3 Facts You Should Know About Health Insurance Exchanges


PremiumYesterday, a reader from California asked, “How much will the, bronze, silver, gold and platinum. plans going to cost a person?”

I told this lady that while that is an excellent question, at this point in time it is impossible to answer.

The PPACA that was signed into law in 2010 by president Obama only built a skeleton.  The Legislative part of our government ceded the power to make rules and regulations to the Executive part of government.  Insurance companies are not able to provide final prices until the Department of Health and Human Services publishes its “Final Rules.”  That guidance is expected by the end of this month.

Although I am not able to share with you what the final premiums are I am able to share some information that you need to know as you prepare for 2014.

Use the form to ask your insurance question.
Use the form to ask your insurance question.

NOT EVERYONE MUST USE EXCHANGES

Most Americans will not need to use the health insurance exchanges.  People who get their health insurance through their employer or already have a government health insurance program, like Medicare are exempt.  Illegal aliens are also exempt from the Individual Mandate.

The exchanges must also be self-sustaining.  For example the Department of Health and Human Services has proposed a 3.5% premium sur-charge for every policy that is purchased through the exchange.

Those people who are not exempt are still not limited to buying insurance through the new exchanges.  Most plans that are offered through the new exchanges will also be available through your insurance broker.

The only ones who must use the exchanges are those people who want to claim the new federal tax subsidies.  Just be aware that the subsidies will not be available as people may think for all plans in the exchange.  There will be limitations and restrictions that people must meet before they qualify for government money.

The figures that are in the attached chart are estimates from the Kaiser Family Foundation.  They are used purely for illustration purposes.  The final premiums may be higher or lower than estimated.

“RATE SHOCK”

Although it is impossible to say now what the actual premiums will be, there is one thing that is certain.  The cost for health insurance is going to increase.

A new buzz-word has appeared in the “ivory towers” that are insurance company headquarters.  “Rate Shock” is the term that is being used to describe what Americans will pay for health insurance once all of the Obamacare mandates are calculated.

The PPACA requires that insurance companies spend at least 80% of the premium they gather on medical expenses.  What is often forgotten is that most states already have laws that require insurance companies to gather enough money to pay for all of the anticipated medical bills from their members.

Insurance companies are trapped between market pressure from the American public demanding lower premiums and politicians who have instituted laws that drive the price of health insurance up.

It is anticipated that health insurance premiums will increase 20-50%.  The most common estimate shows premiums increasing by 40% on January 1.

ENROLLMENT MODIFICATIONS

Originally, it was anticipated that the entire nation would need to enroll in a government approved Essential Health Benefit plan between October 1 and the end of 2013.

Apparently, changes have been made.  Once HHS saw the logistical problems they would have trying to enroll the entire population of the United States in just 3 months, modifications were made.

The Open Enrollment for everyone will be from October 15, 2013 – March 31,2014.  People who must enroll in a qualifying plan may do so during that time, regardless of their health.  This Open Enrollment is for both the uninsured and people who already have an individual health insurance policy.

Those people who already have an individual health insurance policy may have an additional option.  There is a proposal from HHS to allow people to remain exempt from the Individual Mandate until their policy anniversary in 2014.

That means that someone who has a current individual policy as of December 31, 2013 that renews in September may not have to enroll during the Open Enrollment period.  They may be able to wait until September of 2014 to change their coverage.

The bottom line is that every law-abiding American must have a qualifying Essential Health Benefit plan by the end of 2014 but their may be a delay available for some people.

This rule is only proposed at the time of this writing.  It is not official until the Final Rule is published by the Department of Health and Human Services.

As I learn more facts about the changes to health insurance that will be happening in 2013, I will be sharing them in my weekly email.  Click on the banner below to subscribe.

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