Obamacare gets blamed for many things. Much of the blame is well deserved. A good understanding of the laws of cause and effect could have prevented many of the problems we are about to experience.
However, Obamacare is not to be blamed for everything.
In this post I want to share some questions that I have recently been asked about Obamacare. Unfortunately, they do not get asked as often as they should. They show that, with less than 5 months to go before Obamacare’s official Open Enrollment, many Americans are still confused.
1. What effect could Obamacare have on personal life insurance?
None. While personal life insurance is still recommended for those who need to leave money to survivors in the event of their death, Obamacare only affects major medical, Medicare Advantage and Medicare D (Prescription Drug Plans) with private insurance companies.
Obama had nothing to do with the most recent major change that affects personal life insurance. The most recent change to personal life insurance was made by the National Association of Insurance Commissioners. They have implemented what is known as AG-38 (Actuarial Guideline # 38.)
The new regulation requires insurance companies to hold more money in reserves for policies that have a “secondary guarantee.” It will result in higher premiums for those people who purchase a Universal Life (UL) policy with a guaranteed death benefit after the first of this year.
2. Do Medicare patients need to buy additional health insurance under Obamacare?
The answer to this question is yes and no.
- NO – Medicare recipients are not mandated to buy anything else. Medicare B and Medicare D are still optional. As long as they have Medicare A they are exempt from Obamacare’s mandate for Americans to buy government approved health insurance.
- YES – From it is a wise thing to buy additional health insurance, in the form of Medigap, if you have elected to enroll in Medicare B. Talk about combining Medicare A & B and adding a cap to an enrollees liability exist in D.C. but they are just talk and rumors now. Until a significant change is made, Medicare B still requires people to pay 20% of their doctor’s bills and outpatient expenses. Since that potential liability could easily be thousands of dollars, it makes sense to get an insurance policy that would pay those bills for you.
3. Does Obamacare require supplement plans to accept all applicants regardless of pre-existing conditions?
NO – The requirement for health insurance companies to end the practice of medical underwriting applies only to Major Medical insurance. Health insurance companies can, and plan to, reject applicants who wait until they are already sick to get a supplement.
4. Will Obamacare offer Medicare supplements?
NO – Obamacare’s exchanges are for Americans who do not have access to group health insurance or a government program like Medicare. There will be no Medigap plans offered in the exchanges.
However, there is a chance for confusion this autumn. Medicare’s Annual Enrollment happens during the national Open Enrollment. Both start in October.
Although the exchanges will not offer Medigap, if you are enrolled in Medicare, you will still have your annual option to make changes to your Medicare Advantage or Medicare D (Prescription Drug Plan) until December 7.
5. What is Obamacare’s “Catastrophic” option?
The “Catastrophic” option is a plan designed specifically for “young invincibles.” The idea is that we older folk require the premiums that the younger folk pay in order to keep our health insurance premiums affordable.
However, with all the additional benefits that are expected to be in the 4 “Metal” plans, the premiums for young adults, age 19-29, are expected to be “out-of-sight.” Many fear that young adults will elect to just pay Obama’s “penalty” and remain uninsured.
The “Catastrophic” plan is supposed to be a compromise. It is supposed to have fewer benefits available for the first $6250 of medical costs. We have to wait until later this summer to learn all the details.
The anticipation is that the “Catastrophic” plan will have a 3 doctor office visit with co-pay benefit and a benefit for “Preventive Services.” All other health care bills will only be paid after a really large deductible has been satisfied.
Since it is supposed to be less expensive, at least some money will be collected from “young invincibles.” Young adults who suffer minor injuries or illness who have this plan will no doubt be financially hurt but at least they will get some help with major expenses.
6. How often do health insurance companies have to send refunds?
MLR refund checks are mailed out in August each year if one is required. Those checks are sent to the insured only if they have an individual/family policy.
If you get your health insurance at work, you will not get a refund check from your health insurance company. If a refund is due, the check is sent to your employer to use as he sees fit for your health care benefit. He can elect to refund that money to you or use it to offset the cost of future health insurance for the employees of the company.
When Obamacare first became law, the Medical Loss Ratio (MLR) was a huge expectation. That is the part of the law that requires health insurance companies to spend 80-85% of all the premiums they take in on health care bills or refund the difference or refund the difference.
After the first refund checks were sent out in August, 2012, Americans realized that MLR was a huge disappointment.
Most Americans got no refund checks at all. Those who did got way less than they expected. The national average refund check was around $157.
7. How will Obamacare affect Long Term Care insurance?
Obamacare does nothing to directly help Americans with Long Term Care expenses.
The portion of the PPACA that was supposed to establish and promote a voluntary national Long Term Care insurance program, Title VIII, was suspended by President Obama in December of 2011. It was eventually officially repealed in the “Tax Fairness Act of 2012.”
The creation of a voluntary national plan was replaced with a bi-partisan commission to study the problem of paying for Long Term Care as the Baby Boomer generation ages.
8. Are people on Medicare required to buy an Essential Benefit Plan through the new Health Insurance Exchanges?
NO – The text of the PPACA specifically exempts Medicare beneficiaries from the mandate for all Americans to buy a government approved “Essential Benefit Plan.”
In fact, based on what I have heard, those Americans who are over the age of 64 will not even be able to buy major medical insurance on the exchanges. (I will need to wait until the final information is available to see if they will be able to buy dental insurance through an exchange.)
9. Does the Medicaid expansion in Obamacare mean anything to me?
Unless your annual income is less than 130% of the Poverty Level, the Medicaid expansion means very little to you directly.
However, indirectly, it could mean something to you. Medicaid is the only government program that helps Americans with their Long Term Care bills.
If you live in a state that has accepted the Medicaid expansion, it is possible that your state will loosen the qualification requirements for you. If that happens, you will not have to “spend down” as much of your life’s savings to qualify for help with your Long Term Care bills I you have elected not to purchase some form of Long Term Care insurance.
With all the political spin mixed in with facts, I understand that it is easy to get confused about Obamacare. If you are not certain about something, use the form below to ask your question about Obamacare.