FlingCatch

The year is flying by and beginning in 2014, you’ll be required to have health insurance coverage. There is still significant confusion on how insurance will be bought and sold, and how much it will cost. In this post, I discuss five quick facts you need to know to prepare for the health insurance change. #1 - Where will you get health insurance? Insurance will be purchased exactly the same place you purchase insurance now – through large employers, small employers, individual coverage, or public programs. The big difference – large employers will be required to offer coverage or pay a fine. Some employers will opt to provide coverage and some will refuse because the fine is cheaper. The good news – if they don’t offer coverage, you can purchase your own coverage on the health insurance exchange without the fear of being turned down or being sold a substandard policy. #2 – So if your employer doesn’t offer coverage, where will you purchase health insurance? Insurance will be purchased on the health insurance exchange. Policies will be standardized, so they will be easy to compare. Massachusetts has a version of Obamacare already in place and their exchange functions very well. Take a look at it and see how easy it is to purchase coverage. I used the Quincy, Massachusetts zip code to browse – 02169. Give it a try. #3 – Pricing is based on only four factors – and bad health is not one of them. The most common questions I receive are about the cost of health insurance. Is it going to be expensive because you have a health issue? Health issues will not be factored into your health insurance premium. The price of insurance will be based on four factors: Age - older people pay up to three times more than younger people. Rating area – people who live in high cost health areas (think Boston, Miami, Los Angeles,) will pay more than people who live in low cost health areas (like suburban type towns.) Number of people in the family – this makes total sense. Tobacco use – tobacco users will pay up to 1.5 times non-tobacco users. However, this will be very difficult to implement and is considered discriminatory by many. Because of these arguments, some states have decided that tobacco status will not be used in pricing. #4 – Will your health insurance costs be sky high? It depends on what "sky high" means to you, your income, what state you live in, and if you currently have group or individual coverage. What does "sky high" mean to you? A broken ankle can easily cost $10,000, a cardiac bypass can be $100,000, and cancer can be $1,000,000 or more. If your health insurance is $5,000 per year, is that worth it to prepare for a million dollar illness? If you don’t make much to begin with, you’ll get help paying for the insurance. How much do you make? If your income is lower than 400% poverty level, you will receive assistance paying for your health insurance and if you earn less than 138% poverty level, you will be eligible for Medicaid – unless you are in one of those states that made the ridiculous decision not to expand Medicaid coverage for their poorest citizens. Per this great chart by Kaiser Family Foundation, a full 67% of our population will be eligible for premium tax credits or Medicaid. How well has your state regulated insurance in the past? If you live in a state that previously had good oversight in place, and provided good coverage for their constituents, you will not see much of a change in premiums. However, if you live in a state that allowed cherry picking of healthy populations in the individual market, and you have individual insurance, you may see a significant increase in your premium cost on individual insurance – Texas and Florida are great examples. Do you have group or individual coverage? Group insurance has been regulated largely by the federal government for a long time and provides richer benefits such as maternity coverage and better prescription coverage. Therefore, group coverage is more expensive, but employees don’t experience the cost because employers pay a large part of the bill. Individual coverage in many states may not be as robust, and subsequently the premiums may be less expensive. If you live in a state with minimum coverage requirements, premiums for individual insurance may rise significantly to pay for better health insurance policies. The good news coming out – California just released the rates for policies available on the exchange, and they are much lower than expected. It will be interesting to see how the remaining states move forward on rates. #5 – When do you have to shop for health insurance? For individual coverage, open enrollment starts October 1, 2013. You won’t be able to escape the news on this one. It is important to shop during the open enrollment period – you can’t wait until you are sick to purchase coverage. If you develop a serious illness, you’ll be on your own until the next enrollment period. You can take that risk, but why not take care of yourself and know you have the bases covered?

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