Here is an excerpt from my recent article on the Affordable Care Act. This excerpt focuses on the insurance mandate, exchanges and subsidies.
Workplace Health Insurance
About 50% of us get insurance through employers or the workplace. For those people, not much will change although they will benefit from caps on out-of-pocket expenses and certain free preventive care. (Note: Employers generally seem to be offering higher deductible plans which provide an incentive for consumers to be conscious of their health care spending. But that trend toward high deductible plans is unrelated to any provision of the Affordable Care Act.)
A bigger change down the road will be for companies with more than 50 employees who do not get insurance coverage now from their employer. As of 2015, the government will require these companies to cover full-time workers or pay a penalty. This provision is designed to get more employees covered. One controversy arises over whether this requirement will force employers to stay under the 50 employee threshold or offer less than full-time work to avoid paying for employee health insurance.
Smaller employers won’t face the same penalties for refusing to buy insurance but as an incentive, the government will set up special small business marketplaces to make it easier. Unlike now, insurance companies won’t be allowed to inflate prices for these small group plans if some employees are sick.
Purchasing Your Own Insurance – The Exchanges Open on October 1, 2013
In my view, one of the best things about the Affordable Care Act is that it will make health insurance available to millions of Americans who are now completely uninsured, and more affordable for the 14 million who buy their own coverage (because they are self-employed, a retiree under 65 or a part-time worker, for example). In our advocacy practice, we have seen first-hand the often devastating financial and medical outcomes when an uninsured person gets sick. If you purchase insurance through the exchanges between October 1 and December 15, you will be covered by January 1, 2014.
That being said, another controversy over the Affordable Care Act is precisely because there will be a mandate that everyone must be covered by some type of health insurance, whether through an employer, the Government (Medicaid, Medicare, the military) or through private purchase of insurance. Those who are choose to remain uninsured will pay a penalty.
At the centerpiece are the Health Care Exchanges or Marketplaces that are being set up in each state. There are 16 states plus the District of Columbia which decided to set up their own exchange. 34 states (generally with Republican governors and legislatures) chose not to set up an exchange and have defaulted to a Federal model. The remaining seven states will operate an exchange in partnership with the Federal Government. You can learn more about your own state here.
The marketplaces are designed to be a virtual insurance shopping mall with approved plans competing for business. The qualified plans that participate in the Exchanges will be required to offer a uniform minimum benefits package which would be offered at four levels of value (Bronze-Platinum), making comparisons across plans easier.
The essential health benefits in these uniform packages must include at least the following general services: ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health benefits and substance use disorder services, prescription drugs, rehabilitation services and devices, laboratory services, preventive and wellness services and chronic disease management, and pediatric services including oral and vision care.
Plans may offer catastrophic coverage that doesn’t meet one of the four levels of coverage, but only to enrollees under the age of 30 or those who would otherwise be exempt from the requirement to purchase coverage because the premium exceeds 8% of their income.
The National Patient Advocate Foundation has made a useful brochure on the marketplaces available here and you can learn more about shopping for coverage here.
You should note that insurance plans that existed before March 23, 2010, and have been “grandfathered” into the system may be exempt from some provisions. You can learn more here.
Premium subsidies and tax credits to make insurance more affordable
Federal subsidies in the form of premium tax credits to make the coverage more affordable will be available to consumers meeting income requirements. U.S. citizens and legal immigrants who purchase coverage in the new health insurance exchanges and who have income up to 400% of the federal poverty level ($43,320 for an individual or $88,200 for a family of four in 2009) will be eligible for Federal subsidies.
To be eligible for these tax credits, individuals must not be eligible for Government coverage – including Medicaid, the Children’s Health Insurance Program, Medicare, or military coverage – and must not have access to health insurance through an employer.
Cost-sharing subsidies that reduce a plan’s deductibles, co-payments and total out-of-pocket costs will be available to people with incomes up to 250 percent of the poverty level, or about $29,000.
You can use this subsidy calculator developed by the Kaiser Family Foundation to see what your costs may be. (There is an exception in cases when the employer plan does not cover at least 60 percent of covered benefits on average or the employee share of the premium exceeds 9.5% of the employee’s income.)
There will be insurance “navigators” available in each State to help individuals understand the marketplaces. However, the amount of help available depends on how actively and publicly the State is moving forward with ACA implementation. Some states have passed laws restricting navigators or other organizations from explaining the law to the public.
Good sources of information about the exchanges include a National Patient Advocate Foundation guide, the Department of Health and Human Services, and the Kaiser Family Foundation.