The Affordable Care Act – Considerations for the Consumer

It seems that you can’t turn on the news or walk down the street without hearing something about The Affordable Care Act, also known as “Obamacare.” Eric Clark’s blog from July 16th addressed The Affordable Care Act from the standpoint of small business owners. This week, I will break down some of the key issues that you, as a consumer, should know and understand as some of these changes begin to be implemented later this fall.

1.  Where will individuals and families obtain their health insurance coverage?

You can still obtain coverage through your employer, individually, or through government programs, such as Medicare and Medicaid. If you are not already covered under a health insurance plan, you can purchase insurance through the Health Insurance Marketplace, also known as the health insurance “exchange,” beginning October 1, 2013.

The Health Insurance Marketplace (or Exchange) is administered by either your state or the federal government and provides one location to compare plans and enroll easily. Visit healthcare.gov to learn more about the Health Insurance Marketplace and see the details for your state.

2.  Is it true that pre-existing conditions are not a consideration for coverage under The Affordable Care Act?

Yes. Gone are the days of having health insurance coverage denied due to bad health or pre-existing conditions. The price of insurance will be based on four factors – age, rating area (where you live), number of people in your family, and tobacco use.

The Affordable Care Act’s goal is to increase the number of people covered by health insurance. By doing so, the number of “healthy” individuals that are covered increases, thereby spreading out the “risk” to insurance companies. This allows the formerly uninsurable individuals to obtain reasonably priced coverage, where it may not have been obtainable in the past.

3. There is a specific window of time when you can shop for individual health insurance. If you’re not already covered, don’t miss it!

The Health Insurance Marketplace open enrollment starts October 1, 2013 and ends March 31, 2014 for individual coverage. Any coverage purchased during this enrollment period can begin as soon as January 1, 2014.

Some people mistakenly believe they can wait until they become sick to purchase health insurance, because pre-existing conditions are no longer an issue. However, if you become sick or have a catastrophic health event outside of the open enrollment window, you will not be eligible to obtain coverage until the following open enrollment period.

A substantial, unexpected health issue could be detrimental to your portfolio if you are not covered. Remember, part of having a successful financial plan means protecting your assets by mitigating outside risks. Don’t miss the deadline because you think you are healthy and don’t need insurance.

4.  Will your employer eliminate group health insurance benefits for employees?

This is yet to be seen. Beginning in 2015, employers with more than 50 employees will be required to either provide coverage to employees or pay a penalty. Individuals have started to wonder if employers will get rid of group health insurance coverage altogether, because in some cases, the penalty could be less than paying for insurance coverage for everyone. While this will be a decision made on a company-by-company basis, it is anticipated that most employers will retain their health coverage for employees as part of their total benefit package. Companies want to retain loyal staff members, and offering health insurance benefits is one way to keep employees happy and content in the workplace.

5.     Individual health Insurance is expensive. Is it possible to get assistance?

Yes. Individuals who purchase individual health coverage through the exchanges may qualify for government subsidies depending on their income level and family size. The law offers a premium tax credit on a sliding scale for individuals with incomes up to 400% of the federal poverty level, which is $45,960 for an individual in 2013. An individual’s eligibility for government subsidies will be determined when applying for coverage through the exchange. If you would like to know what type of financial assistance you may be eligible for before applying for coverage, you may want to try Kaiser Foundation’s Subsidy Calculator.

 

This is by no means an exhaustive list of changes for The Affordable Care Act. As the open enrollment period is quickly approaching, you should begin researching now if you need to obtain individual health insurance coverage. Visit healthcare.gov to learn more, and as always we encourage you to consult with a professional before making any changes to your situation.

About the author

Megan Rindskopf, CFP®

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