Two groups that will benefit the most from Health Care reform

Here are 2 demographics that may benefit the most when health care reform kicks off January 1st 2014:

Pre 65 retiree – This group of people will have opportunities to shop around without fear of their pre existing conditions causing exorbitant prices or excluding them outright from coverage.  There are a number of people ages 55 – 64 who are financially ready to retire but unable to do so because of their health.  These people are tied to their employer who provides them (and spouses) health insurance.  Starting January 1st, 2014, people will be able to enroll into health insurance without worrying about pre existing conditions.  You can choose a plan that fits your needs and it will cover you immediately.

This age group will also benefit because rates that insurers charge can only be 3x the cost from age 26 to age 64.  This means that a comparable plan that costs a 26 year old $150/month can only cost a 64 year old $450 ($150 x 3.)  This rule was put in force to protect people from being discriminated against based on their age and ultimately means that a younger person will pay more and an older person pay less as pricing is moved to the middle.

Small businesses with less than 50 employees

Many small businesses do not offer health insurance because of the cost and complexity of plans.  The health care reform can help a small business owner in a few ways.

If they offer benefits they will have a dedicated exchange (which is a fancy term for a website) to buy small group policies. These are called Small Business Health Options Programs, or SHOPs, for short. The individual and SHOP exchanges may be separate or combined.  In theory, SHOPs will simplify the quoting process and make an apples to apples comparison easier.

Tax credits will be provided for employers with 25 or fewer employees with an average wage of less than $50,000 a year who offer coverage through an exchange. The credit will cover up to 50% of the employer’s cost (35% for small nonprofit organizations.)

Another likely scenario is that small businesses will provide a set dollar amount (say $100/month) that is benchmarked for health insurance and then let individuals purchase plans on their own.  In this route, individuals and families who fall under the subsidy guidelines (133% to 400% of federal poverty level, $15,282 to $45,960 for an individual or $31,322 to $94,200 for a family of four) can then take their employer credit of $100/month and apply that to the subsidy help they receive from the federal government.  I see this being advantageous for businesses that provide minimum wage jobs as the employee gets a double benefit from the employer and subsidy from the government.

If employees have income above the subsidy limits, they simply can purchase a policy from a broker in the same manner health insurance is sold currently (except there are no worries about pre existing conditions in 2014.)