Whether you've been forced to lay off your team, initiate furloughs, or significantly decrease hours, COVID 19 has affected millions of companies and workers. While COBRA notices are mailed to former employees upon dismissal, it's not the best option (but it's certainly one of the most expensive). We've put together this post for you to share with former employees to help them choose a health insurance plan that's best for them. It's a little gesture that can save them time, money, and headaches during a stressful time.
Many of your employees might have been covered on your employer-sponsored plan for quite some time. In fact, some of them have never even shopped for their own health insurance plan before. If they can't easily add themselves to their spouse's health plan or their parents' plan (only for 26 or younger), that means they'll be shopping for a health plan.
It's simply not a time to be uninsured. While COVID-19 testing is covered, if someone requires inpatient care for coronavirus, they can expect to pay anywhere from $42,486 to $74,310 if uninsured or if they receive care out-of-network, according to recent analysis by independent nonprofit FAIR Health. Yikes! While President Trump recently announced that part of the stimulus package would pay hospitals to treat uninsured coronavirus patients, this doesn't seem like a good gamble to take and isn't available everywhere (nor has it been implemented yet).
Health insurance options following layoffs
Here are the options if former employees need to sign up for a health plan due to loss of coverage in the wake of the COVID-19 pandemic. Some are better than others; we will dive in to each of these routes in this blog.
- Sign up for an individual health plan on Healthcare.gov if you've qualified for a special enrollment period due to loss of employer sponsored health coverage
- Sign up for an individual health plan on your state's exchange if you live in one of the states that have opened exchanges: California, Colorado, Connecticut, Idaho, Maryland, Massachusetts, Minnesota, Nevada, New York, Rhode Island, Vermont, and Washington.
- Sharing ministries
- Short-term plans
COBRA and Coronavirus: Not the best bet
COBRA may sound like a great opportunity to avoid a coverage gap, and in such a confusing marketplace, it may seem like the best option. COBRA, or the Consolidated Omnibus Reconciliation Act, is a temporary coverage option provided to individuals and their families who are no longer eligible for a Group Healthcare plan. This happens after a Qualifying Event—in this case, losing your job due to layoffs tied to the coronavirus pandemic.
COBRA may sound like a hassle-free option that provides the same coverage and the same doctors as your previous plan. But here's the truth: it's the most expensive choice you can make.
Once you elect for coverage under COBRA, the full amount of that cost can be charged to you as an individual. You can be billed for up to 102% of the total cost of coverage; 100% of the cost of your previous plan plus a 2% administrative fee.
There are a few scenarios where COBRA actually makes sense, so keep this in mind. COBRA is the right option if:
- If you’ve already spent your deductible or max out of pocket for the year and expect to continue receiving care. Paying a little more for the COBRA premiums will probably keep the cost of care down versus starting a new deductible.
- If you take a prescription that is only available on your group plan and there’s no alternative your doctor can prescribe. (This would be very rare, FYI).
- If you regularly see a specialist who accepts your group plan, and subsequently will accept COBRA, but does not accept any individual plans available.
Here are three better choices for health insurance.
COBRA alternatives if you've lost your job due to COVID-19
Instead of finding out too late that COBRA falls short, find a healthcare plan that's right for your family. Take Command Health's data-based platform can help you sort out these options and compare plans side by side, and we can help you calculate subsidies and tax-credits as well.
1. Individual Medical Plans: For those of you who have recently lost your jobs (and your health insurance) due to coronavirus, you should qualify for a Special Enrollment Period (SEP), as loss of employer sponsored health insurance is a qualifying event for an SEP. You might need to submit documentation for this like a letter from your former employer or your COBRA coverage notification to confirm your loss of coverage. If you lost your HRA reimbursements because of coronavirus (through QSEHRA or ICHRA), this also qualifies for an SEP, one you should take advantage of to reconfigure potential tax credits. It's important to remember that you will have 60 days from the qualifying event to choose a plan.
If you don't qualify for an SEP, certain states have opened their exchanges, including California, Colorado, Connecticut, Idaho, Maryland, Massachusetts, Minnesota, Nevada, New York, Rhode Island, Vermont, and Washington.
So if you have an SEP or live in a state that's opened their exchange, there are two different types of individual medical plans to consider; On-Exchange or Off-Exchange. On-Exchange plans are found on Healthcare.gov and are eligible for tax-credits and subsidies. Note: Off-exchange plans are not on Healthcare.gov and are not eligible for tax-credits or subsidies. However, the cost of these plans is often comparable, and an off-exchange plan can include larger doctor networks and more features.
Some carriers are doing a better job of offering coverage and support through this COVID-19 pandemic; be vigilant about researching how your carrier options are handling the situation.
Some carriers have agreed to waive member cost-sharing, copays, or other fees because of coronavirus. This varies largely by carrier. To see what specific insurance carriers are doing for their members, check out this helpful link from AHIP.
