Whether you agree or disagree with the Affordable Care Act (more commonly known as Obamacare), one important provision of the Act will officially begin on October 1, 2013. As of that date, individuals may purchase insurance through the ACA’s Health Insurance Exchange (HIX).
Here’s a basic introduction to what you can expect through this new marketplace:
Pricing & Eligibility
Many people are suspicious of insurance because of long-standing practices throughout the industry — such as denying insurance to those with pre-existing conditions, assigning higher prices to individuals like the elderly and women of child-bearing age, refusing claims based on pre-existing conditions, and placing annual and lifetime spending limits on health care.
The ACA, however, has put several rules in effect to prevent these sorts of practices among insurers offering policies in the HIX. For instance, no one purchasing health insurance through the Exchange can be denied coverage because of a pre-existing condition.
In addition, there are now limits on price variations for coverage, which means that insurers can’t make policies prohibitively expensive for certain groups. Price adjustments based on age may not exceed a ratio of 3:1, so a 64-year-old can’t pay more than three times the amount a healthy 21-year-old would pay. Also, smokers may not pay more than 1.5 times the amount that non-smokers pay.
The ACA also outlaws refusal of claims to existing beneficiaries based on pre-existing conditions. And starting in 2014, there will be no annual or lifetime spending limits on plans offered through the HIX.
The Tier System of Coverage
Through the HIX, insurance shoppers will have their choice of four different “tiers” of coverage: bronze, silver, gold, and platinum. Each tier offers a different actuarial value — that is, the percentage of costs that will be paid for by the insurer and not the patient. The lower the actuarial value, the cheaper your premiums will be.
Bronze is the cheapest tier, because the insurer is only responsible for 60% of health care costs. Silver is the next tier up (and the base tier for subsidies, which I discuss below). In the silver tier, the insurer is responsible for 70% of costs. Gold policies cover 80% of costs, and platinum policies cover 90%.
While you’ll pay less for policies with lower actuarial values, you’ll have to pay more out-of-pocket for any health care that you receive. But, according to Obama Care Facts, policies on all tiers will have to offer the following bare minimum benefits:
1. Ambulatory patient services
2. Emergency services
4. Maternity and newborn care
5. Mental health and substance use disorder services, including behavioral health treatment
6. Prescription drugs
7. Rehabilitative and habilitative services and devices
8. Laboratory services
9. Preventive and wellness services and chronic disease management
10. Pediatric services, including oral and vision care
The Subsidy Program
For anyone who makes between 133% and 400% of the federal poverty level (which corresponds to incomes between $31,322 and $94,200 for a family of four), there will be subsidies offered.
These will ensure that lower-income families and individuals don’t have to pay more than a certain percentage (between 3% and 9.5%) of their income toward basic health-care premiums.
The subsidy program is based upon the silver-level of health insurance premiums, which means you get the same amount of subsidy money whether you choose a cheaper bronze-level policy, or a more expensive gold- or platinum-level policy.
Subsidies are paid directly to the insurer, so individuals purchasing insurance through the HIX won’t have to pay the full amount and then wait for reimbursement.
If you’d like to find out if you’ll qualify for a subsidy, the Kaiser Family Foundation offers a subsidy calculator.
The Bottom Line
For those who are currently uninsured, it’s a good idea to explore the available health care options for the upcoming HIX open enrollment. Enrolling in a basic medical plan through HIX may be a less expensive option than you anticipate.
Are you planning on purchasing insurance through the HIX?