Kiplinger's Personal Finance|July 2020
As the effects of the coronavirus pandemic took hold this spring, more than 38 million Americans lost their jobs, and an estimated 27 million workers and their families found themselves without health insurance, too. Nearly half of Americans got their coverage through an employer-sponsored plan in 2018, according to the Kaiser Family Foundation. // But as the coronavirus continues to affect communities across the U.S., it’s more important than ever to have health insurance. And if your income has taken a blow, you may have greater access to affordable coverage than you did while you were working. Kaiser estimates that 79% of those losing employer coverage are likely eligible for subsidized coverage through Medicaid or the Affordable Care Act marketplace.
As you compare your options, consider factors including the premium, deductible, co-payments, out-of-pocket maximum and level of prescription-drug coverage. You may also have choices among plan types. High-deductible plans typically have relatively low premiums, but in 2020 the deductible starts at $1,400 for an individual and $2,800 for a family. With a high-deductible plan, you may also have access to a health savings account, which allows you to set aside pretax money for deductibles and other out-of-pocket medical costs. A preferred provider organization (PPO) plan may be a good choice if you require regular visits with a healthcare provider for a medical condition. Compared with a health maintenance organization (HMO), which typically provides little to no coverage for out-of-network visits, a PPO may have a higher premium but offer greater coverage for out-of-network care. Because of their higher cost to insurers, however, PPOs are hard to come by in the individual marketplace.
One way to ease the pain of switching plans is to ask your medical providers what insurance plans they accept, says Adam Hyers, an insurance broker in Columbus, Ohio. You may be able to find a policy that allows you to continue to see many of your doctors without going out of network.
Keep in mind that if you’re 65 or older and have delayed Medicare coverage because you have employer-based insurance, you are eligible for a special enrollment period for Medicare when you leave your job.
If you are working, you may be able to make changes to your employer-sponsored plan outside of open enrollment. The IRS is temporarily permitting employees to join or drop an employer plan or make certain changes to their existing coverage, including adding family members or choosing a different type of plan. Employees may also open a flexible spending account or alter their contribution amount midyear and get more time to claim unused funds. However, employers are not required to provide these options to workers.
Comprehensive insurance plans are required to fully cover the cost of coronavirus testing. (If you’re not insured, you should be able to get tested free at certain locations, but you’ll likely need an order from a doctor.) Plus, many insurers are offering breaks for treatment of COVID-19 or for those facing hardships because of the crisis. Nearly 60% of insurers said they were waiving at least some out-of-pocket charges for treatment, and 60% said they were offering programs to defer premiums for people affected by the coronavirus crisis, according to a survey conducted in late March and early April by eHealth, an online insurance marketplace.
If you work for a company that has at least 20 employees and you lose health insurance because it reduces your hours or terminates your job for a reason other than gross misconduct, it must offer continuation health care coverage for you, your spouse and your dependent children under COBRA. The law generally lets you extend coverage that you already had through your employer’s group plan for up to 18 months. Some states require small employers to provide continuation coverage (known as “mini-COBRA”), too, but term lengths and events that qualify you for it vary.
If coverage under COBRA is available to you, your former employer should provide information about enrolling. When you elect COBRA, you continue the same type of policy you had. But when your employer’s annual open-enrollment period begins, you may switch to a new type of plan—say, one with a lower premium and higher deductible.
While COBRA is convenient, it’s costly. You typically pay both the employee and employer share of the premium, plus a 2% administrative surcharge. Total average annual premiums (including employer and employee contributions) for employer-sponsored health plans surpassed $20,000 for family coverage and $7,000 for individual coverage last year, according to a survey by the Kaiser Family Foundation. For a possible new round of coronavirus-related stimulus funding, Democratic lawmakers have proposed COBRA subsidies to cover the full cost of premiums for furloughed and laid-off workers, but a law had not been passed as of press time in mid May.
For those who can afford it, COBRA may make sense—especially if you need ongoing care for, say, a pregnancy or cancer treatments, says Karen Pollitz, senior fellow at the Kaiser Family Foundation. If you switch insurance plans, doctors or facilities that you’re already visiting may no longer be covered. “A lack of continuity can cause confusion, disruption and more out-of-pocket costs,” says Pollitz. Sticking with COBRA for a while may also be a good option if you’ve already met your plan deductible for the year.
You can read up to 3 premium stories before you subscribe to Magzter GOLD
Log in, if you are already a subscriber
Get unlimited access to thousands of curated premium stories and 5,000+ magazines
READ THE ENTIRE ISSUE