The 2017 Covered California Open Enrollment Period is upon us. Many of us have received the renewal letters from our insurance company telling us how much our rates are going to increase. We all want answers about how to get lower rates, why is this happening, and what can we do?
This case study is about the decision process I used for our Obamacare health insurance renewal. The result is that we get to keep our doctors and save over $5,000 in 2017.
Summary of Our Situation
My wife and I live in San Diego, CA and are healthy overall. We typically just do our preventive visits each year and maybe an extra office visit for something that’s bothering us at that time.
However, I an an insulin-dependent Type 1 diabetic (for 40 years), and use an insulin pump. Therefore I have brand name prescriptions for insulin, test strips, insulin pump supplies, and a generic prescription to protect my kidneys. My wife has a couple of generic prescriptions.
I set up our health insurance through Covered California so I could use our application to test the Covered CA system each year. We don’t qualify for subsidies. For 2016 we have a Blue Shield Silver 70 PPO plan because we need the prescription coverage, and Blue Shield has my Scripps physicians and my wife’s Arch Health Partners doctors in their network.
When we got our renewal letter from Blue Shield I was already expecting it to be higher and was hoping we would get an “average” increase of 18.2%. Unfortunately, our rate increase was 24.1%. An increase from $1,168 in 2016 to $1,449.65 in 2017 (a total increase of $281.65).
That was too much, so during this Covered California open enrollment period I set out to find a lower cost solution that would minimize the changes we had to make.
Key Issues We Need To Address
The important issues for my wife and I were the following:
- Could we keep our existing doctors?
- Was there a way to reduce our 2017 health insurance costs?
- Do we both need to have Silver coverage?
- Can we get coverage through-out the US?
Steps We Took During The 2017 Covered California Open Enrollment Period
Because I’m a health insurance broker, I knew there were options for my wife and I.
Could We Keep Our Existing Doctors?
For my wife and I, keeping our existing doctors is very important.
I’ve been with the Scripps Health system for over 30 years. My wife searched for several years before finding a doctor she loves in the Arch Health Partners Medical Group in Rancho Bernardo.
This fall Health Net and Scripps agreed on a network contract that will make the entire Scripps Medical system available through the CommunityCare HMO network in San Diego county. This change will take effect on November 1st, 2016. As a result, Scripps will be available in the Blue Shield PPO and the Health Net HMO networks during the 2017 Covered California open enrollment period.
My wife’s Arch Health Partners doctors are available in the Sharp HMO networks and the Blue Shield PPO network on Covered CA.
Therefore we face a decision. Stay together on our existing Blue Shield PPO plans and pay the increased premium. Or switch to a new plan together and either she or I have to change doctors. Or get separate plans so we both can keep our doctors.
Can We Reduce Our 2017 Health Insurance Premiums?
Knowing which networks our doctors were in, I began looking at the plans and rates inside Covered California.
The only way to get our specific numbers was to start the renewal process on our Covered CA application. Once you get to the “Enrollment” section you can see your rates and plans (along with any subsidies your might qualify for).
The two options for me were the Blue Shield Silver 70 PPO plan for $708.46 or a Health Net Silver 70 HMO plan for $535.54.
|2017 Plan Options||Health Net HMO||Blue Shield PPO||Sharp Health Plan HMO|
|Me||Silver 70||Silver 70||–|
|Wife||–||Silver 70||Silver 70|
|Wife – Alt||–||Bronze 60||bronze 60|
Therefore we face a decision. Stay together on a single plan and either she or I have to change doctors. Or get separate plans so we both can keep our doctors.
Do We Both Need Silver Coverage?
In my case, Silver is the best option because of the cost of my prescriptions, and the fact that all but one is a brand name. My wife now has all generic prescriptions.
Earlier this year, one of her prescriptions was a brand name drug that cost about $100/mo. In April that medication became a generic and the cost dropped to about $17/mo. Because of this her total prescription cost each month would be about $22 if she pays the negotiated rates for her medications in a Bronze plan.
Looking at the table above, we can see that the cost difference between the Silver 70 plans and the Bronze 60 plans is $111.04 if she stays at Blue Shield. The difference is $228.55 if she switches to Sharp.
The odds are that she won’t need anything but the benefits that the Bronze plans offer. If something was to happen and she needed extra doctor visits or had an injury, we would be saving enough in monthly premiums to handle many unexpected events.
Can We Get Coverage Through-out The US?
We travel a fair amount each year, so having health insurance that gives us the ability to see a doctor anywhere we go is important, but not a deal-breaker.
This year we both got a miserable cold while we were in New Hampshire for a period of time. Our Blue Shield PPO plan provides the “Blue Care” nationwide network of doctors, hospitals, and urgent care centers. We looked up an urgent care center near where we were staying and went to get checked out. The total cost was a $45 co-pay, and a prescription co-pay.
HMO plans typically have smaller networks than PPO’s. The Sharp Health Plan HMO networks have doctors only in San Diego county. The Health Net CommunityCare network exists only in selected southern CA metropolitan areas (San Diego being one of them).
These HMO networks do not provide any out-of-network benefits except for emergency care. If you have a medical emergency anywhere in the US you can go to any hospital and you will be covered as if you had gone to an in-network hospital in San Diego.
With an HMO network, if you need urgent care services in an out-of-network location you will pay the full cost because this is not covered by an HMO.
Therefore we have to decide if we want to accept this limitation with the HMO options, or stick with the Blue Shield PPO network in order to receive nationwide care.
Our Health Insurance Transformation – The Final Solution
After discussing the options with my wife and taking a holistic view of our situation and the risk reward of each choice, we decided to change our 2017 health insurance plans.
I put myself in the Health Net Silver 70 HMO plan using the CommunityCare network. My wife chose the Sharp Health Plan Bronze 60 HMO plan using Network 2 (the Performance network).
We know we will be giving up the nationwide network, having a family deductible and out-of-pocket maximum, and reducing the benefit level for my wife. However, in the last 5 years we’ve only used a doctor in another location one time during our travels. Plus the cost savings make the risk of a low benefit bronze plan more palatable.
As a couple, we did not really have a family deductible or out-of-pocket maximum in our Blue Shield Silver plan. Because there are only two of us, the Silver plan looks like two individual plans where we each have our own deductible and out-of-pocket maximums. For a family of three or more, the family deductible and out-of-pocket maximum need to be considered in the decision.
As you can see, shopping for alternatives during the 2017 Covered California open enrollment period has the potential to save you a lot of money. You just need to know what kind of options you have. That’s what we specialize in. Finding the best options.
Key Take-Aways From The 2017 Covered CA Open Enrollment and Renewal Period
- To decide if you should switch health plans you need to consider the cost, the benefits, and any expected up-coming medical expenses.
- It’s important to know what networks your doctors accept.
If you are willing to change doctors, then you will have even more options to choose from.
- Most of the time an HMO plan will have lower premiums than a PPO plan.
The managed care model that HMO networks use helps to keep you well and reduce costs by coordinating your care and preventing overlapping treatments.
- If your rate increase for 2017 is greater than 10% there may be a lower cost 2017 plan for you.
- Consider breaking a family into different plans and insurance companies if cost and risk trade-offs warrant such a change.
Remember to consider the loss of a family deductible and out-of-pocket maximum when you put a family on separate plans.
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