Part 1 of this series addresses the basics of Obamacare- including the individual mandate, the creation of the health insurance marketplace, expansion of Medicaid and the guarantee of health insurance regardless of medical conditions. Read Obamacare Basics Part 1: What It Means for You.
This post describes the Obamacare individual health insurance options available to you beginning January 1, 2014- what they look like, how they’re structured and how that will affect you.
Important Point #1- all Obamacare individual health insurance options sold (for individuals and groups under 100) will be standardized
What does this mean?
Today, insurance companies pretty much have free rein (with the exception of a few mandated benefits) to offer a wide variety of deductibles, out of pocket maximums and services covered. Here’s an example:
ABC Company offers the following plan- you pay $500 deductible, then 20% of the next $5,o00 in medical expenses.
Here’s the math- .20 X $5,000 = $1,000. Add the $500 deductible and you’re responsible for $1,500 out of pocket. I call this the “worst-case scenario.” Note: Out of Pocket Amount/Maximum is a critically important important term used in Obamacare. Remember it, we’ll come back to it later.
XYZ Company offers this plan- you pay $2,500 deductible, then 40% of the next $8,000 in medical expenses.
Doing the math- .40 X $8,000 = $3,200. Add the $2,500 deductible and your out of pocket becomes $5,700.
As for variation in services covered, maternity is a great example. Many individual policies don’t automatically include it, but you can pay additional premium to include it as a covered benefit.
Keep in mind this standardization applies whether or not you purchase a plan in the Marketplace or outside of the Marketplace. As a reminder, the Marketplace exists to qualify people for “financial aid” to help pay the premium or reduce the out of pocket amount.
Important Point #2- Standardization will result in Four Obamacare Individual Health Insurance Options
These plans are quickly being nicknamed the “heavy metal plans.” Before you get excited and think a free Metallica or Anthrax concert is one of the benefits, it’s the plan names that helped earn the nickname of “heavy metal”- Bronze, Silver, Gold and Platinum.
So what’s the difference between these plans?
Each plan requires a different level of out-of-pocket from you. Did you keep that term tucked away? I told you it was very important to remember……..Here’s the levels for each plan:
- Bronze- 60%
- Silver- 70%
- Gold- 80%
- Platinum- 90%
The % determines your out of pocket maximum. For example, let’s say you need your appendix removed. That surgery costs $25,000. If you have a Gold-level plan, the insurance company will pay $20,000 (80%). You pay the remaining $5,000 (20%).
Just like it is today, the better your benefit, the more the premium. So, a Platinum plan will cost more than a Bronze plan. What that will be remains to be seen and I doubt we’ll see any premiums until the absolute last minute (which is September 30).
Important Point #3- Obamacare Health Insurance options for you in 2014
In the big picture, you’ll have 4 options for coverage.
- Through employer- there is significant potential for employers to drop coverage if the expense becomes unmanageable. Groups of 50 or more are required to offer coverage to eligible employees OR pay a penalty. Some employers, quite frankly, may decide the penalty is less money then the insurance premium. It could then become strictly a dollars and cents issue.
- Get an individual plan through the marketplace- only reason for buying here is to get tax credits to pay premium or reduce out of pocket. Eligibility for premium assistance is determined by your income as it relates to the Federal Poverty level. The law states these credits are available to those with incomes at 138-400% of Federal Poverty level. You can visit the Dept. of Health and Human Services to see a chart of the 2013 Federal Poverty Level based on number of people in the household.
- Get an individual plan outside of the marketplace
- Go uninsured (and pay a penalty)
Side note: Word on the street is that the application for the marketplace is 15 pages long. Off the marketplace is 1 page. If you can’t get financial aid , why would you put yourself through the agony of 15 pages versus 1? I sure as hell wouldn’t. Most folks hate insurance applications (yes, even me sometimes).
My agency, Alan Galvez Insurance, is a trusted resource for Ohio health insurance. We’ve helped lots of people- from explaining it to obtaining it. We guide people to options that work for them. You may not understand health insurance before you contact us, but we guarantee you will after. You can reach us at 937-592-4871 (800-375-8406) or drop me a line at firstname.lastname@example.org.