Happy Open Enrollment 2021! 🎉 We may be some of the only people who treat Open Enrollment as a major holiday. We can't help it. We love this time of year! But we understand that not everyone shares our enthusiasm, so we produced this short guide to help you navigate Open Enrollment. If this is your first time buying individual health insurance, this article will be your best friend.
|This Open Enrollment 2021 Guide is for employees who have been offered an HRA by their employer and are looking for guidance as they shop for individual health insurance that can be reimbursed with an HRA like the Qualified Small Employer HRA (QSEHRA) and the Individual Coverage HRA (ICHRA).|
Every year, we hear many of the same questions from individuals just like you who are having to navigate the health care system outside of a traditional group plan. Last year, we created a video series to address these questions and sent it out via email. We've included it below as a resource. As you learn about topics like Open Enrollment, individual insurance, and HRAs, please remember that our platform will walk you through the entire process and help you choose a plan that will not only work for you but one that will also work with your HRA.
Here are a few of the high-level questions, as well as several associated questions, this guide addresses in detail:
- What is Open Enrollment?
- How do you buy individual insurance?
- What are Premium Tax Credits?
- + Additional FAQs
Our platform will walk you through the entire process and help you choose a plan that will not only work for you but one that will also work with your HRA.
Section 1: What is Open Enrollment?
What is Open Enrollment?
Open enrollment is the annual period when individuals like you can enroll in a health insurance plan. This year, it's from November 1st to December 15th in most places, although there's a few exceptions where there's a bit more time this year (like California, Colorado, Massachusetts, Minnesota, Nevada, New Jersey, New York, Pennsylvania, Rhode Island, and Washington D.C.). If you're over 65 and enrolling in Medicare, you get a head start on October 15th.
Why is Open Enrollment limited to specific dates?
Health insurers limit open enrollment to the 6-week open enrollment period to prevent adverse selection. Adverse selection happens when sick people sign up for a health plan, but healthy people don’t, which throws the amount of risk a health plan takes on out of balance when insuring someone.
Where can you buy individual insurance?
During open enrollment, insurance plans are available from major medical insurance companies to purchase from "the marketplace" or "exchange." These plans are referred to as "on-exchange" plans. Most states use the federal exchange, Healthcare.gov (38 states, in fact). Twelve states, like California and New York, as well as Washington D.C., have their own state-run exchanges and enrollment systems. Pennsylvania and New Jersey will be operating their own state-run exchanges this year for the first time, meaning if you live in those states, your process will be new this year.
Note that five of the states that use HealthCare.gov are considered state-based exchanges, but actually use the federal platform for enrollment (Arkansas, Kentucky, New Jersey, Pennsylvania, Oregon, and New Mexico).
When you shop at Healthcare.gov, you’re only seeing “on-exchange” plans. However, insurance companies only make a fraction of their plans available “on exchange." If you go directly to an insurance company’s website, you’ll see their “off-exchange” plans, or you can look at all of your plans side by side (including off-exchange options) on our shopping portal.
If you're ready to start shopping, you can view all of your options side by side on our portal.
What is "the marketplace" or "exchange"?
The Affordable Care Act created a health insurance exchange, or online marketplace, where individuals can shop for individual health insurance plans and compare their health plan options. This is known to most as Healthcare.gov. Individuals are only eligible to receive premium subsidies and cost-sharing reductions if they purchase their coverage through the exchange.
Why is Open Enrollment significant for me?
Because your employer is offering you a health reimbursement arrangement, now is the time to purchase your plan for coverage starting on January 1st, 2021. Open enrollment is the time when you can buy a compliant plan that is qualified for your HRA (either a qualified health plan for ICHRA or a Minimum Essential Coverage plan for QSEHRA). If you're a client already using our platform, there will be a to do on your dashboard. If you are new here, we will walk you through onboarding which will include shopping for a plan. Just follow this link to create a log in, sign in and get started shopping for individual health insurance.
