Between now and the first of next year, every American will need to have government approved health insurance or pay a “Shared Responsibility Payment” (formerly known as a penalty.)
People who get health insurance at work will not be burdened (this year) with the decision process. The decision on what type of health insurance you will have will be made by your employer when your current group plan renews in 2014.
If you are enrolled in Medicare, Medicaid or another of the government health insurance programs, you will also not need to do anything.
However, if you are responsible for your own health insurance, you will need to make a decision between now and January 1.
At The Insurance Barn, we have developed 3 strategies that will help you to deal with Obamacare’s Essential Benefit Plans.
Before you pick which strategy you want to use, take the time to ask yourself these basic questions about Obamacare.
Obamacare’s Individual Mandate requires almost every American, regardless of their economic status, to have government approved health insurance.
The new health insurance exchanges (HIX) that have gotten so much attention by the press is only one of many places from which Americans are able to get a Qualifying Health Plan (QHP.)
If you are over age 65 you get Medicare. If you are military, you are eligible for Tricare. If your employer provides group health insurance, you will get your QHP at work. If your household income is less than the Federal Poverty Level (FPL) you will most likely qualify for Medicaid in your state.
The HIX marketplaces are for those who have household incomes of more than the FPL but less than 400% of the FPL. They will qualify for the “subsidies” that you have heard so much about.
The “subsidies” are not necessarily a bad thing. Just remember to do your home-work before you take a tax-credit. The “subsidies” are designed to help those with lower household incomes.
The amount of tax-credit you get is on a sliding scale. The greater your household income is in 2014, the less your “subsidy” will be.
For example, those who only earn a fraction above the FPL may get as much as 93% of their health insurance premium paid by the government. If your household income is closer to 400% of FPL you may get as little as 13% of the cost of your health insurance paid by the federal government.
If you are responsible to get your own health insurance should you buy a QHP now or wait until later in the year?
If you are able to pass medical underwriting and have no need for maternity or substance abuse coverage, my advice is for you to secure health insurance now outside of the HIX.
It is true that premiums for QHP are high. However, they are not as high as they are anticipated to be on the HIX. (On the off-chance that the speculation I have heard is wrong and plans on the HIX are less expensive than planned, you will have the freedom to cancel whatever plan you bought outside of the HIX and exchange it for the less expensive plan that is inside the HIX.)
If you secure a QHP with a 2013 effective date, or earlier, you are allowed to keep it until it renews in 2014. Several insurance companies in Texas, have made arrangements to change the renewal on all their plans to midnight on December 31, 2014.
The result is that if you have one of these plans, you are able to delay getting a government approved Essential Benefit Plan until January 1, 2015.
Just remember that if you elect this option, you need to purchase a QHP outside of the exchange to be effective in 2013. If you are putting this off, you are running out of time.
By the end of 2014, all Americans will be required to have one of 4 Essential Benefit Plans if they are not exempt from the law. One of the questions you will need to ask yourself, either this year or next is, “which plan do I want?”
In order to help you make your decision, the politicians in D.C. have named your 4 options after precious metals. Each plan has a corresponding relationship to the others just like each metal is more valuable than the ones that come before it.
- BRONZE PLANS are expected to be the least expensive but only cover 60% of the Actuarial Value (AV) of health care.
- SILVER PLANS are the only plans that will receive federal tax-credits. At 70% AV, they are expected to be more expensive than Bronze plans before tax-credits are applied
- GOLD PLANS will be similar to the most popular health insurance plans that exist today. Gold plans will cover 80% AV.
- PLATINUM PLANS will be the most expensive plans available. They will cover 90% AV. Many companies who offer Bronze and Silver plans on the HIX have elected not to offer Platinum plans.
Another question that you will need to ask yourself is, “do I want to even claim a tax-credit?”
The politicians are quick to tell Americans that they do not need to be concerned about the high health insurance premiums since the federal government is going to provide “subsidies” to help people pay.
What they are not saying is that the “subsidies” are limited.
- The “subsidies” are actually credits against a future income tax. If you claim one and earn more in 2014 than you anticipated, you could find yourself having problems with the I.R.S.
- The “subsidies” are only available to certain people. In order to claim a “subsidy” your household income must be below 400% of the Federal Poverty Level (FPL).
- The “subsidies” are on a sliding scale. The less your household income is, the more your “subsidy” will be, and vice-versa. The closer your household income is to 400% of FPL the less you will get.
Some Americans have no health insurance, have pre-existing health conditions, need maternity or substance abuse coverage.
They will be able to buy approved Essential Benefit Plans either inside or outside of the HIX starting on October 1, 2013 for coverage to start on January 1, 2014.
The plans will be identical. The only decisions you will have to make will be which insurance company you want to use.
It would be nice if I was able to offer a logical explanation as to why all of this health insurance crap is happening. Unfortunately, I cannot.
When candidate Obama declared a “health care crisis” he raised awareness of the plight of millions of uninsured, poor Americans.
I do not know how long after the election results were tabulated in November, 2008 things changed but it is obvious that something changed. Rather than being concerned about the health care of all Americans, the “Health Care Reform” debates of 2009-2010 became the most partisan and divisive era in American history, with the only possible exceptions being the American Civil War and Prohibition.
The resulting law is called the Patients Protection and Affordable Care Act. It is also called the Affordable Care Act by its supporters and Obamacare by its detractors.
Whatever you call it is meaningless. The one thing that is certain is that the law is less about providing affordable health care to all Americans than it is buying the votes of lower-income Americans by giving them access to health insurance.
You have to accept the changes to your health insurance so that some politician, in D.C. can keep his/her political ambitions alive.