Love it or hate it, if you need to purchase health insurance coverage, you’ll have to understand your options under the Affordable Care Act. This Q&A will focus on individual health insurance policies.
What is the “exchange?”
The Affordable Care Act marketplace exchange is a centralized place where insurers can sell their plans; like a government created store, where insurers can come in and put their products on the shelves for you to shop. But in this case the government requires certain specifications for any item its store carries. The government also gives out coupons to certain shoppers, in the form of subsidies, to lower the price.
I will need a new plan next year. When should I apply?
Open enrollment began Oct. 1 for policies effective Jan. 1, 2014, but you do not have to apply immediately. You should not wait until right before your policy start date to apply though. The process is anticipated to take about six weeks.
How can I find out how much I will pay and where can I buy a plan?
The most publicized entry to Obamacare is Healthcare.gov, where you can see plans and premium estimates in your area by providing your state, county, who will be covered (individual, individual and spouse, family or small business), and if you are shopping for individual coverage, whether or not you are under age 50. You no longer have to register to view this information. Premiums provided are estimates, and not personalized to your situation. You are not asked how many children are covered or for your smoking status; both of those affect your premium. You can apply to purchase your policy through Healthcare.gov, by calling 800-318-2596, or by working with a “navigator.”
Technical issues with Healthcare.gov have made applying difficult. The good news is it’s not the only way to apply. You can also work with a licensed insurance agent or a broker site like eHealth. The process may be smoother, and you can get help with sorting out the best plan for you; federal navigators are not permitted to give advice. The price is still the same if you purchase through a broker or agent; however some plans may not qualify for subsidies, so you’ll need to ask. EHealth right now cannot connect your plan with a subsidy, but expects to have that capability this month.
How will subsidies work?
Depending on your family size and income, you may be eligible for monetary help in paying your premiums. Your subsidy can be applied directly to your premium or taken on your tax return. You will estimate your 2014 income when applying, and if you end up over or under, will settle up when filing your taxes. Subsidies are based on your adjusted gross income and family size. That means if you are eligible for a subsidy, managing the income that appears on the front page of your tax return may make a difference.
Subsidies are based on the premise that premiums for the federal Silver plan cannot exceed 9.5 percent of your income. This doesn’t mean you have to purchase a silver plan; only that the subsidy is based on it. You can estimate your subsidy on the Kaiser Family Foundation website. Additional help with out-of -pocket costs is available for those making up to 250 percent of the federal poverty level.
How do I choose a plan that is right for me?
When shopping for just about anything, going with the cheapest price can be tempting but not always best. So it is with your health insurance plan. When evaluating policies, look not only at the monthly premium, but also your overall out-of-pocket cost.
Obamacare plans are broken down into four groups: bronze, silver, gold and platinum. As you would expect, platinum plans cover the most, while bronze covers the least. Catastrophic plans are available only for those under age 30 or with a hardship exemption. Catastrophic plans are not eligible for the subsidy.
Within those four levels, there are still differences between how you pay for your care. If you typically only use your insurance to cover doctor visits, you may want a plan that has an office visit co-pay, not subject to deductible. Your regular costs are then controlled, at say $20 a visit, rather than having to meet a deductible and pay 10 percent or more each time you go. On the other hand if you tend to have hospital stays or regular expensive testing, a low maximum out-of-pocket may be most important.
Take note of what is included in your maximum out-of-pocket, as some include what you pay toward a deductible while others are on top of the deductible, and typically co-pays are not included in that number. Does the plan have individual deductibles and out-of-pocket maximums, or only family amounts? How do they calculate the family amount? If only one family member is a heavy plan user, then having an individual maximum is helpful.
Prescription coverage may vary, too, between deductibles and either co-insurance or co-pays for different levels of drugs. Levels of prescription coverage are determined by the drug’s place in the carrier’s formulary, or drug book. Formularies vary from carrier to carrier, too, so check where your regular medications fall.
When comparing plans, make an estimate of what a typical year’s medical expenses will cost you in each plan, and then also calculate what a serious illness — or even a serious health scare — will cost. Will the cost of meeting a deductible deter you from visiting your doctor before an illness takes a turn for the worse, or are co-pays more palatable? Can you handle the max out-of-pocket in the event of a serious health issue, or would a higher-premium, more-inclusive plan better suit you?
The strength of your insurer and the plan’s network are also important. How is the customer service? Great coverage is one thing, but if you have to argue to get claims paid, that’s more costly in the end. Check the network for not only doctors and hospitals you do use, but ones you may potentially use should a serious illness occur. Insurance carriers have different networks for different plans, so you may need to call them and ask which network goes with which plan. If you use a broker or agent, they can help, too.
On a related note, the Treasury Department just announced that up to 500 flexible spending dollars can now be rolled over into the next year if unused by Dec. 31 (rather than being forfeited) if your employer chooses to allow it within your plan. Employers may choose to offer a 2½ month grace period after year end in which to use up leftover funds, or the rollover, but not both. They may also choose to offer neither. That is in effect for the 2013 plan year and beyond.