Guide to Purchasing Health Insurance
Individual or group coverage:
Group health insurance may be offered by employers, associations or purchasing pools. Group insurance may also cover the employee’s family members. Often the employer covers part of the premium costs. Employees will usually need to work a minimum number of hours to qualify for employer based group insurance.
Under the federal Affordable Care Act (ACA), companies with 50 or more employees will be assessed a penalty starting in 2015 if they do not offer group health insurance to fulltime workers. Companies with fewer than 50 employees are exempt from the penalty.
Businesses with fewer than 50 employees will be able to buy coverage through the Small Business Health Options Program (SHOP) on the new health insurance marketplace known as “MNsure.” Go to MNsure to look for small employer plans
Companies with fewer than 25 employees, average pay of less than $50,000, and that pay half the cost of insurance for their employees, are eligible for a tax credit in 2014.Individual insurance is an option for those who do not have group insurance available, or for whom the group insurance is not affordable. Under the ACA, everyone not covered by an employer group plan, Medical Assistance (MA), Medicare or other public insurance, is required to purchase health insurance or pay a penalty. For 2014 the penalty will be $95 or one percent of taxable income, and it will increase every year. Members of a recognized religious sect, such as Christian Scientist or Jehovah’s Witness, American Indian tribal members, and those with a financial hardship may be excused from this requirement. Go to MNsure.org to look for individual health plans.
For those without affordable group insurance, another option might be one of the health care plans offered by the Minnesota Department of Human Services. These plans have very low, if any, enrollee cost sharing and in Minnesota will cover low income adults as well as children. An individual looking for insurance on MNsure will be screened for eligibility for the Minnesota health care plans. Those deemed eligible will be directed to DHS. Go to Minnesota Department of Human Services to learn more about the Minnesota Health Care Programs available to eligible Minnesotans.
Grandfathered or new:
Grandfathered plans are plans that were in effect on March 23, 2010 when the federal Affordable Care Act (ACA) was signed into law. The intent was to allow individuals, families and employers to keep the coverage they had. Grandfathered plans are subject to some of the reforms contained in the ACA: no annual dollar limits on coverage; no preexisting conditions exclusions; no waiting period of more than 90 days; no lifetime limits on coverage; dependent children are covered to age 26. Grandfathered plans are not required to offer the essential benefit set or limit cost sharing or provide preventive care with no cost sharing. Grandfathered plans will lose that status if there are significant changes in benefits, copayments, coinsurance, employer contributions or change in insurance companies. Should this occur, the plan will be subject to all of the requirements of the ACA and Minnesota law.
Under the ACA, each state will have an online marketplace for individual and small employer health insurance. In MN the marketplace is called MNsure. To shop on MNsure, you must be a legal resident of MN, live in the service area of the health plan you are purchasing, and not be incarcerated. Initial open enrollment will be 10/1/13 3/31/14. Subsequent annual open enrollment will be in the fall. Coverage is effective 1/1/14 for those enrolled by 12/15/13.
Help shopping and choosing a health plan is available via navigators, in-person assisters, certified application counselor and licensed insurance agents/brokers, and via the MNsure customer call line at 1-855-366-7873. For more details about MNsure, go to MNsure.
Individual and small group health insurance called Qualified Health Plans (QHPs) will be sold on MNsure. For those with lower incomes but not eligible for Minnesota health care programs, MNsure will determine if they quality for a subsidy to help pay for the insurance. Subsidies are only available for shoppers using the MNsure website. A subsidy will be used to discount your insurance premium.
Individual and small group health plans will be sold in four “metal” levels based on their actuarial value: bronze; silver; gold; and platinum. This means that the plan will cover from 60% to 90% of the cost of the benefits provided; the consumer pays the rest in deductible, copays and coinsurance. A catastrophic plan with a lower actuarial value may be offered for young adults under age 30 who cannot otherwise afford coverage.
Each QHP will be offered with a designated provider network. You can use the MNsure website to see if your hospital and clinic is in the network for any QHP you are looking to buy. Hospitals and clinics may be offered in more than one network and by more than one QHP.