Section 2: How To Buy Individual Insurance
How do you buy individual insurance?
It can be a little overwhelming! Before you shop, start by thinking about what's important for you and what health needs you anticipate for the year. Good questions to ask yourself include, Is it more important to have a low premium or a low deductible? Do you regularly see a specialist that needs to stay in-network? Do you have a lot of prescriptions that you'll need covered? Are you anticipating any medical needs this year (i.e., ongoing physical therapy, surgery, or pregnancy?)
It's good to think these things through, because what really drives costs–and therefore your plan choice–are the things you know about: prescriptions, doctor visits, therapy, medical equipment, etc. If you’re healthy, maybe you plan on none of these things–which is just as important to know. Unpredictable costs, like catching a cold, spraining an ankle, or a hospitalization, shouldn't impact your plan choice.
More than 75% of your healthcare costs in the next year are predictable based on your needs.
How do you know you're getting the best price for your plan?
Here's some good news for simplicity: any given plan sold during open enrollment will be priced exactly the same no matter where you find it. If you find a plan you like, say a Blue Cross Blue Shield silver plan on Healthcare.gov, it will legally be priced the same whether you purchase it on the Exchange, or from a broker friend.
The prices on our individual health insurance shopping portal will show you the best prices for all of your health plan options.
How do you know if the plan you want to buy qualifies for your company's HRA?
Gather round, friends. This is a really important question. Why? Because not all plans integrate with HRAs, meaning that not all plans will be reimbursed through an HRA and not all plans will qualify you to participate in your company's HRA. Best to get this right the first time.
Here's an easy, quick list to get started:
- Major medical plans purchased on the exchange (Bronze, Silver, and Gold)
- Medicare (Part A+B, or Part C)
- Catastrophic Plans (limited to those under age 30 or must qualify for hardship exemption)
- Student Health Insurance
Plans that don't work with ICHRA include sharing ministries, TRICARE, short term and indemnity plans, and other employer sponsored group plans (either from spouse, COBRA, or retirement plan).
- Major medical plans: Major Medical plans are those compliant with the Affordable Care Act (ACA) and qualify as Minimum Essential Coverage. If you purchased your plan through Healthcare.gov or your state’s public marketplace, your plan is a Major Medical plan, and your reimbursement through QSEHRA will be tax-free.
- Student insurance
- Your spouse’s plan (varies by QSEHRA plan): If you’re covered by your spouse’s group insurance plan there are some nuances to know regarding premium reimbursement. First, only the portion of the group premium that is not paid for by your spouse’s company is eligible for reimbursement. Second, most group plans are already paid on a pre-tax basis from your spouse’s paycheck. This is great! However, the IRS doesn’t want you to “double dip” and also get a pre-tax QSEHRA reimbursement, so your QSEHRA claim for your premium may be paid on a taxable basis (plan depending). If you can verify that your premium is paid post-tax by your spouse (very rare), then you can still be reimbursed tax-free through QSEHRA!
- Government plans: Medicare, Medicaid, CHIP (children's health insurance programs), Tricare, and VA Care are all eligible healthcare plans and qualify as Minimum Essential Coverage. If you are on one of these plans and pay a monthly premium out of pocket, those can be reimbursed through QSEHRA tax-free.
- Dental Insurance & Vision Insurance Plans: Monthly premiums paid for individual and dental insurance plans can be reimbursed tax-free through QSEHRA. If you have dental and vision benefits through your spouse’s employer, only the portion of the group premium that is not paid for by your spouse’s company is eligible for reimbursement. In addition, if your spouse pays the premiums for your dental and insurance plans pre-tax, you can only be reimbursed for these premiums on a taxable basis.
