5 Things You Need to Know about Individual Health Insurance in 2014 under ObamaCare
November 2012 Newsletter from Bruce Jugan
The Affordable Care Act (ACA), health care reform known as “ObamaCare,” kicks into high gear in 2014. If you buy your own medical insurance, read on for 5 things you need to know.
1. You MUST BUY health insurance – or pay a tax penalty.
- You’ll have to buy your own plan if you don’t get coverage through your employer. This is called the “individual mandate.” In the summer of 2012, the U.S. Supreme Court found it constitutional for the government to require everyone to buy health insurance. The high court determined that the individual mandate is a tax, so be prepared to either pay for health insurance or pay a tax penalty.
- You’ll be exempt from paying the tax if the cost of your health insurance coverage would be greater than 8 percent of your household income or you meet a few other criteria.
- Estimates are that 40 percent of Americans will be exempt from the penalty.
- In 2014, the penalty is only $95 per adult and $47.50 per child (up to $285 for a family) or 1 percent of family income, whichever is greater.
- Watch out: If you don’t buy coverage during the “open enrollment period” you may have a difficult time buying coverage when you need it.
2. You CAN BUY any health insurance plan you want. Insurance companies can’t decline you because of a pre-existing medical condition.
- This is called “guaranteed issue” and it is a HUGE deal. No matter what your medical condition you can get the same plan as everyone else and at the same price.
- The only things that can influence the price of your health plan in California are your age and where you live.
- California will have an “open enrollment period” every year when everyone must buy coverage. This prevents people from waiting until they get really sick or injured and buying coverage at the hospital or doctor’s office when they need medical treatment.
3. Your new policy will have much BETTER BENEFITS than the one you currently have.
- ACA requires every health insurance plan to have “essential benefits.” These essential benefits include coverage of both brand and generic prescription medicine, maternity care, low deductibles and comprehensive coverage in and out of the hospital.
- Gone will be the low-cost, low-benefit plans that are intended for catastrophic coverage and that are popular with people who buy their own medical insurance.
- Gone will be the adage that “some coverage is better than no coverage.” Under the ACA, the minimum available coverage is “comprehensive coverage.”
4. The monthly PRICE of an individual health insurance plan will likely INCREASE.
- Three forces will cause the monthly price of an individual plan to increase:
- No medical underwriting (see No. 2 above).
- Much better benefits (see No. 3 above).
- “Modified community rating,” which changes the way the cost of coverage is spread among the young and the old.
- While it is terrible for an insurance company to decline to cover people with pre-existing medical conditions, the reality is that “medical underwriting” allows those who are able to qualify for coverage to pay less. Eliminating underwriting will increase the cost for healthy people.
- The price of medical insurance in California today is lower than just about every other state because of medical underwriting. In 2014, the entire country will look like New York or Massachusetts, which outlawed underwriting years ago; health insurance plans there cost more than twice as much as in California.
5. You may receive a SUBSIDY to lower the cost of your plan.
- Single people who earn roughly between $15,400 and $46,000 per year will be eligible for a subsidy to lower the cost of their health insurance. Check out this health insurance subsidy calculator for a national perspective, or this ACA subsidy calculator for California.
- The subsidy amount is higher the less you earn and lower the more you earn. A single person who earns more than $46,000 per year in 2014 is not eligible for a subsidy and must pay the entire cost of her medical insurance.
- How the subsidy will work: Assume a health insurance plan costs $344 per month for a 30-year-old living in California. If that person earns $31,200 per year ($15.00 per hour) she must pay the insurance company $225.25 each month. The government will pay the insurance company $118.75 per month.
- People who earn less than $15,400 per year in 2014 will get their health insurance through Medi-Cal, California’s Medicaid program for low income people. This is a big change. Before 2014, a low wage worker with no children did not qualify for Medi-Cal yet he could not afford a health insurance plan. Now he will get Medi-Cal.
If the rules and regulations behind Obama Care sound complicated, that’s because they are. And that’s why we’re here. We’ve been advising clients for more than four decades. BenefitsCafe.com can help guide you through the process of finding a health insurance plan that makes sense for your needs and budget. Just give us a call at (800) 746-0045.