Will You Need Supplemental Insurance With Obamacare?


“People are already paying too much for health insurance.  Why should I pay even more for additional insurance?”

When Obamacare was approved on March 23, 2010 it made several changes to the health insurance system that was used in America but the biggest change is still a year away.

On January 1, 2014, if the current law remains, every American is required to purchase private, government approved “Essential Benefits” health insurance.  The PPACA states 10 minimal requirements but gives the Secretary of Health and Human Services permission to add more levels of coverage.  Those Americans who do not buy the new “Essential Benefits” plans must pay a penalty tax to the Internal Revenue Service.

Enrollment for the new system is scheduled to start next October.  If you get your health insurance through your employer, you should be automatically enrolled.  If you are required to purchase your own health insurance, you will need to enroll in a new plan unless your current plan started prior to March 22, 2010.

Recently, I have been asked several times if, in my professional opinion, the “Essential Benefits” plans are going to be sufficient.  My answer has always been the same.  I tell everyone, “It depends.”

All 4 of the options that congress gave to the Secretary of HHS to offer as “Essential Benefits” plans have cost sharing elements.

The Bronze level plan will be the least expensive.  However, it requires you to pay approximately 40% of your non-preventive medical bills.  The Platinum level plan will only require you to pay 10% of your non-preventive medical bills but it is going to be the most expensive.

There will be 2 levels; gold and silver; between the two extremes but they will also require you to pay a chunk of your medical expenses.

Americans do not like ultimatums.  Many of us view Obama’s mandate as an ultimatum.  Some people plan on not buying any health insurance and forcing Obama to enforce his mandate.  Others plan to spend only what is required to be in compliance with the new law.

POLITICS

It is not my intention with this post to endorse one political candidate over the other.  I do not trust either of them.  Both candidates have proven to me that they are willing to distort the facts if they think that is what is necessary to get votes.

With that being said, I do have my own, personal political opinions.  If you are like me, you are tired of listening to how other people feel about politics.  You are ready for the election to be over.  Fortunately, it will be next week.

What I say below is not designed to change your mind about who you will vote for.  Hopefully, by now you have decided between Obama and Romney who you with to be the nation’s CEO for the next 4 years.  I invite you to skip over this political editorial and read the Question and Answer below.

Although I do not agree with Obamacare’s mandate, I do recognize that under the constitution congress does have the right to levy taxes.  Yes, president Obama can accept some of the blame for lobbying congress for this new tax but there is plenty of blame left over for the members of the 111th congress.  They were the ones who caved in to presidential lobbying.  Because of them, America has a new tax.

In 2009 politicians justified a complete overhaul of Americas health insurance system with anecdotes of people who “filed bankruptcy even though they had health insurance.”  Continue reading to see why that possibility still exists under Obamacare.

QUESTION

Now that my political vent is over, let me spend the balance of this post on the question, “Under Obamacare, do I need to buy supplemental insurance?”

ANSWER

It depends!  There are going to be several variables that you need to consider.  The least of them is going to be deciding which level of plan you want.

If you elect the Platinum or Gold levels your exposure to medical bills should be close to what you have today through your current group benefits plan.  Hopefully, your income is such that you will be able to pay your doctor what your insurance does not pay out of your income.  It hurts but is possible.

If you elect the Bronze or Silver levels your exposure to medical bills will be greater than what it is now under most group benefit plans.  Although they will be less expensive options, you may find that you will have to invade your savings to pay your medical expenses after your insurance plan is finished paying their part.

If you have limited or no savings, you should look at paying for an insurance supplement to go along with your “Essential Benefits” plan.  In most cases, people can find a way to pay for their portion of a doctor’s office visit.  My concern is if someone is diagnosed with a major disease like cancer, heart attack or stroke.

Medical treatment for those conditions can be in the hundreds of thousands of dollars.  Someone who has elected the Bronze option because it will be the least expensive plan, could be looking at being liable for $40,000 on a $100,000 medical bill if they require treatment for cancer.  In their case a relatively inexpensive Critical Illness supplement makes sense.  If it is set up correctly, it will pay them $40,000 in cash in order for them to pay off their portion of medical bills.

The political spin we have heard from both press and politicians is that with the “Essential Benefit” plans, the chance for someone to need to “file for bankruptcy because of medical bills, even though they have insurance” is eliminated.  At least that is the implication.

The truth is that not one of the 4 “Essential Benefit” plans will pay all of your medical bills.  You will still be responsible for 10-40% of the cost for your doctor or hospital and 100% of your living costs while you are recovering.  If you do not have sufficient money in your “Rainy Day” savings, you will need to supplement whatever “Essential Benefit” plan you elect with either Critical Illness, Accident Supplement, Hospital Indemnity, Disability Income or Long Term Care insurance.

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