- Limited Benefit Plans: Limited Benefit Plans are usually significantly cheaper than Major Medical plans but only provide a fixed amount of benefits (vs. unlimited benefits). These plans include short-term plans, fixed indemnity plans, accident plans, and any other plan that pays a medical benefit. As long as you also have a Minimum Essential Coverage health plan, and the limited benefit plan pays a medical benefit to the provider (not a cash benefit to you), the premiums on these plans can be reimbursed tax-free through QSEHRA.
Confused? Here's the good news: Any plan that you purchase on the Exchange will be compliant with your HRA. Major medical off-exchange plans that are available during open enrollment will qualify as well. And here's more good news: our platform will hold your hand through this entire process.
Pro-tip: To see if a plan integrates with your HRA, check for a metal tier (silver, platinum, bronze) in the name or description of the plan. That's a good sign.
What are some things you should avoid while shopping for a plan?
First of all, be an informed shopper. Download our PDF on "Health Insurance 101," where you'll find the basic definitions of key terms you'll need to know while shopping for health insurance (like formulary!). Understanding health insurance jargon will keep you out of trouble and reduce those stress levels.
Another thing to be aware of is that if you are shopping outside of an exchange, for example through a broker, watch out for plans that say indemnity or short term as they don't qualify for QSEHRA or ICHRA. For QSEHRA, some plans like this can be supplemented to qualify but they will not work for ICHRA.
Also important: If you're leaving a company and COBRA is an option, 99% of the time, COBRA is a bad deal. Don’t just accept it because it’s easy. 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!
Do I need to shop for a new plan if I had one this year? (Do you need to renew?)
We recommend never letting your plan auto-renew because 80% of plans will have a significant change each year that you may not be aware of.
It’s tempting to want to stick with one plan out of convenience, and the thought of trying something new can be intimidating. Unfortunately, health insurance isn’t something that should be put on auto-pilot. Plans, doctor networks, prescription coverage and your family’s health needs are changing every year. Not to mention, the market is changing significantly due to several emerging trends: narrowing provider networks, changes in premiums, insurers leaving the exchange and offering off-exchange only plans, premium tax credits changing.
What was great one year may be terrible the next, and insurance companies are frequently shifting things around to maximize their earnings—not necessarily your health.
Section 3: What are Premium Tax Credits?
What are Premium Tax Credits?
Premium tax credits, also known as PTCs, are refundable credits (or subsidies) that helps eligible individuals and families cover the costs of premiums for their health insurance purchased through the ACA Marketplace, or Exchange. To receive a premium tax credit, you must meet certain requirements.
One way to pay too much for health insurance is to leave money on the table. We see many individuals assume they're not eligible for tax credits when they actually are. Depending on where you live, a family of 3 or 4 that makes $90,000 a year will likely qualify for a tax credit.
How do you know if you qualify for Premium Tax Credits?
Generally speaking, tax credits are tied to size and income. They also vary across zip codes. You may qualify for premium tax credits if you:
- Fall within a certain income range
- Cannot be claimed as a dependent
- Do not file a tax return using the filing status of Married Filing Separately
- Have health insurance coverage through the marketplace or exchange.
- Are not able to get affordable coverage through an eligible employer-sponsored group plan that provides MEC.
- Are not eligible for coverage through a government program, like Medicaid, Medicare, CHIP or TRICARE.
- Pay the share of premiums not covered by advance credit payments.
Take Command Health can help you figure out how much you are eligible for on our individual health insurance shopping portal.
How will your HRA effect your Premium Tax Credits?
This is a tricky one. The way HRAs and PTCs interact depends on what type of HRA you have.
For QSEHRA: We will start by explaining how QSEHRAs and Premium Tax Credits work together. Scroll down to skip ahead if you have an ICHRA.
In general, QSEHRA allowance will reduce premium tax credits dollar for dollar.
Basically the employee will be exchanging the tax benefit from the government with the tax benefit from the employer. The employee may still access their tax credits if the benefit is less than the premium tax credit available to them.
As an example, if you are eligible for a $500 tax credit and your employer offers a $400 QSEHRA allowance, your PTC will be reduced to $100 ($500-$400).
