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
- 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.
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 13, 2016 and originally published September 27, 2013.