4th Quarter 2013 Benefits Corner


by Al Horan

In this article I would like to address Chevron’s Open Enrollment for 2014. I would also like to cover what we can expect under the Health Care Reform Act in 2014. Finally, I would like to leave with you a tip for handling drug charges related to a non-admission stay in a hospital.

Our Chevron Benefits Plans

Chevron will conduct Open Enrollment for 2014 for their Medical and Dental Plans between October 14th and October 25th. They expect to mail the Open Enrollment packages to retirees on or about October 4th. The package will contain a Retiree Newsletter, an Open Enrollment Worksheet, a Medicare Part D creditable coverage notice, and a Summary of Benefits & Coverage for Medicare participants. (Non-Medicare participants will be able to download their Summary from Chevron’s benefits website – hr2.chevron.com - or they can request a copy by calling Chevron’s Service Center at 1-888-825-5247.) The Summaries for non-Medicare retirees will comply with the required government format specified under the Health Care Reform Act. The format for Medicare retirees will be the same as last year since the Medicare plans are not required to use the standard format specified for non-Medicare Plans.

Chevron also advised that they do not expect significant changes to the benefit provisions of the Plans nor do they expect any change in eligibility requirements to join a Chevron Plan. Further, at this time member contributions for 2014 have not been made available to us. However, we need to remember that member contributions are a function of claims experience and the Company’s contribution. (Chevron’s maximum annual increase in their contribution is 4%). Under the Health Care Reform Act, anyone who participates in a HMO plan may be eligible for a premium refund if the insurer does not spend 80% to 85% of premiums on the direct care of patients, including efforts to improve the quality of their health. Insurers are required to rebate excess premiums if they fail to meet these standards. This condition currently applies to pre-age 65 HMO participants and beginning in 2014 it will also apply to age 65 and older HMO participants. Chevron reported that none of their pre-age 65 HMO plans generated a refund for 2013. It should be noted that this provision of the Health Care Reform Act does not apply to Chevron’s non-HMO Medical Plans because they are self-insured.

In deciding which Plan to join for 2014 you may wish to consider the following: (a) the state of each participant’s health; (b) the amount of medical care you each received over the last 12 months; (c) any anticipated medical care each of you expect to receive in 2014; and (d) each participant’s age since there is a greater chance of unexpected medical problems at advanced ages. In doing your review you may wish to consider that, to the extent you are eligible, Chevron’s Medicare Plus Plan provides the maximum level of benefits for Medicare participants and Chevron’s Option 1 Plan provides the maximum level of benefits for non-Medicare participants. (These two plans also have higher premiums than the other Chevron sponsored Medicare or PPO plan options.) Please note, Chevron mentioned that generally only about 10% of participants change their coverage. If you decide that you are satisfied with your existing coverage you will not need to do anything. You will be automatically reenrolled in the same Plan for 2014. Lastly, if you haven’t already done so we strongly encourage you to make arrangements with Chevron’s Service Center to have your monthly premiums automatically deducted from your bank account.

Government Benefit Plans

As part of the Health Care Reform Act starting in October 2013 individuals will be able to purchase medical insurance with an effective date of January 1, 2014 through an Insurance Exchange. An Exchange will offer “one-stop shopping” to find and compare private health insurance options. Exchanges will exist at both the State level and the Federal level. However, if an Exchange exists in an individual’s State of residency, they will be required to use the State Exchange if they wish to purchase coverage through an Exchange. If a State does not have an Exchange an individual may purchase health insurance through the Federal Exchange. The Federal Exchange is known as the Health Insurance Marketplace.

An individual will be able to purchase coverage through an Exchange provided they are not covered by Medicare. Exchanges will not be offering Medicare Supplemental Insurance coverage. Most Exchanges are expected to offer prototypical plans that fall into four categories: Bronze Plan, Silver Plan, Gold Plan and Platinum Plan. The type of coverage provided under these plans is expected to vary from an account-based health plan (ABHP) under a Bronze Plan and a Silver Plan, a PPO health plan under a Gold Plan and a HMO under a Platinum Plan. The ABHP models are expected to probably have high deductibles (e.g., $3,000 and $1,500, respectively), high out-of-pocket maximums (e.g., $5,000 and $4,500, respectively) and 20% coinsurance payments. The PPO model is expected to probably have a $500 deductible, a $2,500 out-of-pocket maximum and either a 20% coinsurance payment or a fixed copayment, e.g. $25. Finally, the HMO model is expected to probably have a $250 deductible, a $2,250 out-of-pocket maximum and probably either a 10% coinsurance payment or a fixed copayment, e.g. $10. (The benchmark plans will most likely vary by State.) Employer-sponsored plans must provide coverage at least equal to the Bronze Plan. Presently, almost all employer-sponsored plans exceed the minimum standard; and more than 90% of them offer plans that are equivalent to the Silver Plan, the Gold Plan or the Platinum Plan.

