How Health Insurance Works When You Live in Multiple States

You may find yourself needing more than one policy

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If you live in more than one place, how does your health insurance coverage work? That's a question that you might not think of until you're contemplating the possibility of having homes in multiple states, but it's worth considering well in advance, as it can be complicated.

If you have employer-sponsored health insurance and you have to move back and forth between two or more locations due to your job, your employer has probably already worked out the details. If they have employees in that situation, they likely have a plan with a nationwide network and coverage in all the areas where their employees live and work.

But what if you buy your own health insurance or are covered by Medicare or Medicaid? The specifics vary depending on the coverage you have and where you live. Having homes in two states isn't just reserved for retirees seeking beautiful weather. It also includes college students who spend the school year in a different state, people who relocate on a seasonal basis for work, and a variety of other situations.

Individual Health Insurance

Individual health insurance is coverage that you buy on your own, either through the health insurance exchange or directly from an insurance company. More than 11 million Americans have individual market coverage through the exchanges, and a few million have individual market coverage purchased outside the exchanges.

Although the Affordable Care Act added numerous federal regulations that apply to individual market coverage nationwide, plans are also regulated at the state level, and the plans that are for sale vary widely from one state to another.

Types of Plans

In the last few years, insurers in the individual market have tended to shift away from preferred provider organization plans (PPO plans), and have begun offering mostly health maintenance organization plans (HMOs) and exclusive provider organization plans (EPOs). In short, HMOs and EPOs don't cover out-of-network care, while PPOs do. Although there are still PPO plans available in the individual markets in some states, there are other states where there are no longer any individual market plans available with out-of-network coverage.

The networks tend to be fairly localized, rarely extending into other states unless there's a major metropolitan area that straddles two states.

So what does that mean if you buy your own health insurance and live in more than one state? In 2016, the federal government issued a series of FAQs about residency and permanent moves, and they addressed the scenario of a person who switches between homes in more than one state during the year (see FAQ number 11).

Residency Rules

If you live primarily in one state and only travel to the other home(s) "for a short duration," that's essentially just considered a vacation, and your residency continues to be based on your primary home. But what constitutes a "short duration?" The guidelines further clarify that if you have a second home where you spent "an entire season or other long period of time," you can choose to establish residency in that state.

So, if you split your time between your summer home and your winter home, you have the option to establish residency in either state or both.

Early retirees who aren't yet eligible for Medicare, and who have opted for the snowbird lifestyle (moving to warmer climates during cold months), may very well find themselves having to purchase individual health insurance with exactly this situation. And while it's good to have the flexibility to establish residency and purchase insurance in either or both states, there are some points to keep in mind.

Tips for Living in Two States

If you choose to buy a plan in one state and keep it all year long, you might not have coverage for anything other than emergency care when you're living in the second state. If the plan has a network that is limited to providers within the state (which is true of most individual market plans), you'll have to return to your first home in order to receive in-network medical care.

If you experience a medical emergency at your second home, your plan will cover your emergency care, but the out-of-network emergency room and physicians will generally have the option to balance bill you for the portion of their bill that is above the "reasonable and customary" amount that your insurer pays.

Before opting to rely on a health insurance plan from your home state while you're at your second home, you'll want to carefully discuss the ramifications with your insurance company and make sure you understand all the ins and outs.

You can opt instead to establish residency in both states and buy a new health insurance plan each time you move from one house to another. The United States Department of Health and Human Services (HHS) has clarified that your move counts as a "permanent move" because you intend to reside in the area for at least "an entire season or other long period of time."

So, you're eligible for a special enrollment period triggered by a permanent move, assuming you've been maintaining health insurance year-round (the special enrollment period due to a permanent move only applies if you already had minimum essential coverage in your prior location).

However, buying a new health insurance plan each time you move between your homes means you'll also be starting over with a new deductible and maximum out-of-pocket each time you move. Individual market health plans are sold with calendar-year deductibles and out-of-pocket maximums, which means they reset each year on January 1.

If you keep the same plan from one year to the next, you only have to meet your deductible and out-of-pocket maximum once during each calendar year (although if you incur out-of-network costs, those will either apply to a separate out-of-pocket maximum, might not be capped, or might not be covered at all, depending on your plan).

But what if you live somewhere warm from October through March, and then return to your northern home state from April through September? If you opt to buy a new plan each time you move, you're potentially going to have to meet three deductibles and out-of-pocket maximums in any given calendar year.

You'll need one for the plan you have from April through September, another for the plan you buy in October when you arrive at your winter home, and a third for the time you have that plan from January through March, as it will renew and reset in January (for the new calendar year) even though you only purchased it a few months earlier.

So while the option to buy a new plan each time you move does ensure that you'll have access to in-network care year-round, it's important to understand that it could get very expensive if you end up needing extensive medical care.

Medicare

The snowbird lifestyle is popular with seniors, and it's easy to see why: who wouldn't want nice weather year-round? Original Medicare's nationwide coverage area makes seamless health coverage considerably easier than it is for people who aren't yet eligible for Medicare.

If you're enrolled in Original Medicare (Medicare Parts A and B), you essentially have access to a nationwide provider network. Nationwide, most doctors and hospitals are participating providers with Medicare, which means they agree to accept Medicare rates. You just need to make sure that you find medical providers who participate with Medicare in each area where you live.

