Personal Finance: New federal health care mandates kick in starting Oct. 1
09/22/2013 12:00 AM
10/08/2014 10:48 AM
Love it or hate it, the launch date for the country’s sweeping new health care mandates is just around the corner. In 10 days, the essential piece of the federal government’s Affordable Care Act kicks in, allowing everyone across the country to sign up for health care coverage.
Starting Oct. 1, you’ll need to make some choices, whether you’re currently covered at work, have been buying health insurance on your own, or never had it in the first place.
“We’re getting slammed” with inquiries, said Anne Gonzales, spokeswoman for Covered California, the state’s new health care exchange offering policies under the new law. “People are very focused on Oct. 1, but we’ve already been taking phone calls from consumers and people trying to get educated.”
Although health care policies can’t be purchased online until Oct. 1, “We encourage people to call in ahead of time,” said Gonzales, “so they can shop and compare. There’s no reason to wait.”
While there’s been much heated debate over the merits of affordable health care in the last four years, there are some definite positives. Among them: Everyone will be entitled to 10 “essential services” (see box) and you can’t be denied health care for pre-existing conditions, whether it’s diabetes, cancer, AIDS or anything else.
Whether it’ll be cheaper depends on your family circumstances and your health care needs.
“People who’ve been declined (for pre-existing conditions) all these years will be happy. But if you’re a family of four making $90,000 a year, you’re going to see a big increase,” said Carrie McLean, director of customer care at eHealthInsurance.com, an online health coverage comparison site.
That’s due to a combination of lower caps on what everyone has to pay out of pocket for medical expenses, as well as the mandated coverages required of all health care policies. To cover those costs, health care companies are raising rates on certain policies and premiums.
That’s why it pays, more than ever, to spend some time on your health care choices this fall. Here’s a look at some of the basics:
Covered at work
If your employer provides health care insurance, you’re already in the loop. No doubt you’ve been invited to company presentations, directed to websites or received information packets about changes in your company’s health care plan for 2014.
Open those packets; attend the meetings; go online to look at your options. During this year’s open enrollment, it’s more critical than ever.
Some companies are changing carriers, offering incentives or switching some benefits. Some are urging employees to consider health savings accounts, for instance. (More on that topic in a future column.) And unlike years past, where employees may have been automatically enrolled in a company’s health care plan, this year’s changes often mean you need to proactively take steps to ensure you’re enrolled. If you forget to sign up, you may be out of luck until 2015.
A recent MetLife study found that a majority of employees “are on autopilot” during open enrollment and don’t really scrutinize their health care choices, which could be especially risky this year. “Employee benefits are not ‘one size fits all,’” said Michael Fradkin, MetLife’s senior vice president for worksite benefits, in an email. To avoid “missing new coverage options and money being left on the table, we encourage all employees to take the time to closely evaluate all of their benefits options.”
If you’re confused or unclear about your choices, contact your company’s HR department for guidance.
Buying it yourself
If you’ve never had health care insurance, either because you were too young, had a pre-existing condition or your employer didn’t provide it, now’s your chance to get coverage and shop for the best rate.
Insurance on the exchanges comes in four levels: bronze, silver, gold and platinum. At the lowest level, bronze, your monthly premiums will be the cheapest, but you’ll pay more for doctor visits and co-pays. The plan will cover about 60 percent of your medical costs. At the higher gold and platinum levels, your premiums are higher but you’ll pay less when you see a doctor or buy a prescription. Those plans will cover 80 percent to 90 percent of your costs.
That’s where doing your online comparisons comes in. “Start playing around with the online computer to look at your coverage options,” said Gonzales. Using the “Shop and Compare” tool on the Covered California website, you type in your age, ZIP code, income and family size. You’ll instantly get a list of the companies offering plans in your county.
For instance, a single, 26-year-old male in the 95814 ZIP code making $25,000 a year could get a bronze-level plan for $75 to $84 a month. That’s with a federal subsidy of $126 a month. A family of four in the same ZIP code earning $80,000 a year could choose from four bronze plans priced at $386 to $417 a month, with a $332 subsidy.
You can purchase health insurance from any local or online broker, but you must go through Covered California if you want to apply for a federal subsidy.
