Unless health insurance policies afford 12 full months of coverage, patients get shortchanged.
Most Americans’ health insurance policies work off of the Georgian calendar (January 1st – December 31st). Individuals and families who enroll in or change health insurance policies during their plan’s Open Enrollment periods typically begin a new 12-month policy cycle on January 1st. This affords those individuals twelve full months to work against their deductibles, maximum out of pocket charges and other associated patient costs.
For those individual policyholders faced with what the Health Insurance Marketplace (www.healthcare.gov) considers a “life event”, (i.e., death of spouse, divorce, birth, loss of employer coverage, etc.), a new policy outside of open enrollment must be obtained in what is termed a “special enrollment” period. The money these individuals have spent against their old policy’s deductible, annual out of pocket expenses and related costs are erased. Further, the new Affordable Care Act (ACA) policy (or one purchased on the open market as well as most received via employer benefits) will reset on December 31st . Every year, the millions of policyholders who find themselves in this circumstance have less time to reach their new plan’s deductible and annual out of pocket limits than those whose policy’s were activated January 1st.
If a new policy is effective November 1st, for example, the patient has only two months to work against his/her deductible, out of pocket and associated costs before the policy’s patient costs are reset. As a result, the current calendar year system overwhelmingly favors the insurer.
Insurers (and even many employers who provide health insurance benefits to their employees) might claim they cannot handle stepping away from a calendar year format. If that is the case, consumers who enroll in new plans after January 1st should receive prorated deductibles and out of pocket maximums based on when in the year they enrolled to level the playing field. For example, if a new policy is effective on June 30th, 180 days into the new year, deductibles and out of pocket maximums would be 180/365 or 49%.
Certainly, we wouldn’t accept fiscal disparities caused by calendar year enrollment in other areas of our lives. Imagine if the customer service representative selling you a Costco membership explained,
“Today is December 15th. You will be charged $55 now for two weeks of access to our store. On January 1st, you will be assessed an additional $55 annual fee for next year’s membership.”
No one in his or her right mind would accept such a deal. Yet we don’t even consider it as unfair or even odd within the healthcare space. It costs $16,000 in premiums alone to insure the average American family. Deductibles are skyrocketing, averaging over $10,000 for a family with an Affordable Care Act Bronze level plan. In-network “out of pocket” costs can be staggering — $6600 per individual and $13,200 for families according to healthcare.gov.
Individuals and families deserve the full 12 months of their policies or should receive lower prorated deductibles and annual out of pocket costs based on when they enter into their policy. Anything less unfairly compromises consumers’ fiscal wellness.
Sarah O’Leary is a nationally recognized consumer healthcare expert, author and commentator. She is also the founder of Exhale Healthcare Advocates, LLC.