Implications of Pre-ACA Individual Insurance Policy

[WCMason]

My focus is Medicare so I know just a little about how IFP plans work in the ACA world. I run into a fair amount of turning 65 people who have younger spouses on individual plans that are pre-ACA. Yesterday I met a couple who are paying about $450 per month for a $7.5K deductible plan, $10K max OOP they got about five years ago (a Bronze PPO plan would run them about $650-700 each). Carrier told them they could keep it. Husband's Medicare starts today, wife is nervous that they'll rewrite hers as a compliant plan and her rates will go way up. They were nervous enough that they were considering him not taking Medicare (income puts them at top tier for Part B premium so his cost for Part B, Medigap, and Rx would be higher than what he's paying now, though for much better coverage). He did enroll in Medicare and Medigap after we went over the penalties for not taking Part B when first eligible.

So, just what are the implications for the younger spouse? Aren't there tax penalties in store for their not being in an ACA-compliant plan? Is there a chance she will be able to keep her pre-ACA coverage now that he's coming off of it? If it matters, she is the primary insured on that coverage. Thanks in advance for any input.

 

[DS4]

When you say "Pre ACA", I'm assuming "grandfathered". The spouse going on Medicare can split off and the remaining spouse keeps her grandfathered status. Very simple.

 

[Yagents]

My focus is Medicare so I know just a little about how IFP plans work in the ACA world. I run into a fair amount of turning 65 people who have younger spouses on individual plans that are pre-ACA. Yesterday I met a couple who are paying about $450 per month for a $7.5K deductible plan, $10K max OOP they got about five years ago (a Bronze PPO plan would run them about $650-700 each). Carrier told them they could keep it. Husband's Medicare starts today, wife is nervous that they'll rewrite hers as a compliant plan and her rates will go way up. They were nervous enough that they were considering him not taking Medicare (income puts them at top tier for Part B premium so his cost for Part B, Medigap, and Rx would be higher than what he's paying now, though for much better coverage). He did enroll in Medicare and Medigap after we went over the penalties for not taking Part B when first eligible.

So, just what are the implications for the younger spouse? Aren't there tax penalties in store for their not being in an ACA-compliant plan? Is there a chance she will be able to keep her pre-ACA coverage now that he's coming off of it? If it matters, she is the primary insured on that coverage. Thanks in advance for any input.

The answer is........it depends on the carrier, the state, and effective date of Pre-ACA policy.

1. Grandfathered = effective date prior to 3/23/2010. "5 years old" puts it right around that date. Also, no substantial changes can be made to the policy over past 5 years (like raising deductible), that could have caused it to become NON grandfathered.

2. Non Grandfathered - if eff date after 3/23/2010, then the policy will be ending soon, or at the latest in 2017. Depends on what your state and DOI allowed, and of course the carrier and whether they extended these policies.

3. Carrier - some carriers are requiring termination if anything is changed to the policy, including removing a dependent (Humana?). Other carriers will allow the younger spouse to keep it (Goldenrule). Some carriers (Assurant) are terminating both types of policies at end of this year. Yes, at some carriers, it would matter that she is the primary. It provides more options to keep the policy.

4. Policy - if an HSA plan, you could find the deductible is cut in half, and you lose the "family discount", and the price drop will not be as much as you might expect. Goldenrule is prime example.

5. A grandfathered or NON GF plan are both compliant, and they won't incur the penalty.

 

[kgmom219]

What Y said...

AKA...you need to call the carrier with the client.

But also (this is when I'm not a Over 65 expert), does indy count as creditable coverage so they don't incur the Part B late enrollment penalty?

 

[insuranceconceptscindy]

But also (this is when I'm not a Over 65 expert), does indy count as creditable coverage so they don't incur the Part B late enrollment penalty?

Only employer sponsored group is considered creditable coverage with Medicare. Not individual, not COBRA, not retiree, only active employee coverage, or active employee spouse coverage.

 

[kgmom219]

Only employer sponsored group is considered creditable coverage with Medicare. Not individual, not COBRA, not retiree, only active employee coverage, or active employee spouse coverage.

...........Thanks Cindy!

 

[WCMason]

The answer is........it depends on the carrier, the state, and effective date of Pre-ACA policy. 1. Grandfathered = effective date prior to 3/23/2010. "5 years old" puts it right around that date. Also, no substantial changes can be made to the policy over past 5 years (like raising deductible), that could have caused it to become NON grandfathered. 2. Non Grandfathered - if eff date after 3/23/2010, then the policy will be ending soon, or at the latest in 2017. Depends on what your state and DOI allowed, and of course the carrier and whether they extended these policies. 3. Carrier - some carriers are requiring termination if anything is changed to the policy, including removing a dependent (Humana?). Other carriers will allow the younger spouse to keep it (Goldenrule). Some carriers (Assurant) are terminating both types of policies at end of this year. Yes, at some carriers, it would matter that she is the primary. It provides more options to keep the policy. 4. Policy - if an HSA plan, you could find the deductible is cut in half, and you lose the "family discount", and the price drop will not be as much as you might expect. Goldenrule is prime example. 5. A grandfathered or NON GF plan are both compliant, and they won't incur the penalty.

Thank you. This is a very helpful breakdown of the various scenarios.