One of the mistaken ideas of Obamacare is that it covers all medical bills if someone gets seriously ill or suffers an accident. It was passed with the idea, in part, that it would prevent people from having to file for bankruptcy protection simply because they suffered some bad luck. That is wrong. A full health insurance portfolio helps pay all of the bills that come with being seriously ill or suffering an accident. Not just line the pockets of doctors, hospitals and pharmacies.
Obamacare only provides insurance coverage for 1/3 of the expenses that an individual has during a stressful period of life.
MAJOR MEDICAL – The Patients Protection and Affordable Care Act, (aka PPACA, aka Affordable Care Act, aka Obamacare) mandates that every American purchase health insurance to guarantee payment of doctor, hospital and pharmacy bills. Americans who can not afford to pay the premiums for Major Medical insurance, as defined by the government, would have the premiums paid for them by the IRS.
LONG TERM CARE – The PPACA, as passed by congress in March of 2010, included “Section 8” (or CLASS) provisions. Those provisions required the Secretary of Health and Human Services establish a voluntary Long Term Care insurance plan for American workers to pay for any future long-term care expenses they have in the future. It was not just a suggestion.
Unfortunately, in October of 2012 the Obama administration declared that they would not attempt to implement that portion of the PPACA. That meant that American’s still were limited to the 3 options for paying for long-term care if they need it in the future.
- Directly pay providers out of personal savings. The problem with this, as I see it, is that it penalizes married folk. A couple can spend their entire working years to save money for retirement. If retirement savings have to be used to pay for the care expenses of one spouse, the other, healthy spouse, must spend most of the money that was supposed to be set aside for them to enjoy a comfortable retirement on a fixed income.
- The most common payment for long-term care expenses is made by the state government program known as Medicaid. There are several problems with relying on Medicaid to pay for long term care bills. I will share those limitations in a future email, after all of this AHCA debate is over.
- Use private Long Term Care insurance that they purchased in their 50s or 60s.
DISABILITY – During the debate for Obamacare, Mr. Obama, Ms Pelosi and several other politicians claimed that Theodore Roosevelt was the first American president to call for a national health insurance policy. What was not mentioned was that the type of health insurance that Theodore Roosevelt wanted was what we know today as Disability Income insurance. He wanted to guarantee that families would be able to continue to live in their own home and put food on the table even if a wage earner was unable to work because of an illness or accident. No provisions were made for that event in the PPACA whatsoever.
Today, even after the passage of Obamacare, things are not much different from what they were 100 years ago. If a wage earner is diagnosed with a serious illness or suffers an accident they still are required to pay the bills they previously had. If they cannot, they risk foreclosure, repossession or starvation. While those risks still exist, Obama guarantees that doctors/hospital can still get paid.
Regular bills that accrue while a wage earner recovers from medical treatment can be paid in one of 6 ways.
- Personal Savings
- Company sponsored Disability Income insurance
- Company sponsored Worker’s Compensation insurance (if qualified)
- Social Security Disability Income insurance (if qualified)
- Private Disability Income insurance
Ironically, Major Medical premiums, to pay doctor and hospital bills, have grown so high and so fast that many Americans do not feel like they can afford to pay the premiums required to complete a proper health insurance portfolio if their employer does not pay for those types of insurance coverage.
The Republican replacement plan (aka American Health Care Act) also does not cover all the financial risks associated with a severe illness or accident. However, unlike Obamacare, it does not claim to be a comprehensive “fix” to the problem of “people filing for bankruptcy even though they have health insurance.
It remains to be seen what, if any, replacement legislation will come out of D.C. However, the stated goal is to reduce the premium for the Major Medical portion of a health insurance plan. That way, people will feel more comfortable using some of the money they save on Major Medical insurance to buy the other forms of health insurance they need until they are able to set up a “Rainy Day” savings account and have enough money in it that they do not need Long Term Care or Disability Income insurance.
Tim Barnes, CLU’s insurance license is good throughout the state of Texas. If you live in Texas I am able to answer your insurance questions. Use the form below. However if you live in a state other than Texas, you will need to contact an insurance agent who is familiar with the insurance laws in your state.