana Zinn, independent life insurance agent, Los Angeles, CA.
U.S. Department of Health and Human Services: “What is the Lifetime Risk of Needing Long-Term Services and Supports?”
Genworth Financial: "Cost of Care Survey."
National Association of Insurance Commissioners: “Consumer Alert: 10 Things You Should Know about Buying Long-term Care Insurance,” “What You Need to Know About Long-Term Care Insurance.”
Texas Department of Insurance: “Long-term care insurance guide.”
Greg Klingler, certified financial planner, director of wealth management at the Government Employees’ Benefit Association (GEBA), Hanover, MD.
American Association for Long-Term Care Insurance: “Long-Term Care Insurance Facts, Data, Statistics -- 2020 Reports.”
Bonnie Burns, policy specialist, California Health Advocates, Sacramento, CA.
Biden Extended The ACA Special Enrollment Period To August. Here’s How To Choose A Plan
There’s good news if you’re shopping for health insurance: President Joe Biden further extended the special enrollment period in the health insurance marketplace to Aug. 15 from the original May deadline.
This gives millions of Americans even more time to purchase a health insurance plan in an economy still reeling from the double whammy of unemployment and health risks from the coronavirus pandemic.
“Millions of families will be able to sleep a little more soundly at night because they don’t have to worry about losing everything if they get sick,” the president said in a speech on Tuesday.
Prior to the president’s order signed in January, most states only permitted enrollment in a marketplace, or ACA plan, from Nov. 1 through Dec. 15, or if you experienced a qualifying life event, such as having a baby or losing health insurance you had through a job.
According to a Jan. 2021 study by Kaiser Family Foundation (KFF), a health care issues nonprofit, Biden’s order to reopen and subsequently extend the enrollment period for the health insurance marketplace gives nearly 9 million uninsured Americans access to free or subsidized health insurance.
However, there’s no singular plan that’s a fit for everybody, and parsing the various options can be challenging for anyone. Here’s what you need to know before signing up for a plan during this special enrollment period.
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1. Seek Professional Advice to Choose a PlanSelecting the right health care plan for all but the most basic coverage requires a thorough analysis of your unique circumstances. Don’t go it alone.
“A lot of times people will enroll without help and find out when it’s too late that they signed up for the wrong plan,” says Jason Alford, VP of sales and business development at Health First Health Plans.
There’s no cost to you to use an independent insurance agent (because agents are paid commissions by the insurer) and they can help you identify a plan that will suit you and your family needs more efficiently than you might on your own. Insurance agents can review both plans on the health insurance exchange and plans with private insurers and your premiums will be the same cost whether you make use of an agent or muddle through the details yourself.
If you do use a broker, make sure they’re licensed and have a contract to sell marketplace health plans. Otherwise, they may not be able to provide the widest array of options for your situation and budget. Most importantly, if you qualify for savings and/or subsidies like tax credits from a marketplace health plan, make sure your broker knows this so they will review only relevant options. You can find a certified marketplace broker on the HealthCare.Gov Find Assistance page.
2. Get Up To Date With Stimulus Plan Changes in The Health Insurance MarketplacePresident Biden’s massive $1.9 trillion stimulus bill, the American Rescue Plan Act (ARPA), which passed in March, contained a lot of changes for Americans shopping on the federal health insurance marketplace. Here are the biggest:
If you qualify for a subsidy now under these new considerations, a new plan on the exchange may be just as comprehensive, or even better, then what you’re getting now—and might cost you less. It’s worth taking the time to explore what your options are under the new rules, which kick in on April 1. Keep in mind though that if you do switch plans, you’ll have to start over again with any of the new plan deductibles.
3. The Cheapest Plan Isn’t Always the BestThe four types of coverage on the health care marketplace are known as the “metal” plans: bronze, silver, gold and platinum. Like their namesakes, a silver plan has higher monthly costs than a bronze plan and gold costs more than silver. Platinum is the highest level.
For the special enrollment period, these are the average monthly premium costs for a single 40-year-old before any tax credits or subsidies, according to a KFF analysis of average premiums from 2018 to 2021:
With each increase in price, however, comes a corresponding increase in coverage:
Although you may be tempted to pick the plan that costs the least upfront, this plan may cost you more over time through out-of-pocket costs, and because cheaper plans cover less of your overall health care costs.
