Once a military spouse, always a military spouse, right? Many MSJDN members are facing transition as the time comes to leave the active duty life behind and enter (or re-enter) the civilian workforce. There are probably a few things about going back to civilian life that are overwhelming, but one big question you may have is: what about life after TRICARE? The world of private health insurance can seem daunting, especially if you’ve been out of it for a while. This information will hopefully give you a quick overview of some of the options that are out there to help you navigate the private health insurance world as an informed consumer.
Option 1: Employer-provided group health insurance
If you or your spouse become employed in the private or public sector after active duty, there is a good chance that your employer will offer group health insurance as part of its benefits package. In fact, under the Patient Protection and Affordable Care Act (PPACA), most large employers must offer some kind of group health plan or face a penalty.
Employer-provided health plans can be insured (premiums are paid to an insurance company responsible for paying claims under the plan) or self-insured (the employer pays for claims out of its general assets, up to a certain point). Most health plans use a network of providers (such as an Health Maintenance Organization, a Preferred Provider Organization, or a Point of Service plan). Some plans will require you to designate a primary care provider (although you are usually allowed to choose your own, including an OB-GYN), but many will not require it. Generally, most plans pay much at a much higher rate if you stay in-network, though there are often some benefits for out-of-network services. It’s important to ask your employer for detailed information on how your plan’s network operates.
The types of plans offered by employers vary, but the odds are that you will incur more out-of-pocket expenses in a private health plan than under TRICARE. Most large employers who want to avoid the potential for a penalty under PPACA will offer a plan that covers at least 60% of total costs—leaving you to cover up to 40%. Fortunately, most plans must cap out-of-pocket costs in 2015 for in-network expenses at $6,450 for self-only coverage and $12,900 for family coverage.
The cost of monthly premiums will vary, as well, though most large employers will limit the premium for self-only coverage to no more than 9.5% of your W-2 income (again, to avoid the potential for a penalty under PPACA). Additionally, most plans must cover a range of preventive care expenses with no-cost sharing, which means no deductible or co-pay may be charged.
There are other options offered by many employers to help employees pay for health care expenses. Many employers offer a health care flexible spending account, which allows you to reduce your salary pre-tax and set aside up to $2,550 to pay for certain health care expenses, such as co-pays or dental and vision care expenses. But be prepared! A health care flexible spending account is “use it or lose it,” so whatever you do not spend within the plan year or associated grace period will be forfeited.
Many employers are also moving towards offering a High Deductible Health Plan (HDHP) coupled with a Health Savings Account (HSA). An HDHP must have a deductible of at least $1,300 for self-only coverage or $2,600 for family coverage—though in reality, they are usually much higher. Premiums for HDHP coverage are usually much lower than other insurance plans. Employees cannot have any health insurance or other health coverage that is not an HDHP to be eligible to contribute to an HSA. An HSA is similar to a health care flexible spending account in that most employers allow employees to defer a portion of their salary into the HSA pre-tax, and many employers will also make a contribution into employee accounts. Employees may put up to $3,350 for individual coverage or $6,650 for family coverage into their HSA, with an extra $1,000 allowed if you are over age 55. The HSA is used to pay for eligible health care expenses, which includes any out-of-pocket costs under the group health plan. Unlike flexible spending accounts, the balance of your HSA can roll over from year to year and accumulate—you do not have to use it or lose it.
These are just some of the health insurance options that you may see through an employer-provided health or welfare plan. Employers generally have pretty wide latitude to design their health and welfare plans, so be sure to ask for as much information as possible from your employer about your healthcare options.
Option 2: Individual Health Insurance through a Healthcare Exchange
For those who do not have employer-provided health insurance (or if your employer’s health insurance is too expensive or otherwise inadequate for your needs), another option is to enroll in an individual insurance policy through one of the healthcare exchanges set up under PPACA. For most states, this will be the federal Healthcare Marketplace (www.healthcare.gov).
In states with their own state exchange (such as Colorado, Kentucky, DC, Hawaii, California, Massachusetts, and several others), enrollment is through the state’s website. In both the federal and various state exchanges, you can enroll in a Qualified Health Plan, an insurance policy that meets specific value and cost-sharing standards, and offers an array of mandated benefits called Essential Health Benefits. What is considered an Essential Health Benefit varies by state. The policies that are offered on the healthcare exchanges are similar to those you see outside of the exchanges and are offered by the same insurance companies seen in the private market outside of the exchanges, such as BlueCross/BlueShield, Aetna, Humana, etc.
There are generally four “metal levels” of plans offered: bronze (60% actuarial value), silver (70%), gold (80%), and platinum (90% or above). A plan’s actuarial value is the percentage of total costs that it will pay. For example, silver plans will likely pay 70% for most claims, leaving you to pay 30%, up to your out-of-pocket maximum.
For many people, the draw of enrolling in a plan through a healthcare exchange is the availability of advanced premium tax credits or other cost-sharing assistance. For those individuals whose household income falls between the federal poverty level and up to four times the federal poverty level (between $11,670-$46,680 for an individual and between $23,850-$95,400 for a family of four in 2015), advanced premium tax credits are available through the healthcare exchanges to assist in paying some or most of the premiums for a qualified health plan. However, it is very important to note that if your employer offers you coverage under the employer’s group health plan, and that coverage provides “minimum value” (which is the 60% of total costs mentioned above) and is considered affordable (the self-only premium is not more than 9.56% of your household income), then you will not be eligible for an advance premium tax credit through the healthcare exchange. This is true even if family coverage through your employer’s plan is unaffordable—the only cost that matters is the cost of the premium for self-only coverage.
You can enroll in the Healthcare Marketplace (or the equivalent state exchange) during open enrollment, which is usually at the end of the year for coverage that will start as of January 1 the following year. However, you may have a special enrollment right if you lose coverage under another plan (such as TRICARE) and need to enroll mid-year.
Option 3: Individual Insurance Policy
There are other individual insurance options outside of the healthcare exchanges. You can get a very similar individual insurance policy (which will usually also provide the full array of Essential Health Benefits) without going through www.healthcare.gov or a related state exchange. However, there are no advanced premium tax credits available outside of the exchanges.
You can also enroll in an HDHP and begin contributing to an HSA without doing so through your employer. Contributions to the HSA are fully tax deductible, and you can set yours up through most banks or other financial institutions.
There are also some private health insurance exchanges out there; for example, the State Bar of Texas has a private insurance exchange where members can shop for insurance in a similar manner as on the federal and state exchanges (found at http://texasbar.memberbenefits.com/).
This information does not include other government-provided health insurance options, such as Medicare and Medicaid, but these may be options for some, such as those who are disabled or over the age of 65. It’s important to do your research as you prepare to transition. Hopefully this information will make the process of shopping for health insurance in the civilian world a little less daunting.