It is hard to believe but we are not all that far away from the end of 2013. With the end of the year approaching, you will be required to have health insurance coverage starting in the new year. With the full implementation of Obamacare nearing, there is still quite a bit of confusion on how insurance will be bought, sold, and how much it will cost. Here are five things you need to know to prepare for the changes next year in health insurance.
Where Will You Buy Health Insurance?
Insurance will be bought in the same places you are buying it now. It will be purchased through large employers, small employers, individual coverage, or public programs. The significant change in 2014 is that large employers will be required to offer coverage or pay a fine for not doing so.
Some of these large employers will begin offering coverage if they have not in the past. Others will elect to pay the fine because it is cheaper.
The good news for employees is that if your employer does not offer coverage, you will be eligible to purchase your own coverage on the health insurance exchange and will not have to worry about being turned down or sold a substandard policy.
My Employer is Not Offering Coverage – Where Can I Purchase Health Insurance?
If your employer has elected not to offer health insurance coverage, you will be able to buy coverage through the health insurance exchange. Policies will be standardized, much like Medicare supplemental insurance plans, which will make them very easy to compare from carrier to carrier. Massachusetts has already implemented a version of Obamacare and their exchange has functioned very well.
Only Four Factors Determine Pricing
And bad health is not one of those factors. I get questions about health insurance all of the time, but most of those questions revolve around the cost. Whereas the cost of health insurance coverage may have made it prohibitive for many people with pre-existing health conditions in the past, that will not be the case going forward. Premiums will be based on four factors:
- Age – The older you are, the higher the cost is going to be.
- Rating Area – People who live in high cost health areas (generally big cities like Philadelphia, New York, Los Angelos) will pay more than people who are living in lower cost health zones like small towns and rural areas.
- How Many People Are In Your Family – Pretty much a no-brainer there.
- Tobacco Use – Tobacco users will pay up to 1.5 times more for health insurance than non-tobacco users. This is still being debated and some states have made the decision that tobacco status will not be used in pricing.
Will My Health Insurance Costs Be Expensive?
I hear this debated a lot, and it really is all relevant to your situation and what you feel is “expensive”.
A broken bone with an accompanying trip to the emergency room can easily run $10,000. Being diagnosed with and treating cancer can be an expense well in excess of $1 million. So is $5000 a year worth it to potentially cover a $1 million expense?
If your income is less than 400% of the poverty level, you will receive assistance paying for your health insurance. At 138% of the poverty level, you are eligible for Medicaid.
An interesting provision in Obamacare is it will take into account how your state regulated insurance in the past. If your state had a good record of oversight and providing good coverage for its population, you will not see much of a change in premiums. However, if your state allowed cherry picking of healthy populations in the individual market, and you have individual insurance, you might see a significant increase in your premiums. Florida comes to mind.
When Do I Enroll in My Health Coverage?
For individual coverage, open enrollment will begin on October 1, 2013. It will be hard to miss as it will likely be advertised everywhere. You need to shop during this period. If you wait, and develop a serious illness, you will be on your own until the next enrollment period.
It is really not that far off until 2014 is here. Do not wait to educate yourself and ensure that you are covered for healthcare expenses.