With open enrollment for individual coverage quickly approaching, your employees will likely have questions about purchasing insurance plans on the government marketplaces. Those who aren't eligible for a job-based plan (or otherwise seeking individual coverage) may be intimidated by searching through the available plans and understanding the difference between government and private marketplaces. Given the problems with the launch of the federal health insurance marketplace website last year, they may also be wary of seeking coverage through that portal. You can give them a few tips to help them evaluate their options.
Government and Private Marketplaces
Employees can shop for individual and family plans through government health insurance marketplaces sponsored by the federal or state governments. Individuals must enroll in a government marketplace plan to qualify for a premium tax credit to help reduce the cost of insurance premiums.
Where to shop
- Individuals can start at healthcare.gov to shop for insurance plans either through the federal government portal or a state-run site, if applicable.
- Paychex offers the Personal Marketplace where your employees can shop in both the government and private Marketplace and customize their search to find the plan that best fits their needs.
Tax Credits and Penalties
Most of your employees are probably aware that if they don't have health insurance, they may have to pay a penalty:*
- 2014 – $95 per adult and $47.50 per child up to $285 per family or 1 percent of household income above the tax-filing threshold, whichever is greater.
- 2015 – $325 per adult and $162.50 per child up to $975 per family or 2 percent of household income above the tax-filing threshold, whichever is greater.
- 2016 – $695 per adult and $347.50 per child up to $2,085 per family or 2.5 percent of household income above the tax-filing threshold, whichever is greater.
Not to mention, without insurance, they run the risk of being financially responsible for hefty bills should they have an unexpected medical event.
Individuals may be eligible for tax credits based on their income and family size, which lower the cost of premiums. For a family of four married filing jointly, subscribers may receive lower costs if their income is between $23,850 and $95,400 (based on the 2014 Federal Poverty Level). The higher the income, the lower the credit.
Overview of Costs
In an effort to lower health care costs overall, individuals are becoming financially responsible for larger portions of their medical services, whether through high deductibles or higher co-pays. It's important for your employees to understand the terminology and costs they may be facing to determine the best plan.
- Premium – This is the monthly cost of the health insurance plan.
- High-deductible health plan (HDHP) – These plans have a lower monthly premium in exchange for patients paying more out of pocket, sometimes $11,000 or more for a family. HDHPs are often a good option for people with lower health care utilization. It's important to note that with a family policy, the family deductible must be met before any co-insurance may be applied.
- Health Savings Account (HSA) – Those enrolled in an HDHP are eligible to open a health savings account, which allows them to set aside tax-free money that can be used toward qualifying medical costs, including those that count toward the deductible. These accounts roll over from year to year and, because the account is owned by the individual, it is portable; that is, if the employee changes jobs, they may take their HSA with them.
- Co-pay – This is a fixed cost for seeing a particular service provider. Preventive health services are covered 100 percent, so a co-pay often applies to specialist or sick visits. Plans with lower deductibles tend to have co-pays. Co-pays usually do not count toward a deductible.
- Co-insurance – Once the deductible is met, co-insurance is the distribution of remaining costs. For example, the individual may be responsible for 20 percent of the remaining cost of care, while insurance pays for 80 percent. Co-insurance applies up to the out-of-pocket maximum.
- Out-of-pocket maximum – This is the maximum amount of money the subscriber would be responsible for in a given year for qualified medical services. In the case of high-deductible health plans, it's often not much more than the deductible.
Know the Dates
Although this seems obvious, time gets away from all of us. Make sure your employees know the dates for open enrollment.
- November 15, 2014 – open enrollment opens for all individuals.
- December 15, 2014 – open enrollment for coverage beginning January 1, 2015 ends.
- February 15, 2015 – open enrollment ends. After this point, you must have a qualifying life event to enroll in a health plan.
Employees can enroll in Medicaid or the Children's Health Insurance Program anytime.
Encourage Employees to Do Their Homework
Choosing the right plan is a balancing act between premium costs and personal share of costs. Encourage your employees to evaluate their health care needs, recent utilization, and comfort with risk. The Paychex Personal Marketplace provides many resources to help your staff make an informed decision.
*Income is defined as total gross income in excess of the filing threshold ($10,150 per individual or $20,300 per family in 2014). The penalty is prorated by the number of months in a year. The penalty cannot be greater than the national average premium for Bronze coverage in a public health insurance marketplace. After 2016, penalty amounts are increased annually by the cost of living. Source: www.healthcare.gov