Rich Or Poor - What's In It For You? Health Reform Update
We've recently received many calls asking us about the health insurance landscape and clients wanted our perspective about how things are shaking out. After many phone calls, we thought it might be best simply to write them down as a resource for everyone.
We Are Close! October Will Be Here Soon
The roll out of the PPA/ACA will begin in October of this year and the enrollment period will extend through March of 2014. What this means is that all US citizens (and probably non-citizens) will need to sign up for a health insurance plan during that six month period. People that fail to enroll for coverage will be subject to penalties that will be assessed and enforced through the IRS.
Who Will It Not Impact?
I think the easiest thing to do sometimes is explain how things won't change, or for whom they wont! We have many clients that are IT Programmers, Consultants, and Physicians that own individual or family plans. Most of these clients earn great incomes, well over $100,000 or $200,000 per year for their family. If this is you, little will change in terms of your health plans as you make too much money to benefit from any income subsidies offered by the health exchanges. As usual though, consumers that do not accept subsidies will have a greater choice as they'll be able to buy plans that are "off-exchange".
Of course the broad changes made in the PPA/ACA will impact these higher income earners, but they will not receive any income benefits. In general, health coverage will become more robust and I'll highlight some key improvements later in this document.
Do I Qualify For A Subsidy?
I often get asked if a person will qualify for a subsidy. Check out the matrix below to determine if you will receive some cost relief from the PCA. If you desire a clearer image, simply click on the graphic and it will open a new window with a clear image. (FPL = Federal Poverty Level)
What About Me?
I found a nice tool for helping determine exactly what your subsidy might be for your situation on the Kaiser Family Foundation website. Please click on the subsidy calculator link for more information.
I Get A Subsidy, What Do I Get?
Depending on your income, you'll be eligible to receive several benefits.
- Tax Credits - these credits will/ can be used for any level of health plan and most importantly is advanceable.
- Out of Pocket Max Subsidy - For citizens that purchase a Silver Plan and have an income between 100%-400% FPL.
- Cost sharing - (reduces deductibles, co-insurance, and other payments) - For citizens that purchase a Silver Plan and have income between 100%-250% FPL.
Plan Levels -
One major impact of the creation of the health exchanges in the PCA/ACA is that health insurance plans will be more standardized and therefore, (hopefully), easier to understand. Having stated the hope, we will still have co-pays, deductibles, and co-insurance, so clients will still need help discerning what their real costs and real maximum exposure will be in a worst case event.
I've inserted a graphic to help illustrate how the four new plan designs will cover health care expenses. The grey dollar bills reflect the consumer portion that must be contributed to those costs.
(source - Blue Cross Blue Shield of Texas)
The standardization of plans will assist consumers and agents in the process of examining carrier options for both on-exchange products and off-exchange products. Recall from the discussion above that many of the subsidies steer recipients toward the Silver level plan.
What New Improvements Are Coming?
Yes, we said it, the PCA/ACA actually will provide some benefit to consumers in the future. We only hope there are not many unintended consequences like we've seen in almost every other portion of the implementation so far.
We feel strongly though that the mandate to provide essential health benefits is a great improvement, especially in the area of maternity coverage. As I've yelled and screamed for years, I believe that the Texas Department of Insurance has let Texans down by not requiring insurance companies to provide or at least offer a maternity option here in Texas. It finally took the Federal government to pass a sweeping law to force carriers to provide a basic health service.
Child Only - Coming Back
On January 1st, we'll finally have child only policies available. If there has been on huge miss as a result of the PCA I would have to say that this area has been the worst. Effective September 2010, the Federal law required insurance companies to accept all children under 19 on insurance plans. Unfortunately, they did not require them to keep the same prices AND didn't require them to actually take their applications! In 2014, insurance companies will begin taking children only applications and will not be able to "rate up" those policies and charge as much as 900% more than the original quote for coverage.
I'll begin writing weekly posts in June to ramp up for the coming enrollment season. If you have a topic you'd like me to cover, please email us and we'll put it on the list of items we need to highlight.
Get Coverage Or Wait Until Open Enrollment?
Obviously you need health coverage, as the risk of not having health insurance is too great to gamble with. There are potentially other benefits for obtaining coverage today and not waiting for the open enrollment period as well. Please call us and we'll be happy to help you with your insurance search, or you can go online to request a free quote!
Jason W Bohmann
Texas Health Design