The Affordable Healthcare Act (aka ObamaCare) resulted indirectly in many insurance cancellations, leaving people scrambling for options during the chaotic events of late 2013. President Obama's infamous quote, "If you like your health care plan, you can keep it," turned out to be incorrect for many Americans. But why did these cancellations occur – and if your current plan is still active, should you be looking for alternatives? Let’s cut through the noise to find out.
The reason that so many people received cancellation notices is because their policies did not meet the minimum ObamaCare standards, known as "essential health benefits.” These benefits are outpatient care, hospitalization, emergency services, maternity care, prescription drugs, mental health services, laboratory services, rehabilitation service, and pediatric services. If your current plan meets these standards and meets your desires for coverage and cost, then there is no need to give up this plan.
However, you may still want to shop around for options, for even if you have employer–based coverage, that could go away next year when businesses start to grapple with ObamaCare mandates.
If you do not have employer-based insurance or existing Medicaid coverage, reviewing your options through the state or federal exchanges is wise (14 states have their own exchanges). You are free to purchase private insurance outside the exchanges, but you could miss out on some useful things that are only available to you on the exchanges.
- Tax Credits and Subsidies – The main reason to consider giving up a current plan would be to take advantage of the subsidies or tax credits available through the exchanges. The higher starting premiums may not make it worthwhile, but it does not hurt to check your options.
Advanced Premium Tax Credits are available for incomes up to 400% of the Federal Poverty Level (FPL); they are effectively estimated tax credits that are applied to your premiums with an adjustment at the end of the year to account for the actual tax credit you were due. A different type of credit, Cost-Sharing Reduction, is available for incomes up to 250% of the FPL.
- Catastrophic Health Care Plans – The only way to receive a health plan lower than standard is through a catastrophic health plan. These are offered by the exchanges for those who cannot afford standard plans for hardship reasons. In general, if you already have a healthcare plan, you will not be looking at this, but if you are having economic trouble and need a bare bones plan, check the exchanges to see if you qualify.
- Medicaid Qualifications – You may now qualify for Medicaid, even if you did not qualify before. Some states expanded Medicaid coverage; others did not.
Be careful here, because the federal exchange at healthcare.gov was designed assuming all states would expand Medicaid. If your state did not expand, the federal exchange may throw you into a limbo where your status is unclear. Check with your state exchange or local Medicaid office first before checking healthcare.gov.
Medicaid qualification limits for 2014 are 100% of the 2013 FPL, which is s $11,490 for an individual and $2,550 for a family of four; the full poverty designation guidelines are available online in several locations.
In short, you do not have to give up your health care insurance if you are satisfied with your current plan and it meets ObamaCare standards. However, even if you don't change coverage this year, browsing on your state or federal exchange may better prepare you for your options next year.