Pro tip: If you purchase a marketplace plan through Healthcare.gov or state exchanges, you'll need to figure out if you are eligible for tax credits or increasing existing tax credits due to unemployment. Chat with our team on our website any time and we will walk you through how to do this.
2. Short-Term Plans: Affordable plans that can provide great coverage for specific incidents such as accidents or illness, but don't cover routine care or pre-existing conditions. These plans are exempt from covering the essential health benefits that major medical plans are required to cover under the ACA. Under the Trump administration, short term plans were lengthened to a coverage period of 364 days and renewable up to 3 years as allowed by the carrier. Read more about Pivot short term plans and UHOne Short Term plans on our blog on affordable alternatives to traditional health insurance.
If you have pre-existing conditions, or if you are more vulnerable to the coronavirus, then a short-term plan is probably not the best choice.
If you're young and just need something "just in case," then short term plans could still be a good fit in case of big emergency. If you require treatment for coronavirus, it would cover a hospital stay. Specific plan details would need to be discussed with the carrier. We would recommend adding a premier membership to your short term plan that includes Teledoc to help offset some of the downsides of short-term plans so you can access a doctor virtually before heading to your nearest clinic.
3. Faith-based plans: These sharing ministry plans act like insurance for people that testify and live to a Christian lifestyle. They are exempt from the healthcare laws, are often more affordable, and you can enroll year round. You can read our CEO's Medi-Share review if you want to get a better idea of how sharing ministries work.
Since sharing ministries are not considered insurance, they are exempt from having to cover COVID-19 testing. Each ministry is updating its members on how they will cover testing and treatment. If you have coverage under a sharing ministry, it is best to stay up to date with their coverage terms during this time as things are being updated daily.
Here are what three of the most popular ones are doing:
- MediShare: Free telemedicine visits; COVID-19 testing will be eligible for sharing after annual AHP is met; Some provider fee’s waived if you are referred by MDLIVE to ER or physician.
- Samaritan: COVID-19 tests and treatments are eligible for sharing.
- Christian Healthcare ministries: COVID-19 tests and treatments are eligible for sharing.
Understanding health insurance and COVID-19
If you get coronavirus and you've signed up for a health plan, the care will be covered just the same as any other illness, as testing and medically necessary care for you would fall under what most individual plans call Essential Health Benefits, or minimum essential coverage. It also would include doctor visits, hospitalization and support therapy for the symptoms of the infection. There are no limitations and restrictions surrounding the specific condition.
But remember, treatment and diagnosis for the pandemic still brings with it out of pocket costs for the individual, not to mention the system-wide effect coronavirus will have on the health insurance market.
The best thing you can do when choosing a health plan during COVID-19 is to understand what's covered and what's not, and what your deductibles and out of pocket maximum amounts are.
If you are having trouble, call your insurance carrier and they will walk you through it. Better to know ahead of time, we always say. Kaiser Family Foundation's guide on private health insurance coverage and COVID-19 is a great resource to reference and share.
Here are a few important points that are highly relevant here:
- Out of pocket costs: When individuals receive care for coronavirus, they can face out-of-pocket costs that come in the form of a co-pays, deductibles or coinsurance before coverage kicks in.
- Lab work & diagnostics: All COVID-19 testing is considered an essential health benefit.
- Telehealth: Many health insurance plans partner with Telehealth services (call your carrier to check). Teladoc, a telehealth provider, lets you call a doctor from your home and you never have to leave your couch. That also means that germs are staying at your home too. It's a great complement to social distancing and it means that you'll talk to a doctor and get care quicker than if you had to make a doctor's appointment (it's also cheaper!). We love Teladoc at Take Command Health!
Business owners: consider an HRA when you ramp back up
To mediate the financial loss and brace for further instability in the fallout of coronavirus, many employers are looking to tighten their financial belts when it comes to benefits. Under normal circumstances, the familiarity of traditional group health plans makes them a popular choice. But in uncertain times, the predictability, portability, and flexibility of “defined contribution” health insurance models like ICHRA should be closely considered by employers now and in the future.
For groups where layoffs have been inevitable, we’ve seen a few cases where clients have dropped their group health plan and encouraged laid-off employees to go to the marketplace to purchase individual policies where they will likely qualify for tax credits and subsidies. When the employer reopens and rehires, instead of reinstating the group plan, they will adopt an ICHRA and replace government subsidies with employer reimbursements. Employees will keep their plans throughout and won’t get whiplashed with resetting deductibles and extra hassles.
If you want to learn more about how some of our clients have used their HRAs to combat the financial effects of Coronavirus, check out this post.
Support when you need it
Take Command Health is here to help you make an informed choice about what's best for you. Chat with us on our website and we would be happy to answer any questions! If you want more pro tips on how to shop for individual health insurance, check out our health insurance shopping 101 post.