The premiums charged for health insurance purchased through an Exchange are expected to be very competitive. The premium for the most expensive age group will be limited to three times the premium for the least expensive group within a given plan. Most likely premiums for older people will be low. Also, premiums should not vary for personal claims history or health status. In addition, individuals with family incomes that are between 100% and 400% of the Federal Poverty Level may be eligible for sliding-scale tax credits that cap the premiums for a Silver Plan at 2% to 9.5% of family income. (Family income will be the estimated taxable income for the year in which application is made for insurance. Any difference in the estimated income and the actual income will be reflected in an adjustment to the tax credit that was previously granted.) The Federal Poverty Level annual income ranges from $11,170 (100%) to $44,680 (400%) for an individual; and $15,103 (100%) to $60,520 (400%) for a couple. Individuals who are eligible for government-sponsored programs such as Medicaid or CHIP are not entitled to a subsidy. Also, individuals who are eligible to join an employer-sponsored plan are not eligible to receive a government subsidy unless the plan does not provide health coverage at least equal to the Bronze Plan standard or the premium charged by the employer-sponsored plan for individual coverage exceeds 9.5% of the Federal Poverty Level for a single individual. Please note, irrespective of whether an individual qualifies for a tax credit, most employers (including Chevron) are not expected to contribute toward the cost of coverage that is purchased through an Exchange.

Beginning in 2014, individuals will be required to enroll in an employer-sponsored plan, if available, purchase health insurance through an Exchange or acquire coverage by other means. If they do not purchase health coverage they will be subject to paying an Individual Penalty under the Health Care Reform Act, unless they are otherwise exempt. Anyone who is covered by at least Part A (Hospital coverage) of Medicare satisfies the insurance mandate. The Individual Penalty is $95 per uninsured person or 1% of household income over the filing threshold for 2014; $235 per uninsured person or 2% of household income over the filing threshold for 2015; and $695 per uninsured person or 2.5% of household income over the filing threshold for 2016 and beyond.

For Chevron non-Medicare retirees, an Exchange is an alternative way of purchasing health insurance for themselves and their eligible dependents. If coverage is purchased through an Exchange, Chevron will not contribute towards the cost of the insurance. Also, they may not cover their eligible dependents under a Chevron Plan while they are covered by another health insurance plan. However, they should be able to reenroll in a Chevron Plan during a future Open Enrollment period. Finally, if they should die while not covered by a Chevron Plan their dependents will not be able to rejoin a Chevron Plan in the future.

For information about the availability of health insurance through an Exchange, please phone the Health Insurance Marketplace. Their phone number is 1-800-318-2596 and they may be reached 24/7. Assistance may also be obtained from a Navigator who will be an individual or organization that will be available to help individuals determine which health insurance coverage will best satisfy their needs. Navigators will be sanctioned by the Federal and State government agencies, e.g. State Insurance Departments in collaboration with Insurance Exchanges. No further information about Navigators is available at this time.

Non-Admission Stay in a Hospital

It recently came to my attention that sometimes hospitals will hold a patient for observation over an extended period without admitting them as an inpatient. This type of situation typically occurs when an individual is seen by a hospital’s emergency room. Since the period of observation can be lengthy it sometimes becomes necessary for the hospital to administer routine prescription medications that are taken by the patient. Typically, these medications are not be directly related to treating the medical emergency.

The cost of the routine prescription medications is generally billed separately by a hospital. Medicare and Supplemental Medicare coverage will cover the cost of the emergency room care, but they will not automatically cover the cost of the routine medications since the individual was not admitted to the hospital. Generally, the patient is billed separately for the cost of the routine prescription medications.

It is the responsibility of the patient to pay the hospital for the cost of the routine prescription medications. However, since the medications relate to out-patient care, the patient should seek reimbursement from the provider of their Prescription Drug coverage under Part D of Medicare. In the case of Chevron’s non-HMO Plans the provider is Express Scripts. Their phone number is 1-800-935-6215 and they are available 24/7.

If you have any questions please let me know.

Al Horan, Benefits Chair, Phone: 972-964-1787 Email: awhoran@verizon.net.