It is very important that employees purchasing a plan through the marketplace and receiving a premium tax credit notify their insurance provider immediately about their small business HRA benefit. The insurance provider will recalculate the employee tax credit with the QSEHRA benefit. Failure to report the QSEHRA to your insurer will result in having to pay back the tax credits to the IRS during tax time.
FOR ICHRA: If you have an ICHRA, here's what you should know about PTCs and ICHRA.
Employees can choose to participate in ICHRA or receive a PTC. You cannot have both.
A nice feature of the individual coverage HRA is that as an employee, you have the option to participate in your employer's ICHRA or opt-out annually through the opt-out provision. This is different then ICHRA's predecessor, QSEHRA, which does not allow employees to opt-out.
If you accept the Individual Coverage HRA, you cannot claim any premium tax credits for the year for either yourself or any family members. If you opt-out of the Individual Coverage HRA for the year, you may be able to claim premium tax credits.
The Exchange will then determine if the ICHRA offered is deemed affordable or unaffordable for you. In cases where an employee has opted out of ICHRA and the HRA is considered unaffordable the employee is allowed to claim premium tax credits for themselves and dependents. In cases where the employee has opted out of ICHRA and the coverage is deemed affordable the employee may not claim any premium tax credits for themselves or dependents.
When individuals enroll in an Exchange plan, the Exchange will ask if the individual is offered any coverage through their employer. This includes coverage through the Individual Coverage HRA. Employees will be required to give notice to the Exchange of their ICHRA offering.
During the onboarding process with Take Command Health, we will help you understand these nuances and determine what's best for you.
How can you get more information about Premium Tax Credits?
First stop, look at your plan documents on your portal. The employee notice, specifically, will have great information on what to do about your PTCs that's tailored to you and your exact plan. Also check out the following resources:
- More on QSEHRA & Premium Tax Credits
- More on ICHRA & Premium Tax Credits
- Premium Tax Credit calculator (a.k.a. Subsidy Calculator)
- Affordability calculator (for employees)
- Affordability calculator (for employers)
Section 4: Other Open Enrollment FAQs
What is an "on-exchange" or "marketplace" plan?
An on-exchange, or marketplace plan, is a health insurance plan that's purchased on the ACA marketplace or federal exchange (a.k.a. Healthcare.gov.) or, in some states, state-run exchanges. Any of these are considered marketplace plans and are eligible for premium tax credits.
What is an "off-exchange" plan?
Off-exchange plans are offered by major medical providers and purchased directly through them instead of from the exchange.
Can I buy a plan that's not sold on the exchange? Are there other options besides Obamacare (ACA)?
In general, there are other plans outside of the ACA plans and the off-exchange plans mentioned above. But remember, you need to have a plan that qualifies for reimbursement through your employer's HRA. For QSEHRA, there are some alternative insurance plans that qualify if certain conditions are met. We can guide you through the process of weighing your options and connect you with a partner we trust.
If you're enrolled in an ICHRA, however, you'll need an individual medical plan. We recommend you utilize open enrollment to shop for an on- or off-exchange major medical plan that integrates with ICHRA.
What do the metal tiers mean? (Bronze, Silver, Gold, Platinum)
What the metal tiers are telling you is how much the plan covers and how much it costs.
Here's the gist:
- You rarely get sick or need medical services, apart from an annual checkup and maybe a medication or two.
- You are very healthy and not elderly.
- If buying a family plan, your children are grown and healthy and don’t participate in risky activities.
- Expect to pay 40% out of pocket, 60% paid by your plan
- Your family members have one or two mild conditions that require some medication and specialist visits, but nothing needing close monitoring or frequent care.
- Your family members are able-bodied and under 70.
- Any kids are elementary age or older and healthy, and play few or no sports that often cause injury.
- Expect to pay 30% out of pocket, 70% paid by your plan
- You or a family member has a chronic condition, sees doctors frequently or needs expensive medication that would be impossible to afford out of pocket.
