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Jacques Chambers, CLU,
Posted February 19, 2013
Since the Affordable Care Act (ACA) was signed into law in March, 2010 most of us have watched it more as a political football rather than something that would eventually reconstruct health insurance. Eventually is fast approaching and now is a good time to see what is on the health insurance horizon.
The vast majority of people who are currently covered under their employer’s health insurance plan will continue under their employer’s plan. Although there are speculations that employers will drop their group health coverage, this is not going to happen to larger employers. Small group employers may consider it, but in many cases that will benefit the employee as they will then be eligible to purchase the insurance that fits their needs as well as qualify for subsidies to pay the premiums. The information below is directed to those without health insurance and individuals who have trouble paying their current premiums.
Each state will have a Health Insurance Exchange that will be a source of individual health insurance for individuals, families, and some employees of small employer groups. Individuals will be able to review and purchase health insurance on line, plus some states will also be opening brick and mortar stores where there will be counselors to help people find the health plan that is best for them and learn what financial assistance they qualify for to help with paying the premiums. Beginning October 1, 2013, open enrollment begins in these exchanges for coverage effective January 1, 2014.
Beginning January 1, 2014, individuals will be able to purchase health insurance regardless of their medical condition or health history. Under federal law, the exchanges must offer four broad plans that will be offered by participating health insurance companies. The four plans are labeled Platinum, Gold, Silver, and Bronze plans with varying benefits and premiums. States will have some leeway in the details of the coverage, but they all must provide broad coverage for hospital, doctors, laboratory tests, and prescription drugs, both in-patient and out-patient.
The Platinum Plan, the most expensive, will require its policyholders to pay only about 10% of the medical bills whereas the Bronze Plan enrolled members will pay about 40% of charges. The Platinum Plan would be the most expensive and the Bronze the least.
Each of the plans will be sold by insurance companies through the exchanges, which will allow buyers to compare plans that are identical from one insurance company to another. Insurance buyers will finally be able to compare “apples to apples” for the first time.
Financial assistance will be available to help pay the premiums for people earning below 400% of the Federal Poverty Level, approximately $44,000 annually for an individual and $90,000 for a family of four, based on the 2012 Federal Poverty Levels. It is estimated that almost 80% of people enrolling through the exchanges will be eligible for some subsidy in paying their premiums.
The law allows each state to choose whether to set up and run its own exchange, run their exchange jointly with the federal government, or let the federal government solely operate the exchange. The deadline for choosing by the states, barring any extensions which are probably inevitable, was February 15, 2013. As of that time: 18 states (California, Colorado, Connecticut, Hawaii, Idaho, Kentucky, Massachusetts, Maryland, Minnesota, Mississippi, Nevada, New Mexico, New York, Oregon, Rhode Island, Vermont, Utah, and Washington) and the District of Columbia have opted to operate their own exchanges. 7 states have committed to running their exchanges jointly with the federal government. For those states that let the federal government operate their exchange, the residents will likely go to a single portal on line, and then select their state to see what is available to them.
Employees covered under small employer health plans will have the option to choose a plan from the exchanges if their cost for the employer provided plan exceeds 9.5% of the employee’s household income. This allows them to take advantage of the government subsidies to assist with the premiums. However, decoding the murky language around the 9.5% of income reveals that it is only applied to the cost of the employee’s premiums, not the far higher cost for the employee and his or her family.
Since premium subsidies are only available through the exchanges and many employers only pay the employee portion of a worker’s premiums, leaving the employee to pay for his or her dependents could limit the accessibility of health insurance exchanges to between two and four million non-working spouses and children. Given the current political climate in Washington, it is highly questionable whether Congress will be willing to adjust such errors in the law.
However, if the small employer drops group health coverage for all employees and their dependents, they will all become eligible to purchase their health insurance, along with premium subsidies, from the exchanges.
Medicaid is coverage for low-income persons, which is mandated by the federal government with states administering the program and sharing the costs. It will be expanded beginning in 2014 as well. Under ACA, no longer will Medicaid be available only to just households with children, the elderly, and disabled persons.
The Affordable Care Act will expand the Medicaid program to cover all people with incomes of about $15,000 for a single individual. For a family of 3, it would be approximately $24,300 with higher incomes for couples and families with children. These numbers are approximate because they are based on the 2012 Federal Poverty Level numbers. The 2013 number will be released in April of this year so these numbers will probably rise somewhat.
Under ACA, the federal government will pay 100% of the additional cost to states until 2016 with the federal government reducing its portion until 2020, when it will continue to pay 90% of the increased cost. However, when the Supreme Court issued its ruling on ACA, it said that states were not required to expand their Medicaid program and can refuse to expand their program and, as a result, not receive the additional funding.
Expanding Medicaid under ACA has become another political issue. So far, 22 states have agreed to expand their Medicaid program while 13 have refused, divided generally by the political parties controlling the states.
Expanding Medicaid are: Arkansas, Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nevada, New Hampshire, New Mexico, North Dakota, Ohio, Rhode Island, Vermont, and Washington.
States rejecting Medicaid are: Alabama, Georgia, Idaho, Louisiana, Maine, Mississippi, North Carolina, Oklahoma, Pennsylvania, South Carolina, South Dakota, Texas, and Wisconsin.
This leaves 15 states uncommitted. In many of the undecided states, businesses, especially hospitals and other medical providers, are strongly encouraging the adoption of expanded Medicaid.
It has yet to be determined what will be available for lower income persons in those states declining to expand Medicaid.
The Affordable Care Act is the biggest shift in health care and health insurance coverage since the introduction of Medicare in 1965. It is a massive undertaking with the goals of making health insurance available to all legal residents of the U.S. and, at the same time, encouraging more efficient use of healthcare services and a slowing of rising health care costs.
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[Jacques Chambers, CLU, and his company, Chambers Benefits Consulting, have over 35 years of experience in health, life and disability insurance and Social Security disability benefits. For the past twelve years, he has been assisting people with their rights, problems, and other issues concerning benefits and disability. He can be reached at email@example.com or through his website at: http://www.helpwithbenefits.com.]
Copyright February 2013– Hepatitis C Support Project - All Rights Reserved. Permission to reprint is granted and encouraged with credit to the Hepatitis C Support Project.
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