Five Facts On Health Insurance Through Obamacare

Obamacare will require every individual to have health insurance coverage starting in 2014.

Beginning in 2014, you’ll be required to have health insurance coverage. To alleviate any confusion on how insurance will be bought sold we will discuss five quick facts you need to know to prepare for the health insurance change.

#1 – Where will you get health insurance?

Insurance will continue to be purchased through employers, individual coverage, or public programs. The major difference is that large employers will be required to offer coverage or pay a fine. Some employers will opt to provide coverage some will refuse because the fine is more affordable. If your employer does not offer coverage, you can purchase your own on the health insurance exchange with no risk of being turned down or sold a substandard policy.

(Related: Will You Lose Medicare or Medicaid If You Leave the Nursing Home to Visit Family?)

#2 – So if your employer doesn’t offer coverage, where will you purchase health insurance?

If your employer doesn’t offer coverage, it can be purchased on the health insurance exchange. Policies will be standardized and easy to compare. Massachusetts has a version of Obamacare already in place with a high functioning exchange.  See just how easy it is to purchase coverage. We used the Quincy, Massachusetts zip code to browse – 02169. Give it a try.

#3 – Pricing is based on only four factors – and bad health is not one of them.

Health issues will not be considered in your health insurance premium. The price of insurance will be based on four factors.

(Related: Worried About Chained CPI? You Are Not Alone)

  1. Age – older people pay up to three times more than younger people.
  2. Rating area – people who live in high cost health areas (think Boston, Miami, Los Angeles,) will pay more than people who live in low cost health areas (like suburban type towns.)
  3. Number of people in the family.
  4. Tobacco use – tobacco users will pay up to 1.5 times non-tobacco users. However, this will be very difficult to implement and is considered discriminatory by many. Because of these arguments, some states have decided that tobacco status will not be used in pricing.

#4 – Will your health insurance costs be sky high?

Sky high is a relative term. It will depend on your income, the state you live in, and if you currently have group or individual coverage.

(Related: Rural Areas Could Suffer In States That Opt Against Medicaid Expansion)

  1. A broken ankle can easily cost $10,000, a cardiac bypass can be $100,000, and cancer can be $1,000,000 or more. If your health insurance is $5,000 per year, is that worth it to prepare for a million dollar illness? If you don’t make much to begin with, you’ll get help paying for the insurance.
  2. How much do you make? If your income is lower than 400% poverty level, you will receive assistance paying for your health insurance and if you earn less than 138% poverty level, you will be eligible for Medicaid – unless you are in one of those states that elected not to expand Medicaid coverage for their poorest citizens. Per this great chart by Kaiser Family Foundation, a full 67% of our population will be eligible for premium tax credits or Medicaid.
  3. How well has your state regulated insurance in the past? If you live in a state that previously had good oversight in place, and provided good coverage for their constituents, you will not see much of a change in premiums. But, if you live in a state that allowed cherry picking of healthy populations in the individual market, and you have individual insurance, you may experience a significant increase in your premium cost on individual insurance – Texas and Florida for examples.
  4. Do you have group or individual coverage? Group insurance has been regulated largely by the federal government for a long time and provides richer benefits like maternity coverage and improved prescription coverage.  As a result, group coverage is more expensive, but employees don’t experience the cost because employers pay a large part of the bill. Individual coverage in many states may not be as robust, and subsequently the premiums may be less expensive. If you live in a state with minimum coverage requirements, premiums for individual insurance may rise significantly to pay for better health insurance policies.

(Related: DOMA Increases Medicare Costs For Same-Sex Married Couples))

California recently released the rates for policies available on the exchange, and they are quite a bit lower than anticipated, which is a good sign.

#5 – When do you have to shop for health insurance?

Open enrollment, for individual coverage starts October 1, 2013. You will want to shop during the enrollment period versus waiting until you’re sick to purchase coverage. In the event you develop a serious illness, you will flying solo until the next enrollment period.

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