Medical insurance is experiencing tumultuous change with the implementation of the Affordable Care Act ("ObamaCare"). As of January 1, 2014, every American is required to have minimum insurance in force. However, many of us are still uncertain about how to obtain suitable coverage. This article aims to cut through the confusion, to set you on the path of legal compliance -- and better health.
Under ObamaCare, you can obtain coverage from a variety of sources:
- Your Parents – If you are under age 26, you can be covered by your parent's plan.
- Your Employer – There is strong incentive to join an employer health care plan if it meets minimum requirements (covering at least 60% of costs). You can choose alternate insurance, but you will be ineligible for any tax credits for which you would normally qualify. In addition, employer contributions are typically pre-tax, while your private plan purchase uses after-tax dollars.
- Medicaid or CHIP (Children's Health Insurance Program) – These programs cover individuals and families with a low enough qualifying income.
- Retiree or Temporary Coverage – Includes Medicare, TRICARE, VA, COBRA and select other programs.
- Private Insurance – This is required by ObamaCare if you are not covered by any the above options.
You can select from a variety of private insurance plans on your state Health Exchange website, if your state is one of the fourteen that has such an Exchange. If your state does not sponsor a Health Exchange, you can shop for private insurance on the federal website at www.healthcare.gov. While this website got off to a very rocky start that was highly publicized, it appears to functioning smoothly today. This is borne out by the fact that over 2 million Americans obtained coverage on this site during the last two months of 2013.
Keep in mind that you don't have to use an exchange (state or federal) to buy a qualifying plan; you can deal directly with an insurance agent or a broker. However, if you do, you will miss out on potential subsidies from the exchanges. The key word is "qualifying". Qualifying plans under ObamaCare must contain these minimum, defined "essential health benefits":
- Outpatient Care – Care not requiring admission.
- Emergency Services – Emergency room costs.
- Hospitalization – Care requiring admission and inpatient treatment.
- Maternity Care – Includes newborn care – from pregnancy through birth.
- Mental Health Services – Behavioral and substance abuse disorders, counseling, psychotherapy and other services.
- Prescription Drugs – Coverage for medications.
- Rehabilitation – Covers services and devices to assist with injury, chronic conditions or disabilities.
- Lab Services – Supporting tests such as blood work.
- Pediatric Services – Coverage for your children.
You may not need all of these services, but think of this as analogous to paying taxes to your local school district even though you may no longer have kids in school.
On the exchanges, you will be offered four tiers of "metal" plans: Bronze, Silver, Gold, and Platinum in order of increasing coverage and cost. These plans on average cover 60%, 70%, 80% and 90% of costs, respectively. As you increase from Bronze to Platinum, you will be spending more on premiums and less during visits (your deductible will also be lower).
If you expect many visits to the doctor or expensive medical conditions, a Gold or Platinum plan makes more sense; if you are young and relatively healthy, a Bronze or Silver Plan may be more economical (assuming continued good health).
These plans may be HMO's (Health Maintenance Organizations), EPOs (Exclusive Provider Organizations), PPO's (Preferred Provider Organizations) or POS (Point of Service). All have different rules regarding networks and referrals; check individual plans for details. Make sure you understand the fine print before you sign up.
For high-deductible plans, you can supplement them with an HSA (Health Service Account), money that you set aside in a separate account for out-of pocket health expenses and tax benefits. Your plan may include an HSA or be labeled as HSA-compatible. A Health Reimbursement Account (HRA) is a similar device with your employer's money that is used to reimburse your out-of-pocket expenses.
If the exchanges determine you are not eligible for Medicaid via the Internet, it will display the "metal" plans and determine your subsidy qualifications. Advanced Premium Tax Credits are available at incomes of 100%-400% of federal poverty level ($11,490 for an individual). They are advancements on tax credits to lower your premiums, but they may result in a credit or payment at tax time (depending on the amount of tax credit you are due). Cost sharing reductions are available at 100%-250% with Silver plans; they lower deductibles, copays, and coinsurance.
If your state did not expand Medicaid, you could be in an awkward spot: by your state standards, you may not qualify for Medicaid, but by Federal standards, you do not qualify for subsidies (as the Feds expect you should be on Medicaid). In such cases, you are stuck paying full price for the exchange plans — or you can apply to buy a Catastrophic Health Plan.
Catastrophic Health Plans are listed on the exchanges, but not well advertised. They have limited coverage and very low cost, only covering the so-called essential benefits after a very high deductible has been met. While Catastrophic Plans cover three primary care visits and preventative care, you cannot get subsidies with these plans.
You must be under 29 years old, or apply under a hardship exemption such as the Medicaid issue above. There are other hardship conditions, including homelessness, eviction, substantial property damage, bankruptcy – and, oddly enough, medical expenses that you could not pay over the last 24 months.
These rules have been changing at a rapid rate, so please verify before you buy. Always seek assistance with the exchanges or the insurance companies -- online or through toll free phone numbers they provide -- if you are unsure how the new healthcare law applies to your situation. Your family’s health coverage is far too important for guesswork.