Given all of the rhetoric about the Obama administration’s health care law,
it’s not surprising that many consumers are confused about how the new insurance
exchanges will actually work. Some states that oppose the law have gone as far
as intentionally
limiting the information that trickles out to its residents.
But after much anticipation, the curtain will finally rise on the exchanges
next week, providing millions of consumers with an online marketplace to compare
health insurance plans and then buy the coverage on the spot.
The exchanges are likely to be most attractive to people who qualify for
subsidized coverage. Individuals with low and moderate incomes may be eligible
for a tax credit, which can be used right away, like a gift card, to reduce
their monthly premiums. People with pre-existing conditions will no longer be
denied coverage or charged more (this applies to most plans outside the
exchanges, too). And all of the plans on the exchanges will be required to cover
a list of essential services, from maternity care to mental health care.
“In today’s individual market, it’s like Swiss cheese coverage,” said Sarah
Dash, a research fellow at the Health Policy Institute at Georgetown University.
“Consumers should have an easier time figuring out what they are getting for
their money.”
But it’s still going to take some time to analyze the plans and their costs,
which are expected to vary widely across the states. And the coverage may still
pinch many families’ budgets. Fortunately, there’s a six-month window, from now
to March 31, for people to figure it all out.
Here’s some information to get you started:
Q. Where can I apply or get more information on the exchanges?
A. To
avoid fraud artists, enter through the front door:
Healthcare.gov. From there, you can find links to the exchange
offered in your state. There may be technical glitches as the program gets
started, so alternatively, you can call 1-800-318-2596.
Q . When does coverage go into effect?
A. You can apply as early as Oct. 1, but coverage won’t
begin until Jan. 1. The enrollment period for coverage in 2014 closes on March
31, 2014. After that, you can enroll only if you have a major life event like a
job loss, birth, marriage or divorce.
Q. What sort of coverage will be offered?
A. All plans will have to provide the same set of
essential benefits, including prescriptions, preventive care,
doctor visits, emergency services and hospitalization (this also applies to most
individual and small-employer group plans sold outside of the exchanges). But
plans can offer additional benefits, or different numbers of services like
physical therapy, so you’ll need to do a side-by-side comparison to see what
fits your needs — or at least the needs you can anticipate.
Q. Are the plans sold on the exchange more comprehensive
than plans outside?
A. There are four plan levels, each named for a precious
metal. They all generally offer the same essential benefits, but their cost
structures vary. The lower the premium, the higher the out-of-pocket costs.
The bronze level plan, for instance, has the lowest premiums, but will
require consumers to shoulder more costs out of pocket. They generally cover 60
percent of a typical population’s out-of-pocket costs, and include deductibles,
co-payments and coinsurance. The silver plans cover 70 percent; gold, 80
percent; while platinum covers 90 percent (and therefore carries the highest
premiums).
If you buy a plan on an exchange, your annual out-of-pocket costs cannot
exceed $6,350 for individuals and $12,700 for a family of two or more in 2014.
Catastrophic plans are also available to people under age 30 or those suffering
a financial hardship. These carry high deductibles (equivalent to the
out-of-pocket maximum, or $6,350 for a single person, in 2014). You cannot apply
tax credits to these plans, either.
Premiums will vary across the states because of a variety of
factors, like market competition, the underlying cost of care and the
negotiating power of the exchanges, according to
Kaiser research.
Q. If the costs with plan levels are similar, how will
plans differ within the metal levels?
A. Networks of doctors and hospitals will differ, and
cost-sharing structures may also vary. One plan might have lower deductibles and
higher co-pays, whereas another plan might have a separate deductible for
prescriptions. Various medications may also be covered differently. “If you are
someone who is taking medicines, make sure you know what your drugs will cost in
the various plans being offered,” said Cheryl Fish-Parcham, deputy director of
health policy at Families USA, a Washington consumer advocacy group.
Q. Will I be eligible for a premium tax credit
(subsidized coverage)?
A. People with income between 100 percent of the poverty
line (or about $23,550 for a family of four) and 400 percent of poverty ($94,200
for a family of four) are eligible for a tax credit to defray premium costs.
(All income eligibility is based on your modified adjusted gross income; the
online version of this column links to a
guide explaining how that is calculated).
The tax credits are set up so that consumers will not have to pay more than a
certain percentage of their income, ranging from 2 percent for those with
incomes of up to 133 percent of the poverty level ($15,282 for a single and
$31,322 for a family of four) to 9.5 percent for those with income of 300 to 400
percent of the poverty level, according to the Center on Budget and Policy
Priorities. The dollar amounts of the credits are calculated based on the costs
of the second-to-lowest-cost silver plan available to you.
Kaiser has a
calculator that can give you an idea of
your eligibility.
Q. Can I get help with my out-of-pocket expenses, like
deductibles?
A. People with incomes between 100 percent of the federal
poverty line ($23,550 for a family of four) and 250 percent ($58,875 for a
family of four) are also eligible for
cost-sharing reductions, which means you’ll pay less for
items including deductibles and co-payments, and you’ll have lower out-of-pocket
maximums.
