I am working on a booklet for my subscribers and clients, now. This post, and those that follow, will be the basis for it. Ideally, I will be able to share some strategies for dealing with the changes to the health insurance system that go into effect on January 1, 2013.
However, before I feel comfortable sharing strategies that can be used with Obamacare’s Essential Benefit Plans, I feel compelled to share some background.
There has been much talk, from both political parties, over the Patient’s Protection and Affordable Care Act (PPACA). A great deal of it has been designed to cause Americans to either embrace or repulse the new law.
Unfortunately, extremists from both sides have chosen only those parts of the law that supports their belief system and ignored the parts of the law that do not.
The ultra-liberals believe that the 906 page law will solve the health-care crisis in America. The ultra-conservatives believe that the PPACA signals the end of our nation.
The truth is probably somewhere between the two extremes. There were many parts of the law that all stakeholders agreed was good for Americans. However, there were parts of the law that conservatives found reprehensible.
One of those problems with the PPACA that many Americans found reprehensible is called the, “Individual Mandate.”
Section 5000A of the PPACA requires every American to purchase one of 4 Essential Benefit Plans as determined by the Secretary of Health and Human Services.
(Since the Secretary of HHS is an appointed position and not elected, Americans have very little influence over her. The only way to fire her is to elect a different president. Whether it was congress’ intent or not, I am not in a position to say. What I do know is that the effect of the PPACA was to transfer part of the Legislature’s authority to make law to an unelected autocrat in the Executive Branch of government.)
In 2014 every American, unless they are specifically exempted, will be required to purchase one of 4 Essential Benefit Plans (EBP.) I will address the exempted individuals later.
The 4 basic EBPs are also known as “Metal” plans. The basic plans will be the basis of every American’s health insurance portfolio starting on January 1, 2014.
Below are brief definitions of the basic plans that you will be able to choose from. Each private insurance company that offers EBPs must include the 10 benefits that were outlined by congress in the PPACA plus any benefits that the Secretary of HHS determines should be offered to everyone.
Insurance companies are required to develop and price their policies within 2% points of the Actuarial Values below.
- BRONZE – The Bronze plans must provide coverage for 60% of anticipated medical bills.
- SILVER – The Silver plans must provide coverage for 70% of anticipated medical costs.
- GOLD – The Gold plans must provide coverage for 80% of anticipated medical costs.
- PLATINUM – The Platinum plans must provide coverage for 90% of anticipated medical costs.
You will be responsible to pay doctor and hospital bills that the plan you elect does not.
All of the “Metal” plans will have a “stop-loss” provision. That means that after you have paid a pre-determined amount out of your pocket, the insurance company will all of your medical bills for the rest of the year.
Private Medicare Advantage plans already have this provision but Original Medicare does not. People with Medicare are exempt from the Individual Mandate. I will talk about strategies that they can use later.
In other words, it makes no difference which plan you elect for a major disease, like cancer, that has huge medical bills. Regardless of which plan you elect, you are going to pay your “Maximum Out-of-Pocket.”
The major difference between the plans will be seen if you require minor hospitalization or out-patient treatment. The biggest difference you will see between EBPs will be in how fast you will reach your annual Maximum Out-of-Pocket level. A Bronze plan will require you to pay more in the event you suffer from a kidney stone than a Gold plan will.
IMPORTANT CONSIDERATIONS YOU MUST MAKE
You, and not an insurance agent, Navigator or government employee will need to determine if the extra premium is worth owing less money to a doctor or hospital for a routine medical procedure.
When you elect which of the 4 metal plans you purchase, you will need to consider not only premium. You will need to also consider how much of your health care bill you want your insurance to pay for mid-range health care.
Since all 4 plans have the same “Maximum-Out-Of-Pocket” limit, they will all pay your health care bills at 100% after you have paid the deductibles and co-insurance that are required. If you contract a disease that is very expensive to treat, like cancer, it will not make any difference which plan you have.
However, if you need to be hospitalized for something less expensive, because of an accident or illness, your choice is going to make a huge difference. A “Bronze” plan can leave you paying 40% of the hospital bill. A “Platinum” plan would only require you to pay 10% of the same bill.
When you make your election, you will need to balance the premium you pay with the benefits you would receive. Obviously, if you knew that you would not be the victim of an accident or illness in the next year, you would be able to buy the least expensive plan available.
Over the next few days I will offer some suggestions and advice for strategies that you can use to both be in compliance with Obamacare and provide the level of insurance protection you need for yourself and your family.