What Gen Y Doesn't Get About Open Enrollment - Forbes

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With the arrival of the Affordable Care Act, the already-confusing world of health insurance and open enrollment just got a whole lot more confusing – especially for Gen Y. Not only does this group have fewer years of work experience under their belts – meaning less experience evaluating employer plans and health coverage overall – recent surveys indicate that they largely don’t understand the provisions of the new health care law.

According to a study by EHealthInsurance, only 17% of Millennials consider themselves to be well informed about health care reform; what’s more, 33% mistakenly believe that the individual mandate (requirement for everyone to have health insurance) is already in effect.

To be fair to this overeducated, often-mocked group, employee benefits have long been confusing to employees of all ages. A recent Aflec survey found that just 26% of workers (of all ages) say they “always” understand everything that is covered by their health policy and 33% say they have a full understanding of deductible costs when selecting health insurance.

With open enrollment season kicking into high gear, it’s time to clear up the misconceptions and answer some frequently-asked health-related questions.  (A broader look at employee benefits at stake during open enrollment—including dependent care accounts and vacation buy-ups — can be found here.)

To start: what exactly is open enrollment, anyway?

“You have one time during the year to shop, compare and actually pick a health insurance plan,” says Carrie McLean, director of consumer care for EHealthInsurance.com.  “If you lose track of time and don’t get a plan, you have to wait a whole other year to get insurance (through your employer), which is not a good thing if something happens to you.”

McLean added that while most Millennials – that 18 to 32 set – are healthy and don’t need to worry about major illnesses, it’s still important that they have health insurance — and of course, beginning on Jan. 1, 2014, it’s also required by the ACA. “If they have any sort of extracurricular activity, a number of issues can happen if you twist your ankle and one trip to the emergency room can cost you hundreds or thousands of dollars. This group may have student loans and other things they have to start paying for and you don’t want to start it out with also having medical bills,” she says.

With the “what” and “why” out of the way, here are five more things about health insurance and the implementation of the ACA that Millennials find particularly confounding, along with some expert advice about what it all means and how to find the health coverage that’s right for you.

The vocabulary. Deductibles and premiums, co-pays and coinsurance – the jargon can be both endless and indecipherable. For all its flaws in its early weeks of existence, healthcare.gov actually has a great glossary of all relevant terms and jargon you’ll need to know as you evaluate coverage. However, the four most important to understand are the four already mentioned, because they basically translate into “what, in dollars, you will actually pay.” Your premium is what you pay for health insurance – in other words, your bill. Your deductible is the amount you owe for health services before your insurer starts to pay for things, not including the premium. The two are related, though: the lower your deductible, the more you’ll pay in premiums. The higher your deductible, the less you’ll pay in premiums.

A co-pay is a fixed dollar amount you pay for health services, while coinsurance is a fixed percentage you pay for health costs. An insurance plan with a $20 co-pay for doctor’s visits means you pay $20 to see a doctor no matter how much that visit costs; an insurance visit with a 20% coinsurance provision means you pay 20% of the allowed amount for that visit.

What happens when. It should be noted that there are two types of open enrollment: that which is through your employer, in which you can evaluate employer coverage and decide to switch plans if need be, and that which is through the government’s marketplace. Your employer will provide the dates you need to know in order to complete enrollment on time, but these dates may not be the same as the dates tied to the individual marketplace. EHealth’s McLean explains that since this is the first year of the open marketplace, the open enrollment period is quite long: it started October 1 and goes until March 31, 2014. However, if you want your coverage to begin on January 1, 2014, you will need to submit your application by December 15, 2013.

The possible downsides of staying on a parent’s plan. One of the most popular provisions of the ACA allows children under the age of 26 to remain on their parents’ health plan; this was implemented in 2010, but the provision will become even more lenient in 2014. It used to be that children under 26 could stay on their parents’ plan if and only if their employer did not offer them coverage; in 2014, children under 26 can stay on the parents’ plan even if an employer offers coverage. However, while this sounds convenient, it could actually be logistically difficult – and even quite expensive.

