Disability & Benefits: It’s Open Enrollment Time Again

[Guest guest]

Disability & Benefits: It’s Open Enrollment Time Again

This is the time of year when many employers provide an Open Enrollment Period for employees, allowing them to make changes in their employee benefits choices. Although employers can select other times of the year for this, the majority of employers have their Open Enrollment in November and/or December for a January 1, 2011 effective date.

Also, from November 15 through December 31 Medicare beneficiaries are able to make changes in their coverages as well. NOTE: Later in this article important changes in health plans and Medicare as a result of the new Healthcare Reform Act are described.

Employer Provided Benefit PlansCompanies offering an Open Enrollment period will publish (or offer online) an Open Enrollment Guide that spells out each employee’s current benefits plus the available change options, opportunities, and costs that may be made during the period. For persons dealing with a serious medical condition like HBV/HCV, it can be an opportunity to alter benefits and, in some cases, actually increase benefits.

Life Insurance. Persons dealing with HBV/HCV are generally unable to purchase life insurance in the individual market. However, some larger employers offer voluntary, supplemental life insurance and open enrollment may offer an opportunity to increase the amount of life insurance an employee purchases without proof of good health. Often, the amount that can be increased without providing such proof is limited to only the next immediate bracket if available.

An employer may give all employees a base benefit from $10,000 to $50,000 or more. In addition they may offer Supplemental Life Insurance in certain increments on a guaranteed issue basis up to a specified maximum that the employee would pay for through payroll deduction.

Many employers will allow employees, at Open Enrollment, the opportunity of increasing their life insurance by one increment, again without requiring proof of good health. This would give you the opportunity of increasing your life insurance benefits at a low cost.

While some employers offer this option, many others will not. If it is available, it is an excellent way for an otherwise “uninsurable†person to obtain additional life insurance.

Long Term Disability. Less common, but still occasionally available, is the opportunity to increase the benefit of your LTD plan. Some employers will provide a basic benefit for LTD, such as 50% or 60% of your monthly earnings, and allow employees to purchase an additional 10% or 15% to raise the benefit they would receive in the event of disability.

Some employers may allow you to add this benefit if you did not select it originally. Again, it is important to read your Open Enrollment material to see if your employer offers this.

Revising LTD Premium Payment. One additional possibility to explore is the payment of LTD premiums and its effect on the income taxability of the disability benefits should you ever need to collect them. Some employers will allow you to pay for the LTD coverage through payroll deduction rather than receiving it as a gift. If this is possible you may want to jump at the chance, the reason being taxes.

If you pay for the LTD coverage with money you pay income taxes on, then the benefits you receive if you become disabled will be income tax free, substantially increasing the spendable dollars you would receive as a disability benefit.

Conversely, if the employer “gives†you LTD coverage and pays for it as part of his business expenses, then any benefits you would receive upon disability are fully income taxable. The key is: if the cost of LTD coverage is included in the W-2 you receive at the end of the year, then the benefits, when you collect them, will not be income taxable.

Health Related Benefits. Many employers, especially larger ones, offer a variety of health, dental, and vision plans from which employees can choose. At Open Enrollment you have the opportunity to change your coverage from one plan to another regardless of your medical condition, and sometimes have the opportunity to make choices within your plan, such as increase or decrease the size of the deductible.

For someone dealing with HBV/HCV, this can be an important choice, especially if this is the first Open Enrollment since diagnosis. There is no one type of health plan that is best for everyone. There are two main kinds of plans that employers often offer:

Preferred Provider Organization – These plans provide some coverage for all physicians, but pay more if you choose a physician that has contracted with the insurance company, a Participating Provider. This plan will give you the greatest flexibility in medical providers; however, it will often cost you more out of pocket for both your portion of the monthly premium as well as the plan co-pays and co-insurance. Health Maintenance Organizations – These plans usually offer the lowest out-of-pocket expenses, but limit your choice of physician. Coverage is only provided when using one of their contracting doctors and hospitals. Also, a Primary Care Physician (also called a Gatekeeper) oversees all your medical care and must refer you to a specialist before the HMO will cover the specialist’s charge.

Which plan is better for you will depend on what doctors you wish to retain and what HMOs or PPO plans they are part of, as well as the cost to you.

Important Changes: Under the new Affordable Healthcare Act (ACA, also called the Health Reform Act), the following changes must be made at the beginning of each employer’s plan year, except for certain “grandfathered†plans:

Lifetime limits on benefits are prohibited. Children must be allowed to remain on their parents’ policy up to age 26, even if no longer dependent. Preventive services (physical exams, diagnostic screening exams, etc.) must be covered 100% with no deductible, as long as they are provided by In-Network Providers.

Each employer and its insurer will have rules as to what may and may not be added or changed, so be sure to read the Open Enrollment Guide carefully. Some of the possible changes are listed below.

MedicareMedicare beneficiaries have several choices as well, and the choices must be made between November 15 and December 31 with all changes effective January 1, 2011.

Original Fee For Service Medicare – Many people elect to stay with original Fee-For-Service Medicare. It consists of Part A – Hospital Coverage; Part B – Medical Coverage; and Part D – Prescription Drug Coverage. Parts A and B of original Medicare are the same for everyone, however, each beneficiary can elect in which prescription drug plan to enroll.

The only way to determine which Drug Plan is best for you is to compare plans using your own prescriptions, since not all plans cover all medications. There is a program on line at www.medicare.gov that allows you to enter your medications and where you live and it will show you what each plan would cost you out of your pocket based on your medications. Even if your current Drug Plan has been serving you well, it is advisable to re-run the program in case your medications have changed or your drug plan is revising its formulary for the coming year. The plans for 2011 are already up on the website.

For persons who are not comfortable with computers, Medicare’s toll-free number (800-MEDICARE) will do the same calculation. However, I recommend you find a friend or relative who will do it for you, because the results are too long and involved for a telephone operator to spend much time reviewing all options.

Medicare Advantage Plans – These are plans offered by insurance companies and health service providers that are an alternative to Fee-for-Service Medicare. Many of these plans are Health Maintenance Organizations, but there are also Preferred Provider Organization Plans, Special Needs Programs, and Private Fee for Service plans, although all types are not available in all states.

Under these plans, Medicare pays the insurance company to provide all of your medical care. Benefits under your red, white, and blue Medicare card are no longer covered directly, but the Medicare Advantage Plan must offer all of its benefits and may add more. Some plans may also charge an additional premium, usually relatively small. These plans also include the prescription drug coverage in their plan so you don’t have to work through the Part D coverage question.

Important Change: Under the new Affordable Healthcare Act, all Medicare Advantage plans must limit the claimant’s out-of-pocket expenses to no more than $6,700 per year.

During this Open Enrollment Period, persons may switch from one Medicare Advantage Plan to another or move back to or away from Fee-For Service Medicare.

All changes made to Medicare take effect on January 1.

Important Change: The enrollment period from January 1 through March 31 when one could change from one Medicare Advantage to another is eliminated. In its place is a Disenrollment Period: from January 1 through February 14, one can leave a Medicare Advantage Plan and move to Original Fee-for-Service Medicare and also have a Special Enrollment Period to add Prescription Drug Coverage.

Also, for persons who did not enroll in Medicare Part B when it was first available and who do not qualify for a Special Enrollment Period, there is a General Enrollment Period between January 1 and March 31 of each year with the Part B coverage taking effect the following July 1. There will usually be a surcharge to the premium of 10% for each year you could have been in Part B but were not.

http://www.hcvadvocate.org/news/newsLetter/2010/advocate1110.html#2