If you have recurring medications, for example, and you choose a plan that has the cheapest premiums but little to no prescription coverage, you could end up paying much more then if you had bought a plan that costs a little more each month but had much richer pharmacy benefits.
“Really seek to understand the costs within the plan to avoid surprises down the road,” Alford says.
4. Consider Your Current and Future Financial SituationIf you’re unemployed as a result of the pandemic but expect that once a vaccine is widely available you’re likely to find a job within the next several months, that should weigh heavily in your calculations towards any health care plan.
“If you’re not eligible for a subsidy towards an health care marketplace plan, look to a short-term medical plan or similar alternative,” says Jeff Smedsrud, president of insurance services for Healthcare.Com, an online health insurance marketplace. He says this may be a more cost-effective solution for someone who is likely to only need short-term emergency coverage.
Short-term insurance is commonly used to bridge a coverage gap during a time of transition, such as if you’ve retired a few months before you’re eligible for Medicare, or you’re in between jobs and want a fast and flexible solution. Although short-term insurance can often have lower premiums than health care marketplace plans, it’s not a guarantee that it will provide the coverage you need outside of an emergency.
Short-term plans only cover a handful of medical scenarios like emergency hospital expenses and limited preventative care, depending on the plan you choose. Because the coverage is limited and only expected to be held for a limited amount of time, the monthly premiums are generally less expensive than marketplace plans.
All plans on the government-sponsored marketplace, by contrast, are required to provide coverage to those with preexisting conditions as well as ten essential health benefits; short-term insurance plans are not. You’ll have to weigh the risks of having just minimal coverage before deciding which option might be best if you expect to get a new job that offers health care benefits within the next year or so.
5. If You Have Access to COBRA, It Might Be Your Best OptionIf you’re out of work, but had health care benefits through your previous employer, find out if you’re eligible for continuing coverage benefits. This option is commonly called COBRA, for the Consolidated Omnibus Budget Reconciliation Act, which established the right for employees to keep their coverage for a limited period of time after their employment ends.
However, COBRA is a costly option; while you get to keep your health plan, you’re usually responsible for paying 100% of the premium, plus a 2% administration charge. Depending on your plan, this could cost you thousands of dollars until you find new employment.
As part of ARPA, employers are now required to cover 100% of premiums for eligible former employees who elect to have COBRA coverage between April 1 and Sept 30, 2021.
There’s also another cost-saving benefit to choosing your former employer’s COBRA plan to consider, in addition to the American Rescue Plan subsidy.
“If you had a job and you lost it in June, [with COBRA] you don’t start a new deductible, you don’t start new copays, all those things that can add up,” Smedsrud says.
Typically, an employer must have had 20 or more employees to offer the benefit to workers who were let go. An employee who was dismissed for gross misconduct or who left their job voluntarily is typically not eligible for COBRA.
New Ways To Get Health Insurance When You're Unemployed
© (Getty Images) Young woman sitting while the nurse examining her throat during visit at hospitalWhen you lose your job, you usually lose your employer's health insurance, too. You have several options for replacing that coverage, but until recently many of those choices were expensive and especially difficult to afford when your income is down. But the American Rescue Plan, the relief package that was signed on March 11, 2021, makes several of those options much more affordable.
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Whether you just lost your job or are reassessing your options after losing your job in the past year, here's what you need to consider when choosing new health insurance coverage. With new subsidies and other assistance, the best choice may be totally different now than it had been in the past.
If you had health insurance at work and then lose your job, COBRA is usually your easiest option – and it may be a lot less expensive than it had been in the past. COBRA is a federal law requiring employers to let former employees continue their health insurance coverage for up to 18 months after they lose their jobs. COBRA applies to companies with 20 or more employees, but most states have similar laws for smaller employers. You'll keep the same coverage and provider network, and any expenses that you already paid toward the deductible for the year will still count.
The downside has always been the cost: The premiums usually jump significantly because you have to pay both the employee's and the employer's share of the cost, plus up to 2% in administrative costs. Employers generally pay about 75% of the premiums for their current employees.
But the American Rescue Plan changes the equation for people who lost their jobs involuntarily. That law subsidizes COBRA premiums 100% for up to six months starting April 1 and ending Sept. 30, 2021. The subsidy may last fewer than six months for people whose COBRA eligibility ends before then or for those who become eligible for other job-based health coverage, says Karen Pollitz, senior fellow at the Kaiser Family Foundation.
