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Jacques Chambers, CLU,
Posted October 16, 2013
Enrollment in the Affordable Care Act (ACA, and also known as Obamacare) started October 1. Coverage will start January 1 for those who enroll in a plan between now and December 7. This is the biggest change in health care in the United States since Medicare was passed in 1965, and there will doubtless be glitches and problems getting such a major program up and running.
Given the current controversy in the news about Obamacare, it would be appropriate to note that when Medicare was originally enacted in 1964, there were many dire predictions and warnings about how disastrous it would be to health care and the economy in general, pretty much what is being said now. Medicare went into effect in 1966, and today it stands with Social Security as one of the two most popular government programs in the U.S. Despite the problems involved in getting such a major change up and running, the availability of health insurance for everyone can only benefit us all and the economy in the long run.
But now, the big questions are:
Am I affected by this law?
What changes will this cause to my health insurance?
Should I be doing anything?
What should I be doing?
Do I have to buy health insurance?
When should I do this?
Last question first. As expected for something this major, there are problems getting the websites and the personnel up and running. The problems are exacerbated by the overwhelming interest of the public who have overloaded the system with inquiries. To have coverage effective January 1, 2014, people must enroll by December 7, 2013. That’s over two months from now, so I recommend waiting three to five weeks. The system will settle down; the initial rush will be over. It will be smoother by then.
For the other questions, below is an explanation of the law’s impact on a person based on their health coverage currently.
I have health insurance through my employer
There is nothing you need to do because of the new law. You will remain covered under your employer’s plan.
There is a potential problem that may affect some persons with employer coverage. To prevent employees from abandoning the employer plan to take advantage of the subsidies available in the health insurance exchanges, employees are prohibited from doing so if the employer plan is “reasonable” and “affordable.” “Reasonable” means your plan covers at least 60% of your medical costs. The law defines “affordable” the employee’s portion of the premiums when it is equal to or less than 9.5% of the employee’s household income. However, that only applies to employee’s premium.
Many employers do not pay for dependent coverage and the cost of dependent coverage is not counted towards the above definition of “affordable.” This means that as long as the employee’s coverage is “affordable,” the dependents are not eligible to purchase coverage through the health exchanges either. This is a recognized flaw in the statute, but there is not much hope Congress will correct it any time soon.
There are other things to be aware of depending on the size of your employer:
• I work for a large employer (50 or more employees)
The vast majority of employers with this level of “full-time equivalent employees” already provide health insurance for their employees, and many pay for a portion of employees’ dependent coverage. Effective January 1, 2015, all employers this size will be required to provide health insurance or face tax penalties.
• I work for a small employer (Less than 50 employees)
Employers in this group will not be required to offer health insurance, but tax credits are available for those that choose to. Some employers do offer health insurance to their employees; others do not.
You may have heard some small employers are dropping their employees’ health coverage. Historically, employers paid for all of the employee coverage and occasionally a portion of the dependent premiums. However, in recent years, more and more of the premium burden has been placed on the employee.
While losing the employer’s contribution to your premiums is not good, many of them will compensate for that with increased wages or other benefits. In addition, you will be eligible to not only personally choose the coverage that is best for you and your family, but you may also be eligible for premium tax credits and subsidies to reduce your cost.
I am covered under Medicare
Obamacare makes no changes to either Medicare or Medicare Supplement (or Medigap) plans, other than some expansion of benefits such as preventive care without a deductible or co-insurance. You need not worry about your coverage; it is safe.
I am covered under Medicaid
Obamacare will not affect your current Medicaid coverage.
However, half of the states have agreed to expand their Medicaid programs as provided under Obamacare. You can find a list of those states at: http://www.advisory.com/Daily-Briefing/2012/11/09/MedicaidMap. You should be aware that there is no deadline for states to expand their Medicaid, so others may do so in the coming months.
For those living in states that are expanding their Medicaid programs, many more low-income persons will be eligible for coverage under Medicaid. In those states, individuals will no longer have to be disabled, and the asset/resources test will be eliminated. The only requirement for eligibility will be low income.
Although it may vary slightly by state, generally, if an individual’s income is at or below 133% of the Federal Poverty Level (FPL), they will be eligible for Medicaid coverage. If you are low-income and do not have health insurance or Medicaid, by seeking insurance through the health exchanges as explained below, you will be referred to a Medicaid office or website where you can apply.
The current FPL for an individual is $11,490 per year. To that should be added $4,020 for each additional individual in the family before multiplying by 1.33. FPL amounts are slightly higher in Alaska and Hawaii to reflect the higher cost of living.
I have individual health coverage I purchased directly
You are welcome to continue your individual policy if you wish. It is recommended that, because of the dramatic changes made to health insurance by Obamacare, you compare your coverage and cost with those plans available on the health insurance exchanges since their benefits may be better and the premiums lower, especially if you qualify for premium tax credits and/or coverage subsidies.
I do not currently have health insurance
You are the person this law was passed to benefit. Between October 1, 2013 and March 31, 2014, you can purchase health insurance regardless of your medical condition or history of pre-existing conditions.
You may purchase health insurance directly from insurance companies. However, to take advantage of all the provisions of the law, which may reduce your out-of-pocket costs as well as allow you to compare plans with similar benefits, you may want to shop also on the health exchanges that opened October 1, 2013.
You start by going to www.healthcare.gov. That is the exchange operated by the federal government and should be used by persons in states not operating their own exchanges. One of the first questions it asks is your state of residence. From that, you will either continue into the site or, if your state operates its own exchange, you will be directed to it. You may also find the direct link to your state’s health exchange website by going to: http://www.commonwealthfund.org/Maps-and-Data/State-Exchange-Map.aspx
As explained in earlier columns, based on your location, the size of your family, your age, and your annual income, you will be shown a variety of plans, which will include all the premium tax credits and coverage subsidies available to you. You will also be able to enroll on-line in the plan of your choice.
If you prefer to have someone personally assist you with the process, know that many insurance agents are undergoing the training necessary to assist you. Also, counselors will be available by telephone. Start by calling 1-800-318-2596, the national 24-hour line. Again, depending on your state of residence, you may be referred to your state’s assistance line. Finally, in some states, stores are being opened with counselors available to personally assist you. The above phone number should be able to guide you to their locations.
In addition to comparing benefits and cost be sure to ask:
Is my doctor part of this plan’s network?
Are my medications included in the plan’s formulary?
NOTE: Do no underestimate your 2014 income to get a higher premium credit. They are advancing credits on your actual 2014 income tax. If it is higher than your estimated income, they may want part of it paid back.
I am a documented immigrant
If you reside in the United States legally and have lived in the U.S. for five or more years, you have the same rights and requirements to purchase health insurance as a citizen.
I am an undocumented immigrant
This law does not apply to undocumented immigrants. You will not be able to purchase coverage through the health exchanges. However, you will not be penalized for not purchasing health insurance either.
If you have children who are citizens because they were born here, they are eligible for coverage and should purchase insurance to avoid penalties. The public has been assured that there will be no repercussions from this with immigration issues. No questions will be asked why children and not their parents are enrolling, and the information will not be shared with other federal or state agencies.
I don’t want to buy health insurance
If you are not in one of the groups that do not have to purchase health insurance, you will pay a tax penalty when you file your 2014 tax return. Starting low in the initial years, the penalty will eventually be the greater of $695 and 2.5% of your annual income. This would be a penalty of $1,000 for a person earning $40,000 per year.
You cannot wait until you think you need the insurance to buy it. After the current open enrollment ends March 31, 2014, you will only be able to purchase health insurance during future open enrollments, which will be from October 15 through December 7 of each year, although there are Special Enrollment Periods for persons having Life Qualifying Events such as moving to a new state, certain changes in your income, and changes in your family size. Medicaid enrollment, on the other hand, will be available year round.
To encourage younger, healthy individuals (often called the Young Invincibles) to purchase a plan and avoid the penalties, there is a special plan available just for persons under age thirty. It has a high deductible but the premiums are very low. While young people are generally healthy, they often engage in high risk activities and are often also be accident prone.
The key to success of this program is for a large number of people to enroll, both healthy as well as those with medical problems. That will give the plans the “spread of risk” necessary to continue to function. Although there is much that could and should be done to improve the program, this is the first time the United States has an opportunity to join the rest of the industrialized world in offering quality healthcare for everyone.
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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 firstname.lastname@example.org or through his website at: http://www.helpwithbenefits.com.]
Copyright October 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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