“The Sky Is Falling, The Sky Is Falling” – Chicken Little
The sky is not falling, however, health insurance, as we know it, is about to undergo a major restructuring. If you get your health insurance from your employer, you don’t need to do anything. The headaches, decisions and choices of what plans to use remain with him.
However, if you are responsible for your own health insurance, everything that you are familiar with will change in 2013.
At the end of this post is a chance for you to subscribe to my weekly email. Speculation and rumors abound about Obamacare. I would rather my clients make informed decisions based on facts and not political spin. At least once a month I will try to sort through the political spin to find the truth and keep my clients informed on what they need to do.
It is true that Obamacare will make a huge change in the way health care is delivered and paid for? It already has, however, the biggest change does not start until 2014.
In this post I want to share some questions that I have been asked. Not all of them will be of interest to you, but hopefully, you will find some comfort in some of them.
“Will Obamacare keep me from filing bankruptcy if I get sick?”
I understand this question. During the Health Care Reform debates of 2009 many politicians cited anecdotes of people who had to file for bankruptcy even though they had health insurance.
Obamacare will not prevent that from happening for 2 reasons.
The first reason is that Obamacare only helps people pay medical bills. Most people who had to file for bankruptcy did not just have to pay medical bills. They had to pay their regular bills as well.
Obamacare provides subsidies for people to buy Major Medical insurance to pay their doctors and hospitals. The law does not provide any help for people to pay their mortgages, car payments, groceries, utilities, etc. while they are being treated or recovering from an accident or illness
The second reason has a fancy name. It is called, “cost sharing.”
Obamacare requires all Americans to purchase one of 4 “Essential Benefits” health insurance plans. Those plans are called;
- BRONZE – 60%
- SILVER – 70%
- GOLD – 80%
- PLATINUM – 90%
None of the plans will pay 100% of your medical bills. You are required to pay whatever your health insurance plan does not out of your income or savings if you get sick or injured.
Ironically, after the politicians who forced this law on America spent all of 2009 and the first quarter of 2010 scaring people about their risk, they still leave Americans at risk for bankruptcy.
The mandate of the PPACA and subsidies only apply to the BRONZE level of coverage. It will not help you pay for your regular bills and will only pay for 60% of your medical costs. That means that if you require heart surgery costing $50,000 you will still get a bill of about $20,000.
“Does Obamacare effect Medicare C (Advantage) plans?”
Yes it does but not in the way many of the rumors say. Obamacare does not eliminate Medicare Advantage. After all, Medicare Advantage is the brain-child of another Democratic president, Bill Clinton. It would not be politically expedient to eliminate a pet legislation of a former president from the same party.
Obamacare does not eliminate Medicare Advantage but it does change how private insurance companies will be paid if they elect to offer a plan to challenge Original Medicare.
Last month I wrote, “Will Medicare Advantage Survive?” In it I discuss how private insurance companies will be paid in the future if they continue to offer Medicare Advantage plans.
Medicare Advantage for 2013 benefits from a one time expenditure from the Department of HHS. In the short-term, many of the Advantage plans that are offered are very nice.
The jury is still out over whether the billions of discretionary dollars that HHS put towards Advantage for 2013 are for the benefit of people with Medicare or election year politics.
Only time will tell if Medicare Advantage has a long-term future. When Obamacare first went into effect in 2010, it was estimated that approximately 60% of people who currently had a Medicare Advantage plan would return to Original Medicare within 5 years.
In spite of potential election year politics, I have read nothing about Medicare Advantage that would change my mind about its long-term survival. My crystal ball indicates that in order for Medicare Advantage to survive, insurance companies will need to increase premiums, decrease benefits or both in future years.
“Will my Social Security Disability Insurance payment be effected?”
The answer is “NO.” The Patients Protection and Affordable Care Act is a law that addresses how doctors, hospitals and other medical providers get paid. It does not affect public or private Disability insurance in any way.
“Does Obamacare weaken my Medigap?”
Again the answer is “NO.” Medigap is a contract between you and your insurance company and not the government. Right now congress is considering making modifications to future Medigap plans but 2014 is the earliest that anything is expected to happen. If Medigap is changed, it will be the result of a different legislation.
“Will Obamacare eliminate medicare based supplemental insurance?”
Obamacare is relatively silent on Medicare supplement insurance. What programs it does address for Medicare are Medicare Advantage and Medicare D. Actually, it encourages people to return to Original Medicare. If they do, many of them will want to obtain some form of insurance to pay for what Medicare does not.
In order to do that, unless they can qualify under a special provision that allows them to get guaranteed approval, they will have to be healthy enough to pass medical underwriting.
“I have Medicare. Should I be concerned about Obamacare’s mandate?”
Section 5000 A of the Patient’s Protection and Affordable Care Act requires every American to purchase a government approved “Essential Benefits” health insurance plan. As of now, that section only applies to Americans who are not eligible for Medicare. If you receive Medicare benefits, your plan should be considered in compliance with the new law so that you do not have to pay the new penalty tax for having non-compliant insurance.
The PPACA specifically excludes people who have Medicare Part A from the approaching mandate on page 130.
“Under Obamacare must you have insurance other than Medicare?”
Technically the answer is “NO.” The Patients Protection and Affordable Care Act does not mandate that people with Medicare have any supplemental insurance.
Practically, however, supplementing Medicare with private health insurance is a wise idea for two reasons.
- Original Medicare does not pay for prescription drugs. All the talk in the past few years about “Filling the Donut Hole” only applies to people who have the optional supplement to Medicare known as Medicare D (Prescription Drug Plan).
- Part B of Original Medicare only pays 80% of “Medicare Approved” fees. Since it has not “Out-of-pocket” limit, the amount that you are liable to pay is limitless. The optional supplement known as “Medigap” is used to pay what Medicare does not.
“Will Obamacare help pay for long-term care?”
When president Obama signed the Patient’s Protection and Affordable Care Act into law in March of 2010 it included Title VIII, a.k.a. the C.L.A.S.S. Act. While much of the rest of Obamacare was written to try to reform the current state of “curative” health care, Title VII was designed to reform how Americans pay for “custodial” care for those whose condition is not expected to improve.
In November of 2011, Secretary of Health and Human Services told congress that implementing Title VIII was “infeasible” unless congress authorized more money to subsidize the program. Less than a month later president Obama shut down all work on C.L.A.S.S. and suspended all future efforts to make the program work.
This is a part of Obamacare that the Obama administration has not emphasized. With the Baby Boom generation starting to retire this year, I find it unthinkable that the Obama administration would suspend the one part of the Patients Protection and Affordable Care Act without finding another option.
Technically, Obamacare will help with the coming Long Term Care payment crises. Practically,things are different. The current administration has stopped looking for a solution. Unless you are able to qualify for Medicaid, your options to pay for your Long Term Care needs have not changed.
Health insurance, as we know it, is going to change drastically in 2014. If you are responsible for your own health insurance, click the banner below to subscribe to our weekly email. At least once a month you will get information about what you are required to do in 2013 to stay in compliance with the Patient’s Protection and Affordable Care Act and avoid the new tax penalty.