Evaluating the State of Michigan Health Plan Options

The State of Michigan is in round two of open enrollment for 2020, and there are some changes in the State of Michigan Health Plan Options that are worth evaluating. Here are our thoughts on how to assess the State of Michigan’s health plans for 2021. 

What’s changing? 

The significant change for 2021 is the addition of a health plan option: the High-Deductible Health Plan (HDHP) with Health Savings Account (HSA). HDHP plans have become more popular over the last few years.

These plans have several advantages for the people who fit the criteria to make them work. 

The basic premise of the HDHP is that the plan has a higher deductible ($1,500 Single/ $3,000 Family for the State of Michigan plan) combined with a lower monthly premium ($30-$90.06/pay). In other words, You pay less each month, but you don’t get any coverage until you pay the high deductible. The HDHP gives you access to the same network of doctors and hospitals as the PPO plan. 

You also get access to make contributions to an HSA account. The State of Michigan will be contributing $750 single/$1500 family to start your HSA. You can also contribute to your HSA on a tax-deferred basis up to $3,100/$7,200. The funds you take out of your HSA are tax-free, and excess funds can be rolled over each year. 

Another benefit of the new plan is using a limited purpose health care FSA (LPHC FSA). Typically, FSA is not compatible with HSA plans, meaning you must choose between the two. With the State of Michigan’s plan, you can contribute to the LPHC FSA ($2,750) and use those funds for dental and vision expenses and regular health expenses if you have met the HDHP deductible. Unlike the HSA, only $550 of FSA funds may be rolled over every year ($50 if you are not enrolled in an FSA the following year). 

Plan Comparisons 

With the addition of the HDHP plan, it’s a great time to review the available options to see if a change makes sense for you. The Health Maintenance Organization (HMO) and Preferred Provider Organization (PPO) plans are remaining the same for 2021. The rates are also the same as they were for benefits open enrollment part 1. While everyone’s decision is different, it helps to understand the plans that are available to you and how they may fit into your personal situation. 

HMO

The Health Maintenance Organization (HMO) plans provide employees with network only coverage. Depending on your situation, having all of your care provided in a network might work out well. The benefit of having coverage through an HMO is that it’s less expensive than the PPO Plan and provides coverage right away, unlike the HDHP. Here are some things to consider: 

• • You will have to use a primary care physician that will coordinate your health care services
  • You need referrals to use specialists and other doctors
  • You will want to make sure coverage to doctors and hospitals are available in your area, and you are comfortable with those people
  • If you have adult children on your plan, you’ll want to make sure they have access to the network
  • If you travel frequently, you may not have the coverage you need out of network
  • If you have high health care costs ongoing that you can get through the network
  • Low out-of-pocket expenses

NOTE: Costs will range from a minimum of ($3,184.22 – $5,831.80* Family/ $1,061.32 – $1,943.76* Single) to a maximum of ($7,184.22 – $9,831.80* Family/ $3,061.32 – $3,943.76* Single) * Range is based on different HMO Plan costs

Typically, these plans work well for young families who regularly use the doctor for children and individuals/families that are high users of medical services and live near network services. 

There are also several different HMO plans available through the State of Michigan. Make sure you look into what options are available in your area. Coverages are very similar other than a few minor things. Here are the big ones: 

• For certain surgeries & treatments, some plans have a higher copay and/or co-insurance
• Some services have a $20 copay where some are covered 100%

Make sure if you have a reoccurring service or an upcoming treatment to compare the coverage of the HMO options to find out what plan might work best for you. 

PPO

The Preferred Provider Organization (PPO) provides flexibility to use providers both in and out-of-network without a referral. The monthly premiums and the deductible are higher than the HMO & HDHP Plan. The deductible is higher than the HMO Plan but lower than the HDHP. Here’s what to consider: 

• Frequent extended travel
• Adult children covered under your plan that live out of network
• Use of Out-of-Network Doctors
• Services you need not covered/available in network
• Don’t need referrals to get access to care
• Costs will range from a minimum of ($4,584.58 Family/ $1,528.28 Single) to a maximum of ($8,584.58 Family/ $3,528.28 Single) 

The State of Michigan PPO plan works well for families who need regular access to health care but don’t live close to an HMO network or have a Doctor outside the network. Also, if you regularly travel for extended periods, the primary coverage you get in an HMO out-of-network is emergency care, which may not fit your lifestyle. If you have adult children at college or living out-of-network but still covered under your plan, the PPO option might be best for your family. 

HDHP

The High Deductible Health Plan (HDHP) option is a pay as you use it medical plan. It’s the lowest monthly premium compared to the HMO & PPO plans. Besides annual physicals, immunizations, well-baby childcare, and a few other preventative services, you won’t get any coverage until you meet the plan’s high deductible. Here’s what you need to consider when choosing this plan: 

• • Resources and discipline to meet the higher deductible
  • Coverage is like the PPO plan after the deductible
  • Little to no use of health care 
  • Desire to save for future health care expenses now
  • Need for tax savings

Note: Costs will range from a minimum of ($841.56* Family/ $30* Single) to a maximum of ($8,841.56* Family/ $4,030* Single) * Rates are reduced by the amount of contribution to the HSA by the State of Michigan for comparison purposes

The HDHP works best for healthy individuals and families that do not have a lot of healthcare costs. The plan allows you to save for future health care expenses through the HSA. By combining the HSA and the LPHC FSA, a family can deduct contributions of up to $9,950 ($11,950 for couples over 50). HSA funds can open other opportunities to plan for your retirement.

Check out our recent Podcast on HSAs for more information on planning opportunities. 

Catastrophic Coverage

There is a plan available for catastrophic coverage only. The coverage is minimal (hospitalization only plan), and the monthly premium comes at no cost. Like most things that are free, catastrophic coverage isn’t an option that is going to work for most people. Unless you can’t afford any of the other coverages, we would steer clear of this option. 

Choosing the Right State of Michigan Health Plan for Your Family

The challenge of choosing the right health plan is predicting what the future holds for your health needs in 2021. The best thing you can do is understand the plans and take stock of how you use your health insurance over the past few years to decide what will work best for you. Here are the steps we recommend taking to choose the best plan for you: 

1. Review your medical expenses over the last few years. If you haven’t been keeping track, you can look back at your explanation of benefits (EOB) on your current provider’s website for what was paid out on your behalf. You can also reach out to your doctor’s office to provide you with a list of expenses they charged you over the last few years. 
2. Review your taxes and ask your tax professional how much you could benefit from contributing to an HSA and/or FSA in 2021. 
3. Are you thinking about switching to an HMO? Call your doctors to see if they participate or look them up using the insurance companies to find a doctor portal. 
4. If you have an upcoming medical service, check with the different insurance companies to see what the coverage amounts would be. 
5. If you are thinking of making a switch and have recurring medical services or prescriptions that are currently covered, make sure they are covered under the new plan

By taking these steps, you should be able to narrow down what options might be best for you. There is always a certain amount of guesswork that goes into these decisions. The best way to plan for this is to prioritize what’s most important for you. For example, if the expenses and plan coverage is similar for the HDHP with HSA are similar to the BCN HMO, what do you prioritize right now, cheaper health care, or the ability to save on taxes and for future medical expenses? The good news is, even if you make a choice that doesn’t work out, you can always change back the following year. 

If you are going to change plans, make sure that you take advantage of the benefits of your current plan before December 31st, 2020, as some of those benefits may be going away. 

Have further questions about your specific situation and want to know how it affects your personal financial situation? Give us a call at (517) 321-4832 or email us to set up a meeting to discuss how we can help. 

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