There is a big caveat: you can qualify for the reductions only if you buy a
silver plan. When choosing a silver plan — and compare them closely, because
they will differ — the exchange Web site will automatically show what you will
pay, with the cost-sharing reductions included, according to the Center on
Budget and Policy Priorities.
Even if you’re tempted by the bronze plans’ lower premiums, remember you’ll
probably end up paying more for out-of-pocket costs. For people who qualify for
both premium and cost-sharing subsidies, the silver plan will usually be the
better deal, Ms. Fish-Parcham said.
Q. Should I use all of my subsidy at once? How can I avoid owing taxes?
A. The premium subsidies are delivered in the form of a
refundable tax credit, which can be used immediately to reduce your monthly
premiums.
You can use it all right away, or you can use part of it, or none at all. If
you expect your income to remain the same, you might use the entire credit. But
if your income is likely to rise, it may pay to use only a portion of the
subsidy. That way, you’ll
avoid owing money to the I.R.S. at tax time.
If your income does change, report it to the exchange. If your income drops,
you may be eligible for a larger credit. Changes in family size should also be
reported. “It will all get reconciled on your taxes in the spring of 2015,” said
Karen Pollitz, a senior fellow at the Kaiser Family
Foundation.
Q. How can I find out if my doctor accepts
exchange-based insurance?
A. Many of the insurance providers’ networks of doctors and
hospitals will be narrower than are typically found in commercial insurance,
as
my colleague reported this week. So just because your doctor
accepts, say, a Blue Cross plan provided by your employer, that doesn’t
necessarily mean the doctor will take the same carrier’s plan offered on the
exchange.
The plans will be required to provide a directory that lists their network’s
providers, Ms. Pollitz said, so inspect them carefully.
Q. How will I know if my drugs are covered by the
plans?
A. The exchanges must include a summary of benefits and
coverage for each plan. That includes information about what your co-payments
would be for generic, brand name and specialty drugs. It should also provide a
Web link to the plan’s list of covered drugs and how they are categorized by a
particular plan, said Ms. Fish-Parcham.
Q. If I have employer-based coverage,
can I go to the exchange for coverage?
A. You can, but you probably won’t want to. Your employer’s
plan is usually a better deal. Many employers heavily subsidize your premiums
and you can pay for your coverage using pretax dollars, something you can’t do
if you buy coverage on the exchange.
“Plus, employer plans are typically fairly generous,” said
Lynn Quincy, a senior policy analyst at Consumers Union.
Besides, if your employer offers you coverage, you probably won’t qualify for
a tax credit unless your share of the premium (for the lowest-cost plan for
individual coverage offered by your employer) is more than 9.5 percent of your
modified adjusted gross income, Ms. Quincy explained.
If your employer’s insurance plan doesn’t cover 60 percent of medical costs,
on average (what’s known as “minimum value”) you may also qualify for subsidized
coverage. Your employer is supposed to let you know where the plan falls in
terms of minimum costs. “If you are spending huge amounts out of pocket each
year and you have a high deductible, it’s worth looking at what your
possibilities are,” said Sara R. Collins, vice president of the health care
coverage and access program at the Commonwealth Fund.
Q. Am I eligible for Medicaid?
A. The health care law aimed to expand Medicaid so that
everyone under age 65 would qualify if they earned up to 138 percent of the
federal poverty level (that’s about $16,000 for an individual and $32,500 for a
family of four in 2014). But the Supreme Court ruled in June that the decision
to expand Medicaid is up to the states — and only 26 states have decided to move
forward, according to
Kaiser.
Q. So if I’m poor but not eligible for
Medicaid, can I get insurance on the exchange?
A. Yes, but unfortunately, many people in this situation
won’t be able to afford it. People who don’t qualify for their state’s Medicaid
program but earn too little to qualify for subsidies on the exchange
will have to pay full price for the coverage offered on the
exchanges. So if
you can’t get Medicaid and your income is below 100 percent of
the poverty level, you will not be eligible for subsidized coverage on the
exchange.
Q. What if I’m self-employed or own a
small business?
A. If
you’re self-employed with no employees, you can shop for
coverage on the exchange.
If you have fewer than 50
employees, you can get coverage for yourself and your workers
though the
Small Business Health Options program, known as the
SHOP Marketplace. “Small employers have always wanted to have
the buying clout of a large employer and the SHOP exchanges offer them just
that,” said
Kevin Lucia, project director at Georgetown University’s
Health Policy Institute.
Q. What are the penalties for not
having coverage? Are there any exceptions?
A. Most people will be required to have insurance, with some
exceptions. You are not required to buy insurance if: the cost of insurance
premiums would exceed 8 percent of your income, your income is below the
threshold for filing taxes, you have a certified hardship, or you would have
qualified for Medicaid but live in a state that did not expand the program.
Illegal immigrants, the incarcerated, members of Indian tribes and those who
qualify for certain religious reasons are also exempt.
Everyone else will pay a penalty. In 2014, it will cost you $95 or
approximately 1 percent of your income, whichever is greater. The penalties will
rise each year.