Medigap and Part D

Medicare supplements, also known as Medigap plans, will pick up the tab for some or all of your out-of-pocket costs for covered Medicare expenses, as long as you see a provider who accepts Medicare. This allows Medicare beneficiaries a lot of flexibility in terms of nationwide travel, including living in a different state for part of the year.

Original Medicare plus a Medigap plan will cover most costs, but not prescription drugs. For that, you need a Medicare Part D prescription drug plan. Those are sold by private health insurance companies, and your options are based on your primary location (Medicare has a tool that you can use to see what Part D plans are available in your area).

Part D plans have pharmacy networks, and it's important to pay attention to the scope of the network if you plan to live in more than one area during the year. Some Part D plans have nationwide networks, while others have networks that are more localized.

Even if your Part D plan has a limited pharmacy network, you can look into the option of using the plan's mail-order pharmacy option, and having the medications forwarded to your second home.

In most areas of the country, Medicare Advantage is an alternative for Medicare beneficiaries who would prefer to receive all of their Medicare coverage in one plan, offered by a private insurer. However, Medicare Advantage plans have provider networks that are more limited than the nationwide network of providers who accept Original Medicare. Medicare Advantage plans use managed care, which means they can be HMOs, PPOs, (etc.), and the scope of the network varies from one plan to another.

If you're enrolled in a Medicare Advantage PPO, you'll have some coverage for out-of-network care, although your costs can be significantly higher than they would be if you remained in-network. There are also certain Medicare Advantage plans that are specifically designed for people who live in more than one place, but they're not available in all areas.

If you have or are considering Medicare Advantage coverage and you're also thinking about splitting your time between homes in more than one state, you'll want to carefully read the fine print and talk with the Medicare Advantage insurer to see how you'll be covered when you're outside of your home state.

Medicaid

Although Medicaid is available in every state, it's quite different from Medicare. Medicare is run by the federal government, which is why Original Medicare coverage is the same in every state and includes nationwide access to providers. On the other hand, Medicaid is jointly run by the federal government and each state. Each state has its own Medicaid program so, benefits, eligibility, and provider access vary from one state to another.

This means that Medicaid generally only covers care received in the state that provides the Medicaid coverage, although emergency care is covered outside the state, just as it is with private plans. Non-emergency care is generally not covered.

If you move from one home to another and can establish residency according to the rules of the new state, you can apply for Medicaid coverage each time you move. Medicaid coverage typically takes effect at the start of the month in which you apply, so you can have seamless coverage if you apply in a timely manner. However, it's important to understand that although you may qualify for Medicaid in one state, that doesn't mean you'll qualify in every state.

The Affordable Care Act called for Medicaid eligibility to be extended to 138 percent of the poverty level in every state, but the Supreme Court ruled that states couldn't be forced to expand their eligibility guidelines, and some have refused to do so. In states that have not expanded Medicaid, non-disabled, non-elderly adults without minor children generally aren't eligible for Medicaid at all, regardless of their income level.

As of mid 2019, there are 16 states where Medicaid eligibility has not been expanded, although expansion is expected in 2020 in Nebraska and Idaho under the terms of ballot initiatives that passed in those states in the 2018 election (Utah also passed a ballot initiative to expand Medicaid, and had done so by April 2019, albeit to a more limited population than called for in the ACA).

For low-income seniors, children, and people with disabilities, there is less disparity in terms of Medicaid eligibility from state to state, but eligibility rules do still vary.

If you're enrolled in Medicaid and considering the possibility of living part-time in another state, it's important to talk with the Medicare offices in both states to see how you can maintain continuous coverage.

Travel Insurance

If you're going to spend part of the year in another state and are concerned about having coverage for more than just emergencies, you might want to consider a domestic travel medical policy—or an international travel policy, if you're living overseas for part of the year. These plans are less expensive than individual major medical coverage because they're more limited.

They typically don't cover pre-existing conditions, and they come with caps on the total benefit amount that the plan will pay. However, they can provide additional peace of mind depending on the circumstances.

If you opt to keep the individual major medical plan or Medicare Advantage plan that you purchased in your home state, supplementing it with a travel policy will offer additional protection beyond the emergency-only coverage that you're likely to have with your existing coverage—without the hassle and expense of switching to an entirely new major medical policy each time you move.

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Article Sources

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  1. Mark Farrah Associates. A Brief Analysis of the Individual Health Insurance Market. August 6, 2018.

  2. Centers for Medicare and Medicaid Services, Department of Health and Human Services. FAQs on the Marketplace Residency Requirement and the Special Enrollment Period due to a Permanent Move. January 19, 2016.

  3. Boccuti, Cristina; Fields, Christa; Casillas, Giselle; Hamel, Liz. Kaiser Family Foundation. Primary Care Physicians Accepting Medicare: A Snapshot. October 30, 2015.

  4. Q1Medicare.com. I travel between two states throughout the year (Connecticut and Florida). Is there a Medicare Advantage plan that can provide coverage in both states without additional cost?

  5. Supreme Court of the United States. National Federation of Independent Business, et al., Petitioners v.Kathleen Sebelius, Secretary of Health and Human Services, et al. Decision Date: August 12, 2011

  6. Kaiser Family Foundation. Status of State Action on the Medicaid Expansion Decision. May 13, 2019.


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