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How the Affordable Care Act (Obamacare) Will Affect My Insurance

This article was written by in Featured, Insurance. 11 comments.


In just a few days, one of the major provisions of the Affordable Care Act will go into effect. The health insurance marketplace will open. The public discussion about this marketplace and about Obamacare overall is full of partisan politics, so it’s difficult to see beyond the rhetoric and get an idea of what this new marketplace really means.

The health insurance marketplace is a way for American citizens, who may not be able to get or afford health insurance through the traditional channels, to select a plan for health coverage. Those traditional channels include insurance through an employer, which is usually subsidized by that employer, or directly from an insurance company, such as through individual health insurance.

The law calls for states to set up their own insurance marketplaces, but the federal government is providing a marketplace for residents in states whose governments choose not to organize their own marketplace. The state in which I live, New Jersey, is one of these states in which citizens will use the federal marketplace.

If you have health insurance through your work, the marketplaces (or exchanges) won’t affect you, but other portions of the Affordable Care Act might as I’ll explain. Getting subsidized health insurance through an employer is still going to be the best option for the majority of middle-class or above, full-time employees.

I don’t have health insurance from an employer. I have coverage through COBRA, and I would qualify for continuing that coverage through January 2014, but I may not want to, now that I have more options. With COBRA, I have the same plan I had while I was an employee, but my premiums are no longer subsidized by my employer. In fact, I’m sure my premium includes a fee that gives the third-party COBRA administration company a reason to exist when this layer may not provide any additional benefit to anyone.

Until October 1, my only option than COBRA would be to buy individual insurance directly from an insurance company. After October 1, I can begin shopping on the federal health insurance marketplace, to choose a plan with the coverage that I want, and the monthly premium may be a better deal. The prices and plan details won’t be publicly available until October 1. If there’s a more affordable option than COBRA that meets my coverage needs, I’ll take it.

Why employees may have to select a new plan

Aside from the new marketplaces, the Affordable Care Act requires that all health insurance plans comply with new rules for coverage. The way some insurance companies seem to be handling the requirement is by informing policyholders they must choose a new health care plan for next year. You may have received a letter from your insurance company informing of the need to select a new plan, particularly if you have health insurance through your employer. If you haven’t received this notification, chances are good you know someone who has.

The new plans offered for next year will include at the least the baseline provisions called for by the Affordable Care Act. Policyholders with plans who do not meet that standard will need to select or confirm new coverage for 2014. Some of those baseline provisions include:

  • Outpatient and emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health disorders
  • Preventative care without co-payment
  • Screenings and immunizations for children

Qualifying for discounts

Many people in the United States will qualify for a discount if they choose a health insurance plan through the marketplace. With household income below a certain level, some Americans will qualify for lower monthly premiums, lower copayments, lower coinsurance, and lower deductibles. This income limit for discounted premiums starts at $28,725 for an individual and increases to $99,075 for a family of eight.

Plan categories: bronze, silver, gold, and platinum

The new plans will be categorized as bronze, silver, gold, and platinum. Each level indicates a different balance between premium costs — the monthly fee for coverage — and out-of-pocket costs. In general, if you expect to visit the doctor less, you can choose a plan with lower premiums and higher out-of-pocket costs, but your future medical needs can be difficult to predict sometimes. The marketplace also includes “catastrophic” plans, which have very low premiums. These are often the same decisions employees have made for years when choosing health insurance plans; these new categories can help organize and compare the options.

Medicaid and CHIP

Medicaid is still an available option for health insurance, as is the Children’s Health Insurance Program (CHIP). If you can’t afford coverage from the health insurance marketplace, you or your family may qualify for Medicaid, or your children might qualify for CHIP. If you can afford health insurance but choose not to be covered, a new line on income tax forms will calculate a fee that starts at 1 percent of income, and that fee will be added to the tax you owe, but those who cannot afford health insurance will not be charged this fee, up to $695. That’s less than the cost of health insurance, but opting for health insurance if you can afford it is always a better choice.

In many states, Medicaid is expanding, so more people will be covered under this provision, and for those who do, it will cost less money than buying an insurance plan from the exchanges.

Estimated costs

The Kaiser Family Foundation offers a calculator that helps you determine how much you might pay for a Silver health insurance plan from the exchange in your state (or the federal exchange). According to the calculator here, my premium will be $3,668, or $306 a month. That’s less than half of what I pay for COBRA for good coverage, and about half of what I used to pay for a bare-boned health insurance plan I selected directly from an insurance company as individual insurance.

If you don’t have a health insurance plan through your employer and believe you might be interested in buying health insurance from the exchange, take a look at the calculator and estimate your monthly premium. If you do have health insurance through your employer, you probably won’t need to look at health insurance through the exchange.

Signing up for new health insurance

If you are an employee, you might have some new choices during your open enrollment period this year as insurance companies reformulate their plans to comply with the new law. But for those without with employer-subsidized health insurance options, the marketplaces will open online on October 1. (Owners of small businesses who are shopping for health insurance for their companies can start shopping offline on October 1 but the online shopping won’t be enabled until November 1.) This will give shoppers almost three months to select a plan before they go into effect on January 1, 2014, though open enrollment will continue for three months into 2014.