“It may be, for example, that a 24, 25 year-old is working far away in a different state and the parents’ plan may not have as attractive a network,” says Karen McLeese, vice president of Employee Benefit Regulatory Affairs for CBIZ Benefits & Insurance Services. With limited access to in-network doctors and hospitals, finding care you need when you need it could prove to be a headache. McLeese says that convenience isn’t the only consideration, either.

“The parents’ plan may be a family plan – it may be multi-tiered where incrementally it does cost more to have a child on the plan. That child as single or married employee may be able to get a better deal at the place of his or her employment,” she says, noting that families can run into particular trouble if the parents use an HSA, which can only be used for the medical expenses of a spouse or “qualified child.” If a child is older than 19 but younger than 26 and out on their own working, the child won’t qualify as a “qualifying child,” and his or her medical expenses can’t be reimbursed by the HSA.  (According to the IRS, full time students up to age 24 still count as a qualifying child.)

The new rating system. Bronze, silver and gold aren’t just for the Olympics anymore. These metals (and medals) are being used to help designate the level of coverage of all major health insurance plans in 2014 and how much you’ll pay. McLean and EHealth break it down like this: A bronze plan is designed to cover about 60% of a typical member’s medical expenses, with the consumer paying the rest through deductibles, co-pays, coinsurance, etc. A silver plans will have 70% coverage and gold will cover 80% of costs. There’s also a platinum level, which will cover 90% of your expenses. Just like the premium/deductible ratio, the higher you go up the metal scale the more generous your overall coverage will be – but the more you’ll pay in monthly premiums. McLean says that if you’re healthy and young and don’t take a ton of prescriptions, a bronze plan may cover all of your needs, but it’s important to make sure you could cover the maximum out-of-pocket amount in case of an emergency.

It should be noted that some of these plans can look quite expensive compared to the average 20-something’s budget – an Aetna bronze plan in Pennsylvania with a $5,500 deductible and 10% coinsurance costs $227 per month, for example – but the government is offering subsidies for those who meet the income requirements (400% of the federal poverty level, or $45,960 for a single individual). If you’re not sure if your income would qualify you for a government subsidy, you can use this calculator here.  But — and this is a big but — if you are offered an employer plan and choose to go to the individual exchanges, you aren’t eligible for a subsidy, even if your income would otherwise qualify you for a subsidy.

Finally, it’s worth noting that if your parents claim you as a dependent, your subsidy eligibility will be based on your family’s income, not just yours. If your parents don’t claim you as a dependent but you are under 26 and eligible to stay on your family’s health plan, you can still qualify for a subsidy based on your income.

How to find the best-fitting plan. Once you know what everything means, the real work begins: comparing plans and figuring out what type of coverage you need and what plan will give you the most bang for your buck. To do this, McLeese says, it’s helpful to make a list of your existing conditions and prescription needs along with coverage you might think you need for the coming year, and compare that against the plans either being offered by your employer or through the open market in your state.

“I think it is important to make a checklist. Say okay, I would like to know whether I have dental, orthodontists (for families), ophthalmology,” she says. “List out everything that’s important to you about obtaining health coverage, and then the plans you’re looking at, look at which of those things are covered, how you’d have to pay for it, what kind of [government] subsidy is available. Or for some people, maybe it’s going to be that the government subsidy isn’t going to be available.”

McLean adds that if you make these lists and try to do a comparison yourself and are still confused, it can be helpful to find a licensed insurance agent to help talk you through things. EHealthInsurance, she says, offers this advice for free. If you’re confused about an employer-sponsored plan, your HR department should be able to talk you through things as well.

Finally, if you already have health insurance – either through an employer, a parent, or possibly through a university if you’re in school – don’t assume that it’s not worth evaluating other options. You could find a plan that’s even better. This, McLean says, is a mistake that many employees make when they get benefits paperwork from their HR department.

“Don’t go through just on autopilot when you get that pack of paper. Look to make sure – what changed with the benefits you’re being offered? Is anything in your life changing? Maybe you’ll be starting a family. Is there maternity care on that benefit; how is that paid?” she asks. “Now that individual market has an open enrollment, now’s the time you can also compare and see what else is out there and know:  am I getting the best deal for the coverage I have?”

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