Story first appeared in USA TODAY.
Don't wait. But don't hurry, either.
the best approach to the new health insurance exchanges that are
scheduled to open for business Tuesday. Buying insurance is supposed to
be easier than ever once several provisions of the Affordable Care Act
take effect this fall. That doesn't mean the process is easy or should
be done speedily, however, experts say. That's especially true if
insurance shopping is new to you.
"Don't be hurried in buying a
plan," says Bryce Williams, managing director of global benefits
consulting firm Towers Watson Exchange Solutions. "There's no rush."
likens it to buying the first car off an assembly line: It may be best
to let the new exchanges — particularly the 31 run by the federal
government — iron all the kinks out. Federal exchanges may not be ready,
and there may be more and better information and "hand holding"
available after a few weeks. Besides, your insurance won't start until
Jan. 1, 2014, whether you sign up now or in December.
one of the more than 45 million people who lack health insurance, you
can begin the enrollment process Oct. 1, but you certainly don't have
to. The deadline to purchase (or face a penalty at tax time in 2015) is
March 31, 2014.
Every state has people called navigators who
received grants to help guide consumers through the process in an
unbiased way. Insurance companies are also increasingly pitching their
individual policies online and in stores, where agents are available to
help you figure out what plan is right for you — but they obviously have
a vested interest in your decision. A key benefit to the new online
exchanges is the ability to easily compare different plans — as you
might during online car shopping — without a pushy salesperson hovering.
Key steps in the process:
one. Check out the options on your state's exchange. Start at
HealthCare.gov, the federal government's portal, which will route you to
your state or allow you to create an account if the feds are running
your state's insurance marketplace. Plug in details about where you
live, what you earn and family size. If your income is low enough, you
may be alerted that you're eligible for Medicaid and told how to apply
•Step two. Determine if you are eligible for financial
help, which can come in the form of subsidies to offset the cost of
premiums, co-payments or deductibles.
Anyone under age 65
participating in the new state exchanges can get tax credits if their
incomes are between the poverty level and 400% of the poverty level. In
2014, that means families of four that make $24,000 to $94,000 per year
could get subsidies. Those who make 250% or less of the poverty level
can get even more financial help. The federal poverty level is now
$11,490 for an individual and $23,550 for a family of four.
three. Calculate what you've been spending for your uninsured health
care, including prescription drugs, doctor visits and any emergency room
or other hospital visits. Are there health concerns you've avoided
addressing that are likely to get worse, like that sore knee or
breathing condition? Medicines you should be taking but aren't? Are
there young athletes in the house?
•Step four. Spend time
pondering what type of plan is right for you, based on how much you can
afford to pay in premiums, co-payments and cost-sharing for procedures,
as well as what your medical needs are likely to be next year.
are grouped into coverage levels that are coined bronze, silver, gold
and platinum based on the percentage of out-of-pocket costs borne by the
consumer. Bronze plans cover the lowest percentage of expenses — 60% —
and have the lowest premiums. Silver plans cover 70%, gold pay 80% and
platinum plans cover 90% of out-of-pocket costs. Even policies that
appear affordable may not be if you have high deductibles, co-payments
or cost-sharing for procedures.
Could you afford to pay 40% of last year's medical bills — and almost everything out of pocket until a high deductible is met?
need to consider other factors when deciding among plans. Williams
recommends consumers stick with insurers that are "well entrenched" in
their area; not one you've never heard of before.
Bharucha, a health care strategist for consulting firm Kurt Salmon,
recommends calling providers you would consider if you had insurance and
ask whether they will be accepting patients in the policies you're
"A fair number will say they are full," says Bharucha, who advises physician groups and hospitals.
five. Decide whether it even makes sense financially for you to buy
insurance. For some people, paying the annual penalty, which starts at
$95 or 1% of income for the first year, may be the cheaper move.
(Unless, of course, your health takes a turn for the worse.) By 2016,
however, the annual penalty will be $695 or 2.5% of income.
exchange plans are set up so you will never have to pay more than 9.5%
of your salary for insurance. But the new law certainly doesn't mean
coverage will be cheap.
"It's still going to be expensive,
particularly for low-income people," says Andy Hyman, who directs the
health care coverage team at the Robert Wood Johnson Foundation. "There
is a financial burden, but it's far less today than what it was."
How the financial help works
the Affordable Care Act, there are two main types of subsidies to
reduce insurance costs and out-of-pocket costs of medical care: tax
credits and cost-sharing reductions. To lower your insurance costs, if
eligible, you can get subsidies to help pay for plans obtained in the
new state exchanges. You might also qualify to pay less out-of-pocket
for co-payments, co-insurance (that share of procedure costs you have to
pay) and deductibles.
The subsidy amount is
based primarily on income and number of family members. The tax credit
is calculated as the cost of a "benchmark" middle-range plan in your
area minus your required payment, a set percentage of your family
income. These benchmark plans are set as the second-lowest-cost "silver"
plans for a person of your age living in your area. Depending on how
much you make, you'll be expected to pay between 2% and 9.5% of your
income on monthly premiums. The difference between what you're expected
to pay and the cost of the premium is what the government will cover.
example, Kaiser Family Foundation says a 40-year-old who makes $30,000 a
year is expected to pay 8.37% of income in insurance, or $2,512 per
year. In this person's area, the estimated "benchmark" premium is $3,857
per year. So this person gets a tax credit of $3,857 minus $2,512, or
$1,345, the foundation says.
These tax credits are "advanceable,"
meaning that the savings are included in your monthly premiums. You pay
lower costs up front, rather than having to get reimbursed later.
Savings Account-qualified health plans define a general maximum amount
for out-of-pocket costs. Then, eligible people can get reductions in
their own maximum out-of-pocket expenses, which range from one-third to
two-thirds of this initial maximum, depending on income. Those with the
lowest incomes — at or below 250% of the poverty level — can also get
plans that cover a higher proportion of the cost of medical services.
murky? You'll see how much you can get in savings after you fill out an
application for the state exchanges starting Tuesday. But until then,
you can estimate your potential savings with the Kaiser Family
Foundation's subsidy calculator. This calculator takes into account
information about your income, family and tobacco use and gives you
estimates of how much you might receive in subsidies and how much you
might have to pay for premiums and out-of-pocket costs.
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