Premium tax credits and cost sharing subsidies will be available for US citizens and legal immigrants purchasing individual coverage on MNsure. Premium tax credits for those with incomes up to 400% of the federal poverty level (FPL),(about $47,000 for an individual and $96,000 for a family of four) and will limit what a person has to pay toward the premium to a specified percentage ranging from 2% of income to 9.5% of income for those with income between 300 and 400 % of the FPL. In addition, cost sharing subsidies will be available to those with incomes up to 250% of the FPL (about $29,000 for an individual and $60,000 for a family of four).
Go to MNsure to see what plans are available and how to enroll.
Market reforms and conformance with the ACA
There are many changes made in Minnesota’s health insurance market that apply to individual and small group health insurance that are not sold on MNsure. Some of these reforms apply to grandfathered plans as well as new plans; some apply to both individual and group insurance. Some reforms apply to large group plans as well. Here is a list of many of the reforms in place in 2014. Unless noted, these reforms apply to all individual and small group health plans sold in Minnesota for plan years beginning in 2014.
- Guaranteed issue is required for all health plans, except grandfathered plans, beginning January 1, 2014. This means the carrier cannot refuse to sell you a policy based on your health history.
- If the plan covers dependents, dependent children must be covered up to age 26 without restrictions without regard to the child’s financial dependency, residence, marital status, student status or employment (this also applies to grandfathered group health plans for plan years beginning on or after 1/1/2014)
- No plan may restrict coverage for a preexisting condition for anyone under 19 years of age (does not apply to grandfathered individual health plans)
- No individual health plan may be offered, issued, sold or renewed that contains a preexisting condition limitation, preexisting condition exclusion or exclusionary rider (ban on preexisting condition limitations for children age 18 or under does not apply to grandfathered individual plans. The prohibition on preexisting condition limitation for adults age 19 and over does not apply to grandfathered individual health plans.)
- Premium rates for women and men of the same age must be the same
- Premium rates may vary based on use of tobacco
- Premium rates may vary based on geographic rating areas
- Coverage cannot be canceled or discontinued except for intentional misrepresentation or omission of a material fact or an act that constitutes fraud
- Preventative health services must be covered without any cost-sharing including deductible, coinsurance or copayments, when received from a network provider (except for grandfathered plans)
- No lifetime or annual dollar limits are permitted on the dollar amount of essential health benefits received from network providers
- Health insurers must spend a certain percent of premium revenue on claims and quality improvement or issue a rebate to policyholders
80% in individual and small group markets
85% in large group markets
No cost sharing for women's health coverage including contraceptives
- All individual and small group health plans sold in Minnesota must include the essential health benefits package required by the ACA
- Essential health benefits includes: ambulatory patient services; emergency services; hospitalization; lab services; maternity and newborn care; mental health and substance disorder services including behavioral health care; pediatric care including oral and vision care; prescription drugs; preventive and wellness services; rehabilitative and habilitative services
- Cost sharing for these health plans must be consistent with the ACA
Small group plans $2000 per person/$4000 per family
Individual plans $6350 per person/$12,700 per family for 2014
- Emergency care is covered in or out of network at the same rate, except for grandfathered plans.
Medicare coverage is not subject to these market reforms. Go to Minnesota Board on Aging or Minnesota Department of Commerce - Insurance or Medicare.gov for more information about Medicare health plans and Medicare supplemental insurance.
Short term coverage
You may be able to get short-term health coverage. This temporary coverage can last for up to six months. Preexisting health conditions are not covered. This may be an option to consider if you are between jobs, just graduating from college, or waiting for your group coverage to start. Be sure you understand what is covered and what is not covered. For more information about short term coverage go to Minnesota Department of Commerce.
COBRA and continuation coverage
Federal and state law give you the right to continue your health coverage for a limited time after you and your dependents become ineligible for your employer’s health plan.
COBRA, or the Consolidated Omnibus Budget Reconciliation Act, was passed in 1986 and contains provisions which allow employees to continue health coverage for themselves and their dependents after they leave their jobs. COBRA and state law require that if your employer provides you and your dependents with group health coverage, your employer must also allow you and your dependents to continue that coverage at your own expense, should you or your dependents lose your coverage. In most cases, both you and your dependents may elect COBRA or state continuation coverage for up to 18 months, but the time frame varies depending on how you became eligible for continuation coverage. You will most likely have to pay the entire cost of coverage yourself.