Health Insurance Changes

At Rather & Kittrell, we talk a lot about life being a series of transitions. Whether it is a chosen step into retirement or the sale of a business, the loss of a loved one or a divorce, a purposeful change of employment or an unexpected job loss, we want to walk hand in hand with you to guide you through these transitions.

With each of these transitions, health insurance is a topic that elicits a wide range of emotions and lots of questions, all along the spectrum from complicated to easy.

EXPLORE YOUR HEALTHCARE OPTIONS

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For many, it starts simply, “Do you have access to a group health insurance plan?” If the answer is “no,” we start reviewing options. For our clients aged 65 and older, Medicare is really where we start (but certainly don’t end) planning.  

For clients under 65, we know there’s work to do. Those who know RK well understand that we start with questions that help us craft a solution uniquely tailored to your needs and goals.

No longer having access to group health insurance can come from any of the life transitions mentioned earlier. Let’s discuss five of the main options we may review with clients.

COBRA

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This choice is often the starting point for folks losing group coverage due to what’s called a “qualifying event.”  For clients who had coverage through an employer with more than 20 employees, COBRA is the option to keep the same insurance policy (excluding the Federal Government and certain church-related organizations). Clients should expect to pay the entire premium, perhaps even 102% of the costs, to keep their policy for up to 18 to 36 months. Reviewing the qualifying event will help define the period a client may choose to elect COBRA insurance. 

If clients do not choose COBRA, they are not able to change their minds later. Also, choosing to end COBRA before full benefits are exhausted is not a qualifying event and may severely limit other options.

COBRA is rarely a low-cost choice; however, this may be the best policy for clients who retire closer to the end of the year and have already met the deductible. It also may be the best plan if there are specific medical needs and preferred physicians that you want to keep.

SPOUSAL/OTHER GROUP HEALTH INSURANCE

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If the other spouse has group health insurance available through their employer, this may be an option. If this plan was not used in the first place, due to costs or fewer benefits, you should still compare it to other options. Loss of group coverage due to a qualifying event would allow for enrollment on another group plan.

RETIREE HEALTH INSURANCE PLANS

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These are rare, but some clients have workplace benefits that include retiree health insurance. These plans may have lower costs and often are continuations of existing group coverage. If you decline retiree insurance, most often you cannot join later. A thorough review of costs and benefits is warranted.

PRIVATE HEALTH INSURANCE PLANS

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For healthy clients, short-term private plans may be an option. Because these plans can deny coverage for pre-existing conditions, they are not a good idea for everyone. New legislation is also in place to try and limit short-term plans to only three months, with a one-month extension.

HEALTHCARE.GOV (MARKETPLACE)

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One of the most popular options we address with clients is the Healthcare.gov Marketplace. For clients younger than 65, this option is available without the need to worry about pre-existing medical conditions.  

The Marketplace has a wide-ranging number of plans and costs. Subsidies to help offset the costs of premiums may be available based on household size, income, and plan affordability. If this is the best (or only) option, we like to sit down with a trusted insurance professional to guide us through the litany of companies, tiers, and service areas.

WHAT DOES INSURANCE PLANNING LOOK LIKE AT RK?

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When life transitions occur, we start asking clients questions to help guide us to the right answer. The solution is not always immediately clear, and may even change from year to year. Most importantly, the answer should be tailored to the client’s needs.

For example, the primary insurance carrier may decide to leave a job with group coverage to start a business. If it’s late in a calendar year, and the family has already met the deductible, it might make sense to pay for COBRA for a couple of months (especially if there are expected medical expenses). For this family, we weigh the cost of COBRA and potential out-of-pocket costs against the costs of a new plan and, potentially, a new deductible. Then, we would consider a Marketplace plan for the next calendar year. We may be able to do strategic income planning to help the family qualify for premium subsidies.

We also help spouses compare employers’ group plans. Spouse A may have their entire premium paid by the employer, but family coverage is expensive. So, Spouse B carries the dependent kids on their workplace coverage. If Spouse B loses this insurance, we look at the options. Is family coverage through Spouse A affordable? If not, we may find a Marketplace plan for the rest of the family.

Some of the most interesting planning we have done is for clients who are not yet 65 but in a unique position to meet a specific income level for Marketplace subsidies. These clients have cash reserves and/or after-tax investment accounts that support living expenses without creating too many dividends/interest/capital gains. Some clients can do smaller ROTH IRA conversions or IRA withdrawals to generate income. For these clients, we can play within the Marketplace income rules and drastically reduce costs.  

However, not everyone can uniquely target their income to take advantage of low-cost insurance premiums.  As we craft long-term plans we ask, 

What is most important to you? What are your goals over the next 10, 15, 20 years?

For many people, peace of mind, security, and freedom are top of mind.

Health insurance should not always be a low-cost game. If COBRA is the best choice for your needs, then by all means, let’s plan on that. If your investment income keeps you from qualifying for the highest subsidies, we’ll seek out what’s most best long term. Even when we can’t reduce the costs, we factor those costs into a plan to help provide peace of mind. As your trusted advisor, we want to meet you where you are. We want to help you reach your goals—to thrive mentally, physically and financially.