Getting insured after job loss: Just how complicated?

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About 27 million of the newly unemployed and their family members have likely lost health insurance, according to a new Kaiser Family Foundation estimate.

The ACA offers a leaky but not entirely unseaworthy lifeboat. According to Kaiser estimates, 79% of the newly uninsured are at present likely eligible for ACA-subsidized coverage -- 12.7 million for Medicaid and CHIP and 8.4 million for subsidized private plans in the ACA marketplace.

The basic buckets that those seeking insurance should find themselves sorted into shouldn't in principle be that complicated. Here's the breakdown:

Insuring the newly uninsured: COBRA or ACA?

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So what about fully funding COBRA for the millions or tens of millions of Americans who lose job-based coverage? That is, bail out everyone -- insurers, employers large and small, employees, and hospitals and doctors, who depend on the commercial insurance gravy train?

It's the most expensive way to keep the ranks of the uninsured from ballooning. It's also the least disruptive way.  Families USA, hardly a corporate water-carrying outfit, supports it.

Thought bubbles:

CMS answers a $600 question

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While CMS has declined to open an emergency Special Enrollment Period for all comers on HealthCare.gov, the agency is taking steps to smooth the enrollment path for the newly uninsured. Here's a roundup of some constructive moves, some of which I've noted in recent posts:

• The $600/week extra unemployment benefit provided in the CARES Act is income that counts toward the level of subsidy eligibility in the ACA marketplace but does not count toward Medicaid and CHIP eligibility. That seems a recipe for potential enrollment confusion on a platform that enrolls people in both programs. In response to a query, however, CMS tells me, "HealthCare.gov will be updated to apply logic to ensure federal pandemic UC is counted correctly and unemployed consumers receive the accurate eligibility determination." That is, applicants should report their full UI income in the application, and HealthCare.gov will be able to discount it for the purposes of determining Medicaid eligibility. That's good news, if the "logic" holds up as intended. [Update, 4/24: just to highlight the verb tense above, CMS says that they will add this capability, which means that it's not yet operative.]


• CMS also says that if an applicant's year-to-date income or projected full-year income exceeds the Medicaid eligibility threshold, but current monthly income is below the monthly threshold ($1468 for an individual, $3013 for a family of four), HealthCare.gov will recognize Medicaid eligibility and "transfer the consumer’s information to the state Medicaid or CHIP agency as appropriate." As I've noted in prior posts, in this situation navigators generally prefer to apply directly to state agencies for Medicaid. But whether or not it's difficult in practice to report both annual (or projected annual) and current monthly income on hc.gov and get the right result if one is over and the other is under the threshold, it's possible.


• As noted in my last post, those who apply for a Special Enrollment Period on grounds that they recently lost health coverage (usually after job loss) will not have to document the loss of coverage -- only attest to it. I am not sure whether that is true for other SEP causes, such as marriage.

When a 30 year-old's health insurance decision was a matter of life or death

Yesterday the Atlantic ran an article of mine about the ACA's satisfied unsubsidized -- those who earn too much to qualify for ACA subsidies but were happy with the insurance they found for 2014 under ACA rules because they or a family member have a pre-existing condition.

The original draft was cut down quite a bit, necessarily and appropriately for a general interest publication. Personally, though, I find the full stories of how these "health insurance veterans" navigated the individual market over the course of a decade or two fascinating. One outtake is below; I'll put up another tomorrow.

An individual market vet prefers PPOs

Frank, 40, a film producer, and his wife Sharon, also 40, a film editor, live and work in Los Angeles, among the legions of independent contractors in the film industry. The couple has a 5 year-old son. Sharon has a preexisting condition -- she was diagnosed with thyroid cancer in 2003, which was fortunately caught early and treated successfully.  Intuition and prudence probably saved Sharon's life, as well as the couple's finances. Frank's recollection of the way two young professionals navigated a world in which health insurance was not a given provides a window into the problems the ACA is designed to address.

"At that time, we usually didn't get health insurance," Frank recalls, "but Sharon was working on a program that did provide insurance.  The job ended, and she was going to move on to another thing, and was like, you know, 'I am going to pay for the COBRA and continue my health insurance.' She felt there was something wrong with her neck.  I remember thinking, you don't really have to do that. I didn't have health insurance. I had left where I was and was trying to do some writing, and my attitude was, 'we don't have the money.' She said, 'I really think it's important.'  And she was dead on the money, because she had thyroid cancer.  She was lucky, it wasn't terribly severe, she caught it pretty early, but it took some time -- she had to have three separate surgeries."

Healthy, relatively wealthy, and hit by ACA rate hikes

Past and forthcoming posts of mine have looked (and will look) at the situations of several people who do not qualify for ACA subsidies but were still satisfied with the coverage they obtained for 2014.  That is because they all either had pre-existing conditions or were in a household where someone else had one -- as do a very large percentage of Americans, particularly those over forty in households larger than one person. As for the young, the overwhelming majority of them are subsidy-eligible.