States have not been very forthcoming with information for their citizens about how to enroll in these health insurance plans. In some cases, it seems like government agencies at the state level are deliberately confusing residents in an effort to make this process more difficult. The process is really easy, though, particularly for those with access to the Internet.

  • Visit HealthCare.gov, the federal government’s health care website.
  • Answer a few questions about your residence and status.
  • The website will tell you where to browse to next to see your health insurance options. For example, since New Jersey doesn’t have a state marketplace, I shop right on HealthCare.gov.

The chance of Obamacare failing

The Republicans in Congress are looking to block the provisions of the Affordable Care Act, and seem to be willing to shut down the government in order to make their case. These tactics historically don’t work. Obamacare will go into effect. This is the plan that insurance companies wanted. Unlike a single-payer health care system, the system created by the Affordable Care Act keeps the insurance companies in business and not only keeps industry jobs in place but presents an opportunity for more jobs in insurance as well as health care.

One threat to Obamacare is defunding. The political tactic involved comes from the desire to see ideas put forth by the other party fail, and one way to do that is to put a system into effect while removing the government funding that is necessary for the system to succeed. The result is that one side gets to say, “I told you so,” even if the failure is due to defunding and not due to a systemic problem.

Regardless, with a group as powerful as health insurance companies behind Obamacare, defunding probably isn’t a major concern in the long run, and the health insurance marketplaces will likely live on in some form in perpetuity. Defunding will have an effect on lower-income families that qualify for and rely on the discounted insurance plans.

What are your expectations for the new health insurance marketplaces?

Updated April 23, 2014 and originally published September 27, 2013. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 11 comments… read them below or add one }

avatar jim

As far as the discounts there are two different things. There are tax credits to help people pay for insurance if you’re under 400% of the poverty line. Plus if you’re under 250% of the poverty line then you can get discounts. You hear more about the tax credits rather than the discounts but they both exist and are actually seperate deals.

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avatar mateo

Thanks for summarizing. Up until now, my wife has been basically un-insurable due to multiple pre-existing conditions, that are completely under control BTW. Luckily, I have had employer coverage throughout this time or had COBRA. Otherwise, she would have been out of luck.

You said “I would qualify for continuing that coverage through January 2013″, but I assume you mean 2014.

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avatar Luke Landes ♦127,475 (Platinum)

Glad to hear your wife’s issues are under control. And yes — I did mean 2014.

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avatar DonnaFreedman ♦75 (Newbie)

Alaska doesn’t have a marketplace, either. I’ve gotten a letter from my current insurer saying that I need to choose a new plan because the old one will be kaput after Dec. 31.
Here’s the thing: It will cost twice as much as my current one. I’m going shopping….

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avatar wylerassociate ♦162 (Cent)

My company has moved employees from a PPO health insurance plan to a Health Savings Account where the company will contribute a set amount but the employee has to put their own money . That is less money used for paying down debt, saving for an emergency fund or investing in the stock market. That is the first impact of the ACA, I do want to see what happens going forward.

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avatar Kostas

Personally, I feel like this is a good thing in the long run. Those who are under-served are getting better access to healthcare.

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avatar Ian

Flexo,it would be interesting to see a comparison of your current health insurance plan, premium, deductibles, and compare it to your state’s individual health insurance plan(s). Then, compare to the new obamacare plans that are offered from the federal exchanges avail Oct.1st. Health insurance premiums for individual HMO plan with Rx plan is ridiculously high in nj; it’s like $610 per month, so it’ll be interesting what the federal obamacare plans are.

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avatar FI Pilgrim

My company doesn’t have any plan to drop their group coverage, so no subsidies available for me.

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avatar Anne

I haven’t been able to get the exchange to load for me yet, but looking at ehealthinsurance rates, and this is NOT going to be affordable for our family. Seems like individual rates are doable, but a family of 5? Premiums of $800-$1600/month depending on which high deductible we choose. No way.

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avatar Jeff

I didn’t see anything mentioned about what will most likely be a viable alternative to obtaining health insurance period. Individuals seemingly may be able to choose the penalty method. In doing so, they pay the annual tax on their 1040, and stay uninsured. If incurring some sort of chronic ailment, they could then sign up for their insurance (pre-existing conditions don’t matter). Depending on annual penalty incurred vs. the annual cost of insurance after subsidies, lots of folks may find that it makes good sense for them to simply take the penalty, as of now at least.

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avatar DonnaFreedman ♦75 (Newbie)

But if you’re hit by a bus and you’re uninsured, you can’t get retroactive coverage to help defray the thousands (perhaps tens of thousands) you’ll spend on hospital care.
As for “incurring a chronic illness,” you also ought to think about illnesses/injuries that strike out of the blue. Let me tell you about my daughter, a hale and hearty 19-year-old college student who caught a virus (probably from her roommate). A week later she was 99% paralyzed and on life support due to Guillain-Barre syndrome, and remained hospitalized for months. She also needed therapy to re-learn how to walk, talk and button her own shirts.
If not for insurance, my then-husband and I would have been bankrupt.
Admittedly this was a rare occurrence. But if you needed even a simple appendectomy, here’s hoping you banked what you would have been paying out in insurance premiums — and here’s hoping it would be enough. I had outpatient gall bladder surgery last year and it was more than ten grand.

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