What Supplements Will You Need With Obamacare?


130612102806-standard-benefits-obamacare-620xaThe final plan details are still not available for all states.  As a licensed insurance agent, I should be among the first Americans to learn the details about Obama’s Essential Benefit Plans.  I will not be able to study for certification for the new Federally Facilitated Exchanges (Marketplace) until July.

Hopefully, by then I will be able to share final details about the plans that will be offered though the Federally Facilitated Exchange (a.k.a. Marketplace).

Until that information is available for Texans, our only option is to view plans that are available in states that have elected to build and operate their own exchanges.

The graphic above illustrates the basic “Silver” plan that will be available in California.  There is no guarantee that the plans in Texas will be identical but there is no reason to suspect that they will not be drastically different, based on the way President Obama praised the CA exchange on June 7.

In this post I want to try to give you a heads up of some of the areas you may wish to supplement if you are required to buy an Essential Benefit Plan.

EBP LIMITATIONS

Although the plans in Obamacare will be very expensive, it is important to keep in mind what they are called.  They are called “Essential Benefit Plans.”  Their very title implies that they do not provide comprehensive insurance protection from medical bills.

The 4 “Metal” plans along with the plan for “Young Invincibles” do not cover every expense associated with health care.  They are just designed to make certain that health care providers are paid at least 60% of what they bill you.

If you want insurance that will pay more than the minimum, you will need to be willing to pay more in premium.  You will also need to understand that the Obamacare plans are limited and you will need to buy additional supplements if you wish to customize an insurance portfolio for your unique needs.

SUPPLEMENTS

Since the Obamacare plans are limited to covering just “Essential Benefits,” middle-class Americans will not find many differences between what they have now and what will be available under the 4 “Metal” plans unless they are pregnant or addicted to substances.

The biggest difference that middle-class Americans will see is that those under the age of 50 will need to pay drastically more for Major Medical insurance than they do today.

The second biggest difference they see is that they will not be able to customize their health insurance plans to meet their unique insurance needs without buying separate insurance supplements.

Below is an example of current supplements that are available to help pay for things that the Obamacare plans do not.

Hospital Income –  Hospital Income insurance helps pay for deductibles and co-insurance you could become liable for.  There are two types of hospital income insurance.

  1. The first type pays a single lump sum of cash if you are admitted for at least 24 hours to a hospital.  This type of supplement is typically used to pay for higher plan deductibles if you require hospitalization.
  2. The second type pays a daily benefit.  It is designed for those people who are willing to pay the higher deductibles out of their own savings but want some help with insurance co-insurance if they require hospitalization.

Prescription Drug Plans –  A review of the CA plans show that they only cover generic prescriptions with a co-pay.  If your doctor prescribes a Brand-Name drug, it could be subject to your plan’s deductible and co-insurance.  That means that if you elect a plan with a $2000 deductible and require a Brand-Name drug, you will have to pay for the full retail cost of your prescription, up to $2000.

Although I am not aware of any true insurance supplements to help with Brand-Name drugs, there are several Prescription Drug discount plans available.

You will need to enroll in one of the Obamacare plans either this year or next, depending on when your current health insurance plan renews.  When you do, you will need to review your prescription coverage.  If it does not cover Brand-Name drugs, I encourage you to get a Prescription Drug Plan.  They are typically very inexpensive or even free.

If your health insurance policy does not cover Brand-Name drugs until after you have satisfied the plan’s deductible, I highly encourage you to get a Prescription Drug Supplement.

Critical Illness  –  Critical Illness insurance pays a lump-sum of cash directly to you if you are diagnosed with a covered critical illness.  Since the money is paid directly to you, it can be used in any way you see fit.  Common uses for the money include.

  1. Deductibles, co-pays and co-insurance
  2. Experimental treatments
  3. Expensive drugs
  4. Room & Board for a healthy loved one to travel to a specialty hospital
  5. Home care during recovery from treatment or surgery.

All Critical Illness policies cover cancer, heart attack and stroke.  Most will cover additional critical illnesses.  If you elect to shop for Critical Illness insurance, speak to an insurance professional whom you trust, to find a plan that will cover the conditions that concern you.  Not every plan will.

Disability Income –  When the Health Care Reform debates were happening, it was common for a politician to cite the number of middle-class Americans who had “health insurance” but still had to file for bankruptcy protection because of medical treatment.

What was not said was that, in many cases, the bankruptcy would not have been necessary if the bills, other than hospital and doctor bills, had continued to be paid.  When you get severely ill, two financial things happen.

  1. Other bills do not get paid if you do not have enough in savings to pay your deductible and co-insurance.
  2. Income stops, for many, until you have recovered sufficiently to return to work.

Disability Income insurance is used to continue a flow of income to your house so that your regular bills, like your mortgage, car payment, utilities, etc. will continue to be paid while you are recovering.

HINT:  Many people think that the only private option for Disability Income insurance is expensive Long Term Disability Income.  If you want to protect yourself, but do not want to spend more money then necessary, consider getting a private Short Term Disability Income plan and coordinating it with any benefits you get at work along with Social Security Disability Income insurance.

Accident Supplemental Insurance –  Accident Supplements are, in many ways, the most unpredictable for of insurance available.  I have seen Accident Supplement as riders to Major Medical insurance policies that will pay for the policy’s entire deductible if you are injured in an accident.

I have also seen a stand-alone Accident Supplement policy.  This type of policy typically pays benefits on a “Scheduled” basis.  That means that it will pay a stated amount for each injury that you sustain.

For example, most Accident Supplements pay $100 or less if you need stitches for a minor laceration, however the same policy may pay $50,000, or more, if you end up in a coma.

The nicest thing about Accident Supplements is that they are typically very inexpensive.  If you already have 3-6 months in your Rainy Day fund, you probably do not need to spend the premium.  However, if you do not have sufficient money in your Rainy Day fund, I encourage you to consider adding an Accident Supplement policy to your portfolio.

HOW DO YOU GET THESE SUPPLEMENTS?

The supplements above are just a few of the supplements that are currently available.  I am certain that the insurance industry will develop some new options to go along with Obamacare over the next months and years.  Until they develop something better, middle-class Americans will need to use the current plans to augment what the new Essential Benefit Plans do not cover.

The headline above implies that I will give you directions to obtain the supplements you need.  I will do my best.

The first place to look for supplements is through your employer.  Many businesses have set up payroll deduction plans to allow employees to purchase the types of insurance supplements they want on a preferential basis.  These type of plans are called, “Voluntary.”  If you want one or more of these supplements but are not certain if they are available at work, ask your employer or Human Resource department if a “Voluntary Plan” exists.

If you work for a company that does not offer a “voluntary” plan or are self-employed, do not be discouraged.  Several insurance companies offer these types of plans on a “stand-alone” basis.  That means that rather than having the premium with-held from your pay-check each month, you will pay the insurance company directly.

Voluntary

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