When comparison shopping, have an idea what’s important in your health plan. Do you still want to see your same doctors? Will it cover the prescription drugs you take? How often do you see a physician; do you just need basic coverage? How much can you comfortably afford, both in monthly premiums and out-of-pocket expenses?
“It’s like car insurance. You can lower lower your premium, but if you get in a car accident, you want to be sure you’re covered,” said McLean. “We all hope we won’t get cancer and won’t need the insurance. But if you get seriously ill midyear and originally purchased a bronze level plan, you’ll hit your out of pocket quickly. And you won’t be able to change that until next open enrollment.”
To get personal help, you can call Covered California’s toll-free number or use its online LiveWebchat to speak with a health care insurance counselor in 13 languages. Covered California has hired hundreds of call-center staffers and is training 16,000 enrollment counselors who will be available through community organizations, county offices and nonprofits to help with health care sign-ups.
If you’ve been buying your own insurance on an individual plan, your premium rates will likely go up significantly as companies adjust their costs for mandatory coverages, said eHealthInsurance’s McLean.
But the good news is that for all Americans, out-of-pocket medical expenses will be capped. For a single person, the most you’ll have to pay from your own wallet for prescription drugs and medical care is $6,350. For a married couple with kids, the highest is $12,700. (In some cases, those caps have been delayed until 2015 to give insurers time to comply.)
Options for young adults
Adult children up to age 26 who are covered on a parent’s health care plan can remain so; the new enrollment season does not affect their status. But depending on what your employer charges for dependent premiums, it may be cheaper to have your son or daughter buy a single health insurance plan. It also can make sense if your child lives out of state and has to use costlier, out-of-network doctors and hospitals.
Young adults who don’t have coverage from Mom or Dad or from an employer can purchase individual plans. They’re also eligible for a special, limited category of health insurance called “catastrophic coverage.” Available to those 30 or younger, it doesn’t cover regular medical expenses, such as doctor’s visits, prescription drugs or even an ER visit. Instead, it’s designed to handle “excessive medical bills” that could come with a hospitalization or serious illness.
Compare the “catastrophic” price with the lowest-level bronze premiums to see if the savings are worth the limited coverage.
A little pain: penalties
If you don’t sign up for health care coverage? There are tax penalties, which phase in over three years. In 2014, the first-year penalty for not buying health insurance is 1 percent of annual income or $95 per adult, whichever is greater. The maximum penalty per family is $285.
By 2016, the penalty will be 2.5 percent of income or $695 per adult, with a maximum per family of $2,085. After that, it’s adjusted for inflation.
The penalty is based on the number of days or months you go without coverage after March 31.
Some are exempt from the new health care penalties: inmates, undocumented immigrants, American Indian tribal members and those with religious objections. Also exempted are low-income folks who don’t have a tax-filing requirement.
At least in the first year, it’s expected that many people will make the calculation that it’s worth gambling they won’t get sick. Some may decide they’d rather pay the $95 individual penalty than spend several hundred a month in health care premiums. But that calculation could change in future years as the penalties go up – and if they become seriously ill or hospitalized and are stuck with uncovered medical bills.
A little help: subsidies
To make mandatory health care coverage more affordable, the federal government is providing subsidies, either tax credits (to help cover premiums) or cost-sharing (to help cover out-of-pocket costs), or both. The only way to apply for a subsidy is through a state-sponsored exchange, like Covered California. Its website has a calculator that quickly determines, based on income, if you qualify. (It also determines if you qualify for Medi-Cal or Medicare.)
Generally, if you’re single and make up to $46,000 a year, you will qualify for assistance. For a family of four, you can make up to $90,000 and still qualify.
Note: In most cases, if you’re covered at work by your employer, you won’t qualify for a federal subsidy. The only exception is if your company’s annual health care premiums are more than 9.5 percent of your household income.
Take a breath
As bewildering as some of the choices may be, you don’t have to have everything wrapped up by Oct. 1. “Take a deep breath and know that you have some time to make a decision,” said eHealthInsurance’s McLean. “It’s new for California ... Give it some time. You don’t have to see and shop it all at once.”
You can also post questions about the new Affordable Care provisions to “ Ask Emily,” a new feature that appears weekly in The Sacramento Bee’s Business section. The advice is from Emily Bazar, writer with the California HealthCare Foundation’s Center for Health Reporting. Send your questions directly to her at: AskEmily@usc.edu.
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