For many years in Nevada, the choices for individual coverage were basically HPN/Sierra Health & Life, Anthem Blue Cross, and at one time Aetna and Humana. Both Aetna and Humana have left the individual insurance market leaving HPN/Sierra and Anthem as the only choices. During the past few years, that has changed significantly. Hometown Health from Northern NV has entered the Southern NV market along with Ambetter, Select Health, and Friday Health Plans.
To complicate things, the Nevada Health Link offers individual coverage with or without a government subsidy. Off the exchange, there is no subsidy.
Also, the former PPO (Preferred Provider Organization) is no longer offered in the individual market. (The small and large group market still offers PPO plans.) The replacement for the PPO is called and EPO (Elite Provider Organization). They both have the same providers but with the EPO you can only go out of NV for coverage if it is urgent or an emergency. There is no longer a nationwide network for individual coverage. It is my understanding that it is nationwide, so all individual coverage is now EPO’s without a national network.
On-exchange coverage is offered through all the carriers and again with or without a subsidy. These subsidies are based on the number of people in the household and the income. The parameters are based on the national poverty level and that determines how much of a subsidy you would receive for the current year. What most people do not understand is the subsidy is reconciled when you file your taxes for the year. If you overestimated your income, you would get money back from the government in the form of a tax reduction.
If you underestimated your income, you must pay that back. The government can only take the money back from any tax refund. If there is no refund, you still owe the money and at some point, it will be reconciled. The latest statics show that 53% of those receiving a subsidy will have to pay back part or all the subsidy received. I could not find any information on how much has been paid back. In NV we have a state-based exchange rather than using the federal one. Meaning Nevadans run the exchange without any help from the federal government. The concepts are the same, but it is run locally.
Off the exchange, there are no subsidies offered so you pay the entire premium. Off the exchange, there are the same insurance carriers, but the plans are somewhat different. With both on and off the exchange, there are no medical questions asked so the coverage is a guaranteed issue. That has been that way since ObamaCare was first introduced.
What I find most interesting is that each year the plans change just a little bit but mostly it is the maximum out of pocket that goes up along with the deductible, copays, and of course the monthly premiums.
At this point, perhaps an explanation of how insurance works might be in order. There are four components in all insurance. The maximum out of pocket, the deductible, and copays or percentages. (The percentage is based on the level of the plan. Platinum(90/10) is the highest, then gold(80/20), silver(70/30), and bronze(60/40). The insurance company pays the higher amount, and the insured pays the lower amount. The higher the metal, the higher the premium, and the lower out-of-pocket cost. The lower the metal, the higher out-of-pocket costs but the premiums are lower.)
The deductible and copays and percentages all apply against the maximum out of pocket. When the maximum is reached anytime during the year, the insurance company pays whatever other charges for the remainder of the year. It all starts again on January 1st. That is as simple as can be but would like to offer some other thoughts on individual insurance. About 17% of the population hit the maximum out of pocket.
As mentioned earlier the monthly premiums keep rising annually and quite frankly, they are very high. Perhaps everyone must reconsider what insurance is and how to buy it differently. Previously, many took the lowest deductible with the highest premium. With costs rising annually as we age the cost is becoming prohibitive.
An easier way to consider buying insurance is to prepare for a major illness that everyone will experience sometime in their life and buy the highest deductible plan you can with the lowest monthly premium. That means that you will be paying the contracted rates for doctor visits and other minor services. That also means you need to shop for prescription medications because those prices using insurance have risen considerably and you need to think outside the box. There are three companies that offer considerable savings in prescription medications, and everyone should consider using these sources and pay cash for the drugs. GoodRx, Nevada Drug Card, and Single care offer reduced pricing for many medications, and everyone should consider checking their pricing to see if paying cash reduces your overall costs. Remember, it is not what you make but what you keep that is important.
The rethinking on how to buy insurance has changed significantly over the years due to rising prices especially as you age. In your 20’s and 30’s the monthly premium for the insurance is relatively reasonable but in your later years, the monthly premiums are getting very expensive. I just spoke to a client in her early 50’s and her monthly premium exceeds $1000 per month. Many or most people cannot afford those monthly rates so you must make changes so you can afford to keep the insurance. As we age, not having insurance is not an option.
Consider instead getting an HSA. That stands for Health Savings Account and is another form of insurance with some extras. The HSA by federal definition cannot have any fixed copays for medical services or prescriptions. It has a high deductible that once met, all medical services are covered for the remainder of the year. You pay the contracted rates the providers have with the insurance company for all medical and prescriptions needed.
The other component of the HSA is optional. You can set up a checking account whereby you put pre-tax dollars into it to pay for any medical or prescription medications. Annually the maximum amount you can put aside changes and it also depends on if you are single or have a spouse and or family. In 2021 an individual can contribute up to $3600 while a family can contribute up to $7,200. This money is taken out of your paycheck pre-tax meaning you pay no income tax on that money. It can only be used for medical or prescription medications. Anyone over the age of 55, can contribute an additional $1000. If you and your spouse are 55 or older both of you can contribute $1000. Once you turn 65 you can no longer contribute but the money is yours so you can use it for medical or prescriptions until it is depleted.
My recommendation for most people is to talk with your broker and if applicable change their insurance to an HSA. If you can afford it, put pre-tax money aside monthly to pay those out-of-pocket costs. That reduces their monthly premiums for insurance and may give them some breathing room due to the savings in insurance premiums. If you cannot afford to put money aside, then still use the HSA to reduce your monthly insurance premiums.
I realize this is a lot to digest but I am available to explain anything relating to buying insurance. My contact information is listed below for your convenience.
The Barend Agency Inc. Len Barend, broker.