Photo (cc) by 401(K) 2013
We’re about six weeks away from the opening of the state health insurance marketplaces required by the Affordable Care Act, commonly known as Obamacare.
Oct. 1 is when all those who can’t get affordable health insurance through a workplace — or aren’t eligible for Medicaid or Medicare — can apply to buy health insurance on their own without the possibility of being turned down. The actual health coverage purchased through the marketplaces won’t begin until Jan. 1.
The Oct. 1 deadline is still on, despite some major adjustments and delays. The New York Times recently reported on another postponement:
In another setback for President Obama’s health care initiative, the administration has delayed until 2015 a significant consumer protection in the law that limits how much people may have to spend on their own health care. The limit on out-of-pocket costs, including deductibles and co-payments, was not supposed to exceed $6,350 for an individual and $12,700 for a family. But under a little-noticed ruling, federal officials have granted a one-year grace period to some insurers, allowing them to set higher limits, or no limit at all on some costs, in 2014.
Not postponed is the penalty for failing to have any kind of health insurance next year. The penalty in 2014 will be $95 per adult or 1 percent of adjusted family income, whichever is higher, and will increase to $695 or 2.5 percent of income in 2016.
What can you do to prepare for the opening of the insurance marketplace in your state? Here are a few things to keep in mind:
1. Will this change what you currently do? (Probably not)
The state marketplaces are where people can buy individual coverage and it’s also for businesses that employ 50 or fewer people. Explains PBS’ The Rundown blog:
Currently, the vast majority of Americans with insurance coverage get it through their jobs — and they generally work for companies with more than 50 workers. Large firms already offer coverage similar to what the health law will require insurers to offer individuals and small firms, so little change is expected.
Anyone can apply for individual health insurance through a marketplace, even those who have insurance through work. But if your work-based coverage is considered “affordable” — and it likely will be if your employer is paying part of the cost — you won’t be eligible for a government subsidy to reduce your monthly premium for insurance purchased through the marketplace, explains Carolyn McClanahan on Forbes.
What’s considered affordable? “If premium cost is more than 9.5 percent of your income and you are under 400 percent poverty level, insurance is not considered affordable,” she writes. So, for most of you, it wouldn’t make sense to switch from your work-based plan. But if your employer’s health insurance plan is sufficiently lousy, the marketplace makes sense.
2. Research what the marketplace rates will be in your state
So far 14 states and Washington, D.C., have released what the cost of health plans on their marketplaces will be. If your location is among them, you can find the rates here, on Kaiser Health News. Overall, it’s expected that young, healthy people will have higher premiums than they do now for individual (not work-based) coverage, and older people will have lower premiums. And health insurers will no longer be able to charge a higher premium just because you have a pre-existing condition.
Note (and this is important): If you buy health insurance through a state marketplace, you’ll likely be eligible for a federal subsidy to help with the cost.
3. Research individual policies sold outside the marketplace
In the states that already require more than very minimal coverage from individual insurance policies, your individual policy may cost about the same next year. In other states, the cost of an individual policy purchased outside the state marketplace will likely increase to cover an expansion of the coverage you’ll get. Explains CNNMoney:
Starting next year, nearly all individual plans — both in and out of the exchanges — will be required to cover an array of “essential” services, including medication, maternity and mental health care. Many plans don’t currently offer those benefits.
So, if you currently have an individual policy — some 15 million Americans do — you may or may not want to keep it. Or you may find that your insurance company is eliminating your plan and replacing it with plans that meet the new standards for care.
But keep in mind that unless you buy your individual coverage through a state marketplace, you won’t be eligible for the federal subsidy.
4. Figure in the federal subsidy
A huge part of Obamacare is the help offered to those who can’t afford health insurance premiums. The subsidy is a tax credit that’s applied directly to the premiums. It will be paid to the insurance company, not to you.
Who will be eligible for this help? Plenty of people.
CNNMoney explains, “People with annual income of up to 400 percent of the poverty line — or roughly $45,000 for an individual and about $92,000 for a family of four — will get federal subsidies to help defray the premium costs.” The lower your income, the higher the subsidy. How much will you get? The Kaiser Family Foundation has a calculator.
5. Get ready to fill out your application to a marketplace
You will need to provide information such as Social Security number and income. As of Oct. 1, information can be submitted through paper forms, over the phone or online. You should get a response within two weeks explaining your next steps.
Enrollment in the marketplaces closes after March 31, unless you have a major life event like relocation to another state, changes to income, or changes in your family status.
HealthCare.gov recommends you take these steps to prepare for submitting an application in a marketplace.
6. Select your level of coverage
You will have a choice of four levels: platinum, gold, silver and bronze. Platinum will have the highest premium but the lowest out-of-pocket expenses. Bronze will come with the lowest monthly cost but the highest possible out-of-pocket costs.
How to decide which one to pick? HealthCare.gov offers advice about that.
7. Check into Medicaid
Many states have expanded eligibility for Medicaid, a federal/state health insurance program for low-income people. Some states have decided not to participate in the expansion.
What if your state has not and you don’t qualify under the current Medicaid rules? You won’t have to pay the penalty for being uninsured.
8. Kick your pre-existing addiction
Under Obamacare, insurance providers cannot charge more due to pre-existing conditions or gender. But they can charge more if you smoke. Smokers can be charged up to 1.5 times the premiums of those who don’t use tobacco in most states. To quit on the cheap, follow these tips.
Where do you stand on Obamacare and the insurance marketplaces? Voice your opinions on our Facebook page.
Karen Datko contributed to this report.