How health care reform will affect you

thWe are rapidly approaching the 2014 start date of the new health care reform known as the Affordable Care Act (ACA) or Obamacare.  This unprecedented law will definitely create confusion.  To help answer the question of “How will health care reform affect me?”  Here are some ways that different segments of the population will be affected:

Men and Women under 26 Right now people cannot buy an individual policy from insurance companies.  This really limits the options they have when it comes to shopping around.  This will change in 2014 when people will be able to buy insurance from private companies or the exchange.  A big benefit of health care reform is that wellness expenses are covered at 100% by insurance (things like immunizations, vaccines, well baby checkups at 12 months, 2 years, etc.)

Adults 26 – 40 This group of people may experience the “rudest awakening” of any segment.  Why?  In laymans terms, the younger, healthy person will pay more to make insurance more affordable to the people who are sicker and older.  It will average the cost out so that “affordable” care is available to everyone.  This age group is more likely to go without coverage by choice, not seeing the need for coverage or wanting to pay the premiums.  These people will now be fined if they choose to continue without coverage.  This demographic will benefit the most from the tax credits and subsidies offered by the federal government to help reduce the added cost of health insurance.

Adults 41 – 55 This group may see little change in the cost, design, and structure of health insurance.  I expect pricing for this age group to remain pretty consistent compared to what it costs them now.  People who make $40,000 or less will benefit from tax credits and assistance from the federal government when they buy a qualified plan from an exchange.  The tax credits are available for a family of 4 who makes up to $90,000.

Adults 55 – 64 This section of the population may benefit the most from the health care reform.  Specifically, people with chronic and pre existing conditions will no longer be “rated up” for their conditions and will pay no more than 3x the cost of a 26 year old.  In this demographic, it is more common for someone to work solely for the health insurance offered by their employer.  This may change if a 60 year old with diabetes (who in 2013 would be declined by every insurance company that offers major medical coverage) can now go out to an “exchange” and purchase a policy for the same price as someone with no chronic conditions and have coverage begin right away.  People who do not have insurance because of medical conditions and costs will benefit greatly from the health care reform as they now have options to choose from.

Adults 65+ This group of Medicare eligible Americans won’t see the drastic change in the way that health care is purchased or sold.  What may happen are increases in premiums and out of pocket maximums on Medicare Advantage plans as these plans are funded by the Federal Government.  The overpayments to Medicare Advantage are being used to offer coverage under Obamacare.

Small Businesses This demographic is tricky.  On one hand, small employers (less than 100 employees) have a hard time shopping and securing coverage in the current market.  Think of it this way, each worker and their dependents are looked at individually to determine an employer’s risk factor.  This can be difficult for a small business owner to juggle along with the other roles necessary to run a business.  Because of the difficulty, some business owners do not offer coverage to employees.  If they already have coverage, a large claim (like an ER visit/hospital stay) can shoot up premiums for everyone in the group.  Now when they go to shop around, the group has a strike against them and can cause problems switching to another company to save money.  As the premiums go up, the owner is forced with the decision of absorbing the costs, passing them to the employees, or cutting benefits.  It makes for a very difficult process.

The healthcare reform sets out to help this issue by creating the Small Business Health Options Program or SHOP exchange.  I’ll talk about the SHOP program in detail later on.

Large Employers If you have health insurance from a large employer, you probably won’t see meaningful changes initially.  However, as employers learn how the rules of Obamacare, you will probably see some employers change the way the offer coverage.  For example, lets say that the average worker costs an employer (like Boeing) $12,000/year to insure.  Your employer might pay all, some, or none of this $12,000 depending on the situation.  If the employer decides not to provide insurance to its employees after 2014, they are fined $2,000 per employee per year.  Using simple math, it’s pretty easy to see how a large employer can benefit by dropping the group coverage, paying the $2,000 fine, and then giving each employee say $8,000/year to go buy their own coverage from an exchange.  If an employer has 200 employees, this saves them $400,000/year ($2,000/year savings x 200 employees).  Ultimately, this may end up being the new “normal” for people who work at large companies and may even be a good thing.  If $8,000 can buy you a better policy than what you presently have from your company, then it is a good deal for you too.

Employers with less than 100 employees will be able to use the SHOP exchange. This is the small business section of the “ObamaCare” health insurance exchange, which offers small businesses a large variety of Qualified Health Plans (QHPs) that allows employers and employees to choose insurance that meets their budgets.

 

SHOP Choices. The SHOP exchanges provide side-by-side comparisons of Qualified Health Plans, benefits, costs, and quality.
SHOP Employee Options. SHOPs allow small business employers to offer workers Qualified Health Plans from several insurers, just like larger employers.
SHOP Employer Control. Small Business employers control when they participate as well as their own level of contribution towards coverage. SHOPs allow you to make a single monthly payment via SHOP rather than to multiple plans.
SHOP Affordability. SHOP can save your business money by spreading insurers’ administrative costs across more employers. Small Businesses with may be eligible for tax credits and subsidies on the SHOP exchange as well.