At the same time, of the 12-18 million people who bought insurance in the individual market in 2013, nearly half were not eligible for subsidies, according to the Urban Institute. Of the substantial percentage of them who were not punished for a pre-existing condition in the pre-ACA market, many will pay more for coverage in 2014 than they did last year (click here for more statistical detail on these fronts).  Some will get better coverage for the extra money, but some won't, and some will get coverage they would not buy if they did not have to.

In recent days I've heard from two of them, neither unsympathetic to the ACA (yes, my readership is skewed that way).  Sam, living in New Hampshire, was hit hard by a premium increase this year.  If the timing of certain life events had been somewhat different, however, he might have benefited directly from the law's enactment. His initial note indicates somewhat unusual circumstances:

COBRA or the ACA? cont.

A while back, I put up a pair of posts examining the factors to be weighed by people faced with a choice between continuing an employer-sponsored health plan via COBRA or buying a health plan on an ACA exchange.

Once case involved a couple, ages 62 and 57, navigating a simultaneous retirement and divorce. As both are subsidy-eligible, an ACA plan yields big savings. The other involved a single New York-based 31 year-old who's been continuing good coverage via COBRA and is at the edge of subsidy eligibility. An ACA plan would slash his monthly fee considerably, even without subsidy, while offering more restrictive coverage.

COBRA is likely to be the better choice, however, for older insurance-seekers who are not eligible for subsidies.  Employer-sponsored insurance is usually not age-rated -- that is, it doesn't cost more for older plan members -- and the coverage it offers generally has a higher actuarial value than the ACA's benchmark silver plans. ACA plans are more modestly age-rated than plans in the pre-ACA individual market -- the ratio of oldest to youngest is capped at 3-to-1, versus the 5-to-1 cap that most states allowed pre-ACA. Still, many older buyers can leverage the lack of age rating in their ESI to get better coverage for the same price than on the exchanges.

Healthcare.gov comes through in a complicated situation

Yesterday's post examined the factors to be weighed by people who face a choice between continuing on an employer-sponsored insurance plan via COBRA and switching to a Qualified Health Plan under the ACA. In brief: an ACA plan is likely to have a lower premium -- especially but not exclusively for those eligible for subsidies -- while a COBRA'd employer-sponsored plan is likely to offer better choice of doctors and hospitals and/or lower out-of-pocket costs.

One sidelight that emerged is that for many in the individual market, income is likely to be variable, and thus subsidy calculation can be delicate. That raises the question of how flexible and fact-specific a new federal bureaucracy is likely to be.  We looked at the case of Marcia, who is in the midst of a divorce just as a her husband is retiring.  Because she is in her mid-fifties, the base price of a silver ACA plan is quite high -- over $600 per month for the cheapest silver plan. Her post-divorce income will qualify her for a monthly subsidy of over $350 per month.  But the interim is uncharted territory. Her husband has just gone off salary and will soon go on Social Security, and their income is pooled for subsidy calculation purposes until the divorce is finalized.

Switching from COBRA to the ACA exchanges

I know a couple of people who will likely save a good deal of money by switching from COBRA to health plans available on ACA exchanges. It strikes me that people making this transition are an important subset of those who may stand to benefit from the ACA.  I'd like to invite people who have made this switch or are considering it to contact me via the "about me" tab on the right margin of this blog.

COBRA, the Consolidated Omnibus Budget Reconciliation Act, first passed in 1986, is best known for allowing people who lose or quit a job to continue on the former employer's group health plan for a fixed period (usually 18 months; 36 months in case of divorce) without the benefit of the employer's contribution.  It can also be tapped by people recently divorced or widowed or whose spouses become eligible for Medicare. An FAQ about eligibility and rules is provided by the Dept. of Labor, here.

Employer-sponsored insurance (ESI) usually provides more expansive coverage than the silver plans that are the benchmark in ACA exchanges -- though that may not be the case for people who qualify for additional subsidies reducing out-of-pocket expenses. But ESI is expensive. People whose income qualifies them for relatively modest ACA subsidies, or no subsidy at all, may have to balance tradeoffs when deciding between COBRA and an ACA plan. Below, in brief, with first-name pseudonyms, are outlines of the two situations I'm familiar with.

New coverage rules for employer-provided health plans

Most overviews of the effects of the new health reform law have suggested that it won't have a large impact on employer-provided insurance. That ain't necessarily so.

Business Insurance reports that employers "will have to redesign their health care plans to extend coverage to employees' adult children up to age 26, eliminate lifetime dollar limits and remove pre-existing condition exclusions, if any, for children up to age 19."

Historically, insurance has been regulated by the states. While many states have strict coverage mandates (and others minimal ones), employers that offer self-funded health plans to their employees have been exempt from these mandates.  Since more than half of all Americans who get their health coverage from their employers are in self-funded plans -- approximately two thirds of large employers self-fund -- that's a large regulatory loophole.

According to Business Insurance, however, the new federal coverage rules do apply to self-funded plans:

For example, few employers extend coverage to employees' children to age 26 as the legislation will require starting next year; typical cutoffs are at age 23. Many states already require such extensions, but those state laws apply only to insured plans and not to the roughly two-thirds of larger employers that self-fund their plans.