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Healthy CoverageCalifornia CPA January/February 2010Clearing Up Some Issues Surrounding Health Care’s Future It’s a guessing game as to what will happen with health insurance these days. To demystify the issue, we asked Group Insurance Trust Executive Director Susan Young a few questions about health insurance and what the impending changes might mean for CPAs. Is there any way to estimate the future costs (premiums, out-of-pocket, etc.) of health care? Many factors weigh into the overall costs of insurance. As new mandates come into play, these impact the costs of the plan. Other factors that may drive costs up are loss experience (loss ratios), trend, increased utilization of prescription drugs, rising costs of prescription drugs, non-emergency visits to emergency rooms and provider fee schedules. Another contributor is providers’ practice of defensive medicine, such as ordering all conceivable tests in hope of avoiding possible malpractice claims if things don’t go well. Will the proposed changes increase costs/change benefits for those with insurance? The proposed health care changes will most certainly increase the cost of insurance. The new mandates and the taxes imposed will impact both consumers and employers. I’m a 65-year-old sole proprietor with no employees, and I’m retiring. My spouse is 60 years old and a dependent on my policy. What can I expect to happen? You will need to factor the age of your spouse into your retirement planning. Retiring with a younger-age spouse may limit your options for spousal coverage if your spouse is not eligible for Medicare. Upon retirement your group plan will end, and COBRA or Cal-COBRA will not be available to your spouse. Your spouse would need to apply for an individual policy, which is subject to medical underwriting and can be denied or surcharged based upon medical history. Do I need to keep working to keep health insurance for my spouse? Continuing to work will ensure coverage is available for your spouse. Under the CalCPA ProtectPlus program, CPAs may work a minimum of 20 hours per week or 1,000 hours per year and continue to be eligible for benefits in the plan. How much should I plan to set aside to cover medical expenses and premiums for my spouse? You should plan for monthly premiums and out-of-pocket costs, such as deductibles and coinsurances. For someone aged 60–64 and enrolled in an average co-pay plan, such as the Protect 25 plan, premiums run an average of $1,000 per month. Premiums for the HSA 1500 plan average $800 per month. The deductibles are $500 and $1,500 respectively. The out-of-pocket maximum for the Protect 25 plan is $4,000 and $4,500 for the HSA plan. Will Medicare protect me, or do I need to keep working to cover my own medical expenses not covered by Medicare? Medicare may have its share of gaps, so protect yourself by obtaining a Medicare supplement plan (Medigap policy) and Medicare Part D (prescription benefit plan). What will happen if I’m on the CalCPA ProtectPlus plan and choose to retire? If you’re a sole proprietor, age 65 and enrolled in Medicare, notify CalCPA ProtecPlus that you’re retiring and ready to terminate your group plan. If you’re a sole proprietor, under age 65 (an early retiree) and choose to retire, make sure you have plans for your coverage until you reach age 65. Once you retire, your group plan must terminate, and there is no coverage available until you are eligible for Medicare, unless you enroll and are accepted into an individual plan. Remember, when applying for individual coverage, it’s subject to medical underwriting. Coverage could be surcharged for medical conditions or denied. If denied coverage, you may be eligible for HIPAA coverage (under federal law) if you meet the requirements. What will happen if I’m on an individual plan purchased outside of CalCPA ProtectPlus? If you retire while covered under an individual plan purchased outside of CalCPA, your retirement has no bearing on the policy, as it’s not tied to an employer/group plan. Group plans require that a business continue to operate for the policy to remain in force. What happens to my health insurance if my company goes out of business? When the business closes its doors, the group plan ends, and no COBRA or Cal-COBRA benefits are available. You may need to look at the individual marketplace for a policy (subject to underwriting). Premiums can be expensive and is part of the reason why the uninsured numbers continue to rise. One of the proposed changes in health care reform is extending Medicare to age 55. This would offer an option for early retirees that doesn’t exist today. It would allow coverage without having to go through medical underwriting as is done currently in the individual marketplace. How would your answer differ if I was a sole proprietor with one employee? One of the great values of group coverage in California is “guarantee issue,” wherein coverage for groups of two or more employees is guaranteed as long as they meet the criteria of a “group” in California. Firms with two or more employees are guaranteed issue as long as they are a bona fide business and have two employees that work a minimum of 20 hours per week. Another area of concern is the issue of underwriting for the sole proprietor with no employees. Some members feel CalCPA plans will not be available to them because they have medical issues and will need to go through medical underwriting. Will these members be declined coverage through the CalCPA Protect Plan? Sole proprietors are subject to medical underwriting. If denied coverage, members may be eligible for HIPAA coverage (under federal law), if you meet all of the following:
Will their premiums be much higher than the basic rate offered? |