- Your children are preschool age or younger, needing frequent pediatrician visits.
- You may be older or at a higher risk for colds and flu than most people.
- Expect to pay 20% out of pocket, 80% paid by your plan
- You or a family member has an expensive chronic condition and takes several medications.
- You seek urgent or emergency care more than once per year on average, frequently need exams to manage a condition or see doctors more than once per month.
- You are older or at very high risk for colds, flu, or injuries.
- Expect to pay 10% out of pocket, 90% paid by your plan
Check out our handy blog post on what the metal tiers mean for more information.
What are insurance "premiums" and "deductibles"?
A premium is the monthly cost for your health insurance. The premium is what your monthly allowance for an HRA will cover.
A deductible is the amount of covered healthcare costs you pay before your health insurance begins to cover the costs. If you have a $2,000 deductible, you'll be paying $2,000 out of pocket before insurance kicks in.
Pro-tip: Your monthly premium does not count toward your deductible.
What are the differences between the network types (HMO, PPO, EPO)?
An HMO (or “health maintenance organization”) is generally the most affordable, but least flexible network type. Here a few key concepts of a HMO:
- You are required to select a primary care physician (or the insurance company can assign one for you) who is your first-stop for health needs. You will need a referral from your primary care physician to see a specialist.
- If you choose to see a doctor outside of the network or without a referral, you will generally have to pay all costs out-of-pocket unless it is a true medical emergency or you have no other options.
- The physician network is local.
A PPO (or “preferred provider organization”) is generally the most flexible, yet most expensive network type. Here a few key concepts of a PPO:
- You do not need to select a primary care physician and you do not need referrals to see a specialist.
- If you see an in-network provider, you will only be responsible for paying a portion of the bill (based on your plan's coverage structure).
- If you choose to see a doctor who is outside the preferred network, you will generally have to pay a larger portion of the bill than you would for an in-network provider.
- You will have access to out-of-state providers that are considered in-network.
An EPO (or “exclusive provider network”) is a hybrid of a HMO and a PPO. Here a few key concepts of an EPO:
- EPOs are more flexible than an HMO, and are typically less expensive than a PPO.
- Like a PPO, you do not need a referral to get care from a specialist.
- Like an HMO, you are responsible for paying out-of-pocket if you seek care from a doctor outside your plan's network.
A POS (or "point of service”) is also a hybrid of a HMO and a PPO. Here are a few key concepts of a POS:
- POS plans are more flexible than an HMO, and are typically less expensive than a PPO.
- Like an HMO, you will need a referral from your primary care physician in order to see a specialist.
- Like a PPO plan, you will have access to out-of-network providers (at an increased cost).
Can I change health insurance plans in the middle of the year?
You can only change plans and buy on-exchange plans during Open Enrollment (November 1st through December 15th) unless you meet certain conditions that qualify you for a Special Enrollment Period. These circumstances include having a baby, getting married, getting divorced, or changing jobs. In other word, big life changes.
If you are offered an HRA for the first time from your employer, that qualifies you for a Special Enrollment Period as well, where you'll have 60 days to sign up for a health plan that meets your HRA requirements.
Pro-tip: We recommend you take advantage of Open Enrollment to sign up for a plan. You'll have more options.
This is an exciting time, and we're honored to a part of this process with you. If you have any other questions as you begin the process, please reach out. We are here to help you! And for those of you who are ready to being, please login to our portal and we'll walk you through the process.
Happy Open Enrollment, everybody! 🎉
I wrote this blog because I care about ideas (big and little) that can help fix our healthcare system. I used to work on projects for Kaiser Permanente and the Parkland Health & Hospital System so I've seen the system inside and out. It's so important that consumers keep up with industry shifts and changing health insurance regulations. I'm also Take Command Health's Content Editor and a busy mom. Learn more about me and connect with me on our about us page. Thanks!