Sunday, September 18, 2016

IBM Medicare spouse access to HRA funding

People have asked me recently whether there is any advantage to using One Exchange services to buy insurance for their Medicare eligible spouse. The reason to do it is to more quickly spend your HRA money and/or make sure your spouse has easy access to the funds if you predecease your spouse.

The health insurance products you buy through One Exchange are EXACTLY the same products you buy when you search on  The only difference is shows you ALL the products you can buy in your zip code.  One Exchange shows you a SUBSET of the health insurance products because they only show products for which they get a commission.  One Exchange is an insurance agent. IBM requires you to buy at least one product from One Exchange to access your HRA. IBM is forcing you to use an insurance agent to get the money.

If you get an allotment of money every year from IBM it is highly likely you will use up that allotment for a given year just on yourself for part B, part D premiums, medigap premiums, dental, glasses and coinsurance payments.  If your allotment is a one time amount you received at retirement (via an FHA), you spend that money until the account is depleted which may take a number of years. In the first case, once the annual allotment is spent out, you're done with One Exchange until the next year.  In the second case, you're done with One Exchange when your HRA is depleted.

Case 1:  The retiree gets an annual allotment.  He spent the entire allotment on himself for the past 2 years.  His wife is now turning 65.  He did not opt to have his benefit reduced to pass some money to his wife if he does not survive her.  The only reason for his wife to buy any of her Medicare insurance through One Exchange is because the retiree might expire before the annual allotment is spent. The spouse will be able to spend the rest of the funds until the end of that year. After that year, there is no more allotment and therefore no reason for the spouse to use OneExchange and have reduced insurance choices (and I am not sure the spouse is even allowed to use the services).

Case 2: The retiree gets an annual allotment.  He/she did opt to have a reduced amount to pass on the benefit to the spouse.  The retiree might want the spouse to buy one health insurance product (MA, medigap or part D) within the One Exchange system in case the retiree expires during the year so that it is setup and the remaining money is easily available to the spouse plus have an easier transition for the next year allotment.

Case 3: The retiree gets a fixed amount HRA at retirement through FHA funding to spend until it is depleted and it may take a number of years to do it.  The retiree might want the spouse to buy health insurance products within the One Exchange system to more quickly spend down that FHA/HRA account (as there is no guarantee it will be available until it is depleted) and also for the same reason as Case 2  - that is to make the transition easier for a surviving spouse by already having established access to the HRA funding.