If you currently have an individual health insurance plan, you will be in for a big change when you sign up for your coverage in 2014.
Approximately 50% of the individual health plans that are currently being sold in the marketplace do not meet the standards of Obamacare to be sold in 2014. The reason for this is because the Affordable Care Act (ACA) sets new minimums for the basic coverage every individual health care plan must provide effective on renewals on or after January 1, 2014.
About 15 million Americans (or about 6% of non-elderly adults) currently have coverage in the individual health market. Beginning in the fall of 2013, they will be able to shop for and enroll in health insurance through state-based exchanges (aka SHOP or The Exchange) with coverage taking effect in January. By 2016, it is projected that around 24 million people will get their insurance through the exchanges, while another 12 million will continue to obtain individual coverage outside of the exchange.
Beginning in 2014, nearly all plans, both group and individual, will be required to cover an array of “essential” services regardless of if they are purchased within the exchange or not. These “essential” services will include medication, maternity, and mental health care. Many individual plans do not currently offer these benefits.
What will happen to the plans that do not meet the new minimum standards? They will more than likely disappear and you will not be allowed to renew your existing coverage on the plan you currently have. A handful of existing plans will be grandfathered in, but the qualifying criteria for a grandfathered plan is hard to meet. In order for