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When It’s Time To Split Up The Family

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All five members of the Wadstein family have Covered California’s most comprehensive — and expensive — level of health insurance, even though the two youngest children are the only ones who need that kind of plan.

Zachariah, 8, and Zoey, 2, have a serious metabolic disorder, but the El Cajon family was told it couldn’t purchase a benefit-rich plan for them and a separate, cheaper policy for the other three, said their mom, Christine Wadstein.

That’s about to change. This month, Covered California began making it easier for families like the Wadsteins to choose different health plans for different members of the family.

For this year, the family purchased a platinum-level plan that covers 90 percent of medical costs and comes with a monthly premium of about $1,100 after tax credits are applied, said Wadstein, 34. Lower-level plans cover as little as 60 percent of medical costs.

Zoey and Zachariah both have phenylketonuria, known as PKU, a genetic illness that can cause intellectual disability, seizures and psychiatric disorders. They eat a special diet, need frequent lab tests and visit doctors often.

“Right now, we have the burden of really high [insurance] costs because we all have to be on the best plan we can get,” Wadstein said.

Under the new rules, Covered California enrollees who receive tax credits — currently about 90 percent of them — will be able to select different plans for different members of the family in the online health insurance application. Tax credits will be distributed proportionally among the different plans.

Previously, the online application only allowed those who were not eligible for tax credits to choose multiple plans within a family.

Covered California spokesman Dana Howard said families who received tax credits could also buy multiple plans before, but they had to call Covered California’s customer service to request them. The exchange would then manually split the family between different plans.

But several insurance agents, who handle hundreds of Covered California customers, did not know of that option. They were surprised to hear that families who receive tax credits had any split-coverage option before the recent rule change.

“I tried and they wouldn’t do it,” said Kevin Knauss, an insurance agent based in Granite Bay, near Sacramento.

Knauss said clients often ask him if it is possible, and now he can say yes.

“It’s going to be big,” he predicted. “It could save them money.”

But saving money isn’t a given. Families must meet separate deductibles and out-of-pocket maximums for each plan, which could negate any premium savings.

“The only reason I can imagine a family wanting to do this is if they have a really sick family member,” said Darci Gutierrez, an insurance agent based in Dublin, in the Bay Area.

Even in that case, she advises families to do the math.

They may think they can save money by putting some family members on a plan with cheaper premiums because they’re healthy and don’t expect to need much health care during the year, Gutierrez said.

But an unexpected accident or illness could result in substantial out-of-pocket medical costs, she said.

Here’s why: When choosing a Covered California or private-market health plan, enrollees also must select a “metal tier” (bronze, silver, gold or platinum), which determines how much they will pay out of their own pockets for care. Bronze plans have the lowest monthly premiums but the highest out-of-pocket costs for medical services. Platinum plans have the highest monthly premiums, but lower out-of-pocket costs.

Next year, the bronze plan family deductible for medical services will be $12,600, excluding prescription drugs, and the out-of-pocket maximum will be $13,600. The platinum plan, by contrast, will have no deductible, and the family out-of-pocket maximum will be $8,000.

Covered California officials also urge customers to think carefully before splitting the family into different plans.

That is especially true for families whose household income falls between 138 percent and 250 percent of the federal poverty level, they said. Those families are eligible for cost-sharing subsidies that reduce out-of-pocket expenses, in addition to tax credits that lower monthly premiums.

But enrollees must sign up for a silver plan in order to get this benefit.

“If the family qualifies for cost-sharing reductions, there’s no reason for any family member to be on a platinum plan in that case,” Howard said. “It doesn’t make financial sense.”

Even for families who make too much to qualify for the cost-sharing reductions but still are eligible for tax credits, “the silver plan is a pretty strong plan,” Howard said.

Families should seek the guidance of certified insurance agents, certified enrollment counselors or Covered California customer service representatives to help them explore their options, he said.

Covered California officials believe American Indians and Alaska Natives who are members of federally recognized tribes may benefit the most from this change. They — within certain income brackets — are eligible for a special Covered California plan that cuts cost-sharing expenses.

In some families not everyone belongs to a federally recognized tribe, and in those cases Covered California manually put different family members into different plans, Howard said.

Now that process will be automated.

In employer-sponsored insurance, giving families the option to choose more than one health plan is “very rare,” said Paul Fronstin, director of health research for the Employee Benefit Research Institute.

In more than 20 years, Fronstin knows of two employers who offered this option to their workers.

While it gives them choices, those who choose different plans for different family members are essentially betting that they won’t have high enough health care expenses to exhaust the multiple annual deductibles or out-of-pocket maximums, he said.

“You never know when you’re going to wind up in the ER,” Fronstin said. “They’re picking a plan based on expected use, but they may be wrong.”

Wadstein said she’s “so relieved” by the change and will explore her options during open enrollment, which begins Nov. 1.

“If there were a benefit to us to be able to save money, which we desperately need, I would put the three of us in a silver plan and the two kids in the platinum plan,” she said.

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