The new subsidy only applies to people who lost their jobs involuntarily; people who left on their own are not eligible for the subsidy. For them, COBRA coverage will continue to be very expensive.
You usually have up to 60 days after you lose your employer's coverage to elect COBRA, but a federal emergency regulation temporarily extended the COBRA election period. "This means people who got laid off last summer, for example, and who didn't take COBRA then, still have time to elect it," says Pollitz.
Regardless of when you sign up, the COBRA coverage can only last for up to 18 months after the qualifying event – which would generally be when you lost your job and lost your employer's health insurance coverage. "So, for example, someone laid off March 1, 2020, will have COBRA through August 2021," says Pollitz.
Keep in mind that even though the subsidy can last for up to six months, there currently is no special enrollment period to sign up for marketplace coverage when the subsidy ends on Aug. 30. Under the current rules, you may not be able to switch to a marketplace policy until annual open enrollment in the fall, with new coverage beginning Jan. 1. The Biden administration may create a new special enrollment period before then, but otherwise you may get stuck paying the full COBRA premiums for a few months after the subsidy ends – before you can switch to a possibly less-expensive marketplace policy – if you haven't found a new job with health insurance benefits.
Sign Up for Coverage Through Your State's Insurance Marketplace – and Maybe Get an Enhanced SubsidyYou usually have to wait until open enrollment, which generally runs from Nov. 1 to Dec. 15, to buy an individual health insurance policy at your state's health insurance marketplace or HealthCare.Gov. But you qualify for a special enrollment period if you lose your coverage when you lose your job. In that case, you have up to 60 days after you lose your employer's coverage to buy a policy through the marketplace. You can go to HealthCare.Gov to find links to the marketplace in your state. And you have an extra opportunity to sign up for coverage this year. HealthCare.Gov opened up a new special enrollment period for anyone to sign up (or switch coverage) from Feb. 15 to August 15, 2021. Most states that run their own health insurance marketplaces are offering similar special enrollment periods. You can take advantage of this special enrollment period even if you didn't lose your job in the past 60 days.
Depending on the number of people in your family and your income for the year, you may also get a subsidy to help pay your premiums – and the American Rescue Plan just increased the size of the subsidies for 2021 and 2022. If you lose your job, it's definitely worthwhile to see if you can qualify for a subsidy, which could cut your premiums substantially.
Under the previous calculation, the premium tax credits (the subsidies) were based on the assumption that a household should contribute no more than 9.8% of their income towards health insurance costs (with lower income levels contributing a smaller percentage to the premiums). The American Rescue Plan changed that maximum contribution to 8.5% of household income. Also, under the previous rules the subsidies were only available to people who earned less than 400% of the federal poverty level; the new rules eliminate that income cap for receiving the subsidy.
"This means the government is expecting families to use less of their income towards health insurance costs and is using stimulus funds to make up the difference," says Matt Rosenberg, a certified public accountant and personal financial specialist in Grand Junction, Colorado, and a member of the American Institute of CPA's Financial Literacy Commission. "This should boost the amount of premium tax credit that a family receives, and the goal is to make premiums more affordable for all individuals and families."
The Kaiser Family Foundation's Health Insurance Marketplace Calculator can give you a quick estimate of your premiums after the subsidy and has been updated with the new subsidy figures. You can get the specific numbers for each policy at your state's health insurance marketplace.
For example, a 40-year-old couple in Chicago whose 2021 income is $40,000 could qualify for a subsidy of $580 per month under the new rules, reducing their premiums to $109 per month for a mid-level policy. Without the subsidy, they'd have to pay $689 per month. The subsidies are based on your income for the full year, so if you lose your job you'll need to estimate your income for all of 2021 to calculate your subsidy.
People who already have policies can go back to HealthCare.Gov or their state marketplace and adjust their premium tax credit for the enhanced subsidies, which should lower their monthly premiums. You should be able to make the changes in the 36 states that use HealthCare.Gov starting in April; the 14 states plus the District of Columbia that operate their own marketplaces may take a bit longer to update their systems, says Rachel Schwab, research associate with the Center on Health Insurance Reforms for the Georgetown University Health Policy Institute. If your premiums aren't adjusted during the year, you may end up getting more money back when you file your 2021 income-tax return next spring instead.
The American Rescue Plan also created an extra subsidy for people who received unemployment compensation in 2021. They may be able to receive a subsidy that covers the full price of the second-lowest-cost silver-level plan in their area. The Kaiser Family Foundation calculator can also help you estimate the unemployment subsidy.
Even if you've been uninsured for a long time, you still have until August 15, 2021, to sign up for a marketplace plan during the special COVID enrollment period at HealthCare.Gov and most state marketplaces. "People not yet enrolled in marketplace plans can and should come back to see if they can now afford coverage," says Pollitz.
People who already had marketplace coverage through HealthCare.Gov and some states can also switch coverage before August 15 if they find that another plan is more affordable with the new subsidy calculation. "During the last open enrollment, some people applied their subsidy to bronze level plans in order to minimize (even eliminate) monthly premiums, but in so doing, they signed up for extremely high bronze deductibles," says Pollitz. "Now a silver plan with lower deductibles may be more affordable." Bronze-level policies tend to have lower premiums but higher deductibles and cost-sharing than silver-level plans.
A few of the state-based marketplaces are only allowing people to buy new health insurance if they were uninsured, but do not allow to switch plans if they already had marketplace coverage. Those rules may change; consumers should check with their marketplace to see what their options are, says Schwab.
Choosing Between COBRA and Marketplace Coverage Under the New RulesIf you lost your job involuntarily and qualify for the COBRA subsidy, then you'll have $0 premiums for up to six months, which may be less expensive than marketplace coverage with the premium tax credits. But if you left your job voluntarily, you won't qualify for the COBRA subsidy and may pay much less for subsidized marketplace coverage, especially if your income has dropped.
But premiums are just one factor to consider. If you've already had some health care costs this year and paid some expenses toward the deductible for 2021, then you still get credit for those bills under a COBRA policy. But if you switch to marketplace coverage, you usually need to start the deductible period again.
"If you had a catastrophic event this year and already paid your deductible and (you're) up to your out-of-pocket maximum, then it behooves you to stay on the COBRA plan, and you get credit for the cost-sharing you paid," says John Barkett, senior director of policy affairs at Willis Towers Watson, a benefits consulting firm. "If you change plans, you could have to start the clock over again."
Also find out whether your doctors, hospitals and other providers are included in the new plan's network, and compare your cost-sharing for medical care and prescription drugs under the policies. "People in ongoing treatment especially may want to avoid changing providers if possible," says Pollitz. The marketplace policy may have higher deductibles and co-payments than the COBRA coverage.
"It's important to look behind the monthly premium to see what each coverage option offers, what your likely access to providers and likely out-of-pocket costs for covered services will be," says Pollitz.
Join Your Spouse's PlanIf your spouse is still employed and has coverage through his or her employer, you may be able to join as a dependent after you leave your job and lose your employer's health insurance. Find out how much the premiums will increase to add you to the coverage.
Sign Up for MedicaidDepending your income and your state, you may qualify for Medicaid. In the 36 states that have expanded Medicaid eligibility under the Affordable Care Act, income eligibility for adults is 138% of the federal poverty level. Eligibility is based on your monthly income rather than your annual income, so you may qualify even if you had a well-paying job for the first few months of the year and then were laid off. Medicaid is always open for enrollment year-round, says Pollitz. The Medicaid quick screening tool at HealthCare.Gov can help you find out if you qualify based on your income, state and number of people in your household. You'll also find links to your state's Medicaid website, and you can find out more at Medicaid.Gov.
Sign Up for Medicare if You're 65 or OlderYou can sign up for Medicare starting three months before to three months after the month you turn 65. It's easiest to enroll online on the Social Security website, even if you don't want to sign up for Social Security benefits yet.
If you didn't sign up for Medicare Part B at 65 because you were working, you have up to eight months after you leave your job and lose that coverage to add Medicare Part B without a late-enrollment penalty. But it's a good idea to act even faster after you leave your job so you can avoid any coverage gaps. If you don't have health insurance from a current employer, then Medicare generally becomes your primary coverage, even if you haven't signed up yet. COBRA doesn't count as coverage from a current employer.
You can get help with Medicare questions and enrollment from your State Health Insurance Assistance Program.
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