According to Marketwatch.com, coming in 2014 and barring any delays in the health-care law’s implementation, people will be able to buy insurance through new exchanges. The law dictates that no one can be denied coverage for health reasons, and it limits age-based pricing.
Will this provide the insurance solution that some older workers are seeking? Here are some preliminary answers:
How will the new system work?
Consumers in each state or region will have access to an online exchange where they will be able to shop for health-insurance policies. Insurers will sell health plans at four different levels—bronze, silver, gold and platinum—each offering similar benefits but with a different cost structure.
Consumers buying a bronze plan will pay the least in monthly premiums but shoulder the most risk—that is, they may have to pay more out of pocket for medical care, depending on their health-care needs, than those covered by higher-tier plans. Platinum plans will have the highest monthly premiums and offer the highest level of cost coverage.
Insurers won’t be allowed to deny people or charge higher rates based on pre-existing health conditions, and although premium costs may vary by age, insurers are prohibited from charging the oldest consumers in a plan more than three times the rate they charge the youngest adults.
What type of insurance will be available?
The plans offered by insurers on the exchanges may vary by state or region, but the health law specifies that, at a minimum, certain health benefits must be covered, including emergency services, prescription drugs and hospitalization.
But states have some leeway in determining what is offered.
“It isn’t going to be a nationally imposed plan,” says Katy Votava, president of Goodcare.com, a Rochester, N.Y., consulting firm that works with financial advisers and their clients to help them manage health-care costs. “California could be very different from Texas.”
What will it cost?
Prices will vary, depending on average health-care spending where you live, plus your age, the plan you choose, whether you are eligible for government subsidies and other factors.
The Congressional Budget Office estimates that in 2016, average monthly premiums nationwide for bronze plans, the lowest-cost options, will run about $400 for a single person and $1,020 for families.
That estimate doesn’t count subsidies that will reduce premiums for eligible consumers. Generally, to qualify for help, your income must be no more than 400% of the federal poverty level, or about $92,200 for a family of four and $44,680 for a single person in 2012.
The law also caps annual out-of-pocket costs for covered services for consumers who buy insurance on the exchanges and some others; that cap matches the out-of-pocket limit for health savings accounts, which is $6,050 for individuals and $12,100 for families in 2012. For lower-income people who purchase insurance on the exchanges, the cap will be even lower.
When will the exchanges be open for business?
The federal government set a deadline of Jan. 1, 2014, for the exchanges to be up and running, with enrollment to begin on Oct. 1, 2013. Currently, states vary widely in their progress, according to the Kaiser Family Foundation, a nonprofit, nonpartisan research organization. (Visit healthreform.kff.org and click on “The States” to find out where your state stands.)
In states that decide not to set up exchanges, consumers will have access to a federal exchange.
What steps should I take now?
Start tracking your health-care spending; that will make it easier to shop for the health insurance that suits your needs best.
Assess whether you might qualify for a subsidy to reduce your costs. The Kaiser Family Foundation has a calculator to give consumers an idea of how subsidies work. Go to healthreform.kff.org and click on “Interactive Features” and then scroll down to “Subsidy Calculator.”
Give yourself time to shop for a plan. Start at least two or three months in advance, Dr. Votava advises, to find out, for example, which plans your doctor participates in. Also, look for a plan that covers any prescription drugs you may be taking.