Earlier this week I was asked questions about covering a single child in her twenties. The father had recently gotten her an individual health plan on his own. He was not satisfied with his choice and called me for a professional opinion.
Unfortunately, by the time he called me she was already symptomatic of an unknown illness. I had to tell him that until the doctors were able to diagnose what was wrong with her, treat it and she was fully recovered, under current laws, she needed to keep her current plan, even though the premiums were outrageous.
The logic I used is that, while the plan he elected has very high premiums, they are nothing compared to the medical bills she would run up if she is diagnosed with something major. Since all insurance companies would either decline or rider anything that she was being treated or tested for, he has no choice but to keep her current plan until she is back to normal.
I was able to share with him that the laws change on January 1, 2014. At that time she can get coverage from any insurance company, regardless of her health. However, that is not the environment in which we live today.
In 2013, adults still need get health insurance while they are healthy. Those who do not are on their own when, and if, they need medical help.
Although I was not able to help him lower his monthly premium for her, his phone call got me thinking about the options for young adults. (His daughter is only a couple of years younger than my children. They will have the same options under Obamacare.)
In October of this year, all law-abiding Americans will be required to enroll in one of the Essential Benefit Plans that are approved by the federal government unless they are exempt for some reason. They are called the “Metal Plans” because of their names. The 4 standard EBPs will be called Bronze, Silver, Gold and Platinum plans.
WHO MUST ACT
If you get your health insurance at work, there is nothing that you need to do but pay the premium. If anyone needs to worry about EBP qualification, it is your employer and insurance company. They will make certain that you are in compliance with Obamacare’s Individual Mandate.
If you are receiving government health insurance benefits, like Medicare, Tricare, etc. you will be exempt from the requirements of Obamacare.
However, if you are required to buy your own health insurance, you will need to choose between one of 4 “Metal” plans during Open Enrollment. The Open Enrollment lasts from October 1, 2013 to March 31, 2014.
There is an unconfirmed rumor that those who already have health insurance may be allowed to delay enrollment in one of the EBPs until the anniversary of their policy in 2014 if it is later than March 31. However, I have not seen that rumor confirmed by anything official as of today.
If the rumor is true, it is likely that I will not be able to get confirmation until this summers training by the Department of Health and Human Services on the new Obamacare system.
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Estimations that I have gotten have premiums for young adults increasing by as much as 185% for coverage that starts in January. Already insurance companies are anticipating Obamacare requirements and have raised their 2013 premiums. They are expected to have a massive increase again in January 2014.
The insurance companies are warning Americans to prepare for “Rate Shock.” I am encouraging my clients to pay off as much debt as possible so that they will be able to afford the premiums that are coming.
YOUNG ADULT ALTERNATIVE
My conversation with this father reminded me of a little known alternative that will be available for young adults who are still in their 20s. They will have access to a 5th plan. It is called the “Catastrophic” plan.
The Catastrophic plan is expected to be less expensive than the 4 Metal plans. It will not be eligible for federal subsidies. (Right now the plan is to make the subsidies available only for those who elect the 2nd least expensive Silver option unless you qualify for an exception.)
I know very little about the Catastrophic plan other than what is in the PPACA. For some reason the Department of Health and Human Services has chosen not to say much about that option.
What I do know is that the Catastrophic option will only be available to those adults who are not yet 30. That plan will require them to pay for the first $5000 of their health care with the exception of Preventive Services and 3 doctor office visits.
I have not heard what percent of medical bills the Catastrophic option will pay after the $5000 deductible. Current IRS guidelines require insurance companies to pay 100% of any medical bills that exceed $5000. However, there is not a 100% option in the “Metal” plans.
I guess that until the Exchange Training later this summer, I will not know the details about the Catastrophic plan. Until then, I will only be able to tell parents and young adults that some sort of option will be available but I am unable to give them details now.