Ready or not, here it comes!
The launch of new marketplaces for buying your own health insurance—a key piece of the “Obamacare” plan—is just four months away.
The launch of new marketplaces for buying your own health insurance—a key piece of the “Obamacare” plan—is just four months away, and the so-called insurance exchanges are starting to take shape.
In late May, the state of California said 13 health-care plans will participate in its exchange, offering insurance in the state’s 19 regions, and insurers in several other states are proposing rates and plans. The federal government will run exchanges in states that don’t provide their own.
If you get your health insurance through your job or through Medicare or Medicaid, you probably won’t be affected by the exchanges. But if you don’t have health insurance through work or you have been buying your own as a sole proprietor, the exchanges will provide central sites for comparing plans and buying individual and family insurance.
For many people who currently buy individual insurance, premiums could go up, reflecting new fees, taxes and a requirement that 10 essential areas be covered. Among those are maternity care, substance abuse and mental-health services and prescription-drug coverage, which aren’t standard in individual policies today, says Sarah Lueck, a senior policy analyst at the Center on Budget and Policy Priorities, a nonprofit group in Washington.
In addition, plans can’t exclude pre-existing conditions. While a typical 60-year-old today might pay five to seven times more for health insurance than a 20-year-old, the new law limits that ratio to three times what a typical young person might pay, says Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, the industry’s trade group.
Those who buy through the exchanges and have incomes below certain limits also will get tax credits to reduce their costs.
Beginning next year, those who choose to forgo health insurance could pay a tax penalty of 1% of their family income, or at least $95. Those penalties are set to increase in 2015 and 2016.
Here’s an overview of the new twists and turns coming this fall.
Know your metals. When you go to an exchange, such as Covered California you will see four different levels of plans.
“Bronze” plans are priced so that approximately 60% of the average person’s health-care costs are covered by insurance. “Silver” should cover about 70% of the average person’s costs, “gold” 80% and “platinum” 90%. (In addition, those under 30 can buy a limited “catastrophic plan” intended to provide insurance only when costs reach a certain point.)
Generally, bronze plans should have the lowest premiums and platinum the highest, but prices can vary widely. Proposed premiums for a 40-year-old single person in Portland, Ore., for instance, range from $169 to $401 a month for a bronze plan and $276 to $591 a month for a gold plan.
Bronze plans might look cheap, but that will hold true only if you don’t need much medical care. If you suffer a serious illness or are hurt in an accident, you might have to meet a deductible of up to $5,000 for an individual or $10,000 for a family or pay half the hospital bill.
Under the law, annual out-of-pocket expenses are capped at $6,350 for a single person and $12,700 for a family.
• Check the details. Some states, including California and New York, are standardizing at least some of their plans. For instance, some silver plans will have the same copayments for specialists or emergency-room visits, so buyers can compare apples to apples.
But in most states, plans under a category like silver might have very different deductibles and copays, which you will need to take into account in calculating your actual cost.
“You don’t shop for this the way you do for peaches,” says Karen Pollitz, a senior fellow at the Kaiser Family Foundation, a nonprofit that focuses on health-care issues.
• Network, network. The best copays and rates will apply only to in-network providers, so you will want to be sure that you are comfortable with your choices of doctors and hospitals. While a broad network might be appealing, a smaller one could save you money.
Paul Wingle, head of exchange strategy and implementation at insurer Aetna, AET +1.59%notes that a silver plan with a small network might be cheaper than a bronze plan because the insurer has negotiated better deals with a smaller group of providers.
• What’s your real cost? The majority of people who need to buy insurance are expected to receive some help from the government, depending on their income.
Through tax credits, the government will help fund some of the premiums for those whose household income is up to 400% of the federal poverty level. That’s $45,960 for an individual or $94,200 for a family of four, based on 2013 numbers.
Experts expect those subsidies to reduce some of the cost sting, especially for young people. Those with incomes below 250% of the federal poverty level should also pay smaller deductibles and copays.
• Be prepared. Open enrollment for coverage starting Jan. 1, 2014, will begin Oct. 1 and run through March 31. After that, open enrollment for 2015 will run only from Oct. 15 to Dec. 7, 2014.
To get a head start, you might want to evaluate your medical needs and calculate what will most affect your budget: overall deductibles or copays for specialists or prescription medicine. If you don’t already have a good rainy-day fund, you also should set aside money so that a large deductible or out-of-pocket expense doesn’t put you into debt.
Finally, if you smoke, this is a good time to kick the habit. Under the law, tobacco users could pay as much as 50% more in premiums than nonsmokers.
Write to Karen Blumenthal at karen.blumenthal@wsj.com
A version of this article appeared June 1, 2013, on page B8 in the U.S. edition of The Wall Street Journal, with the headline: Tackling the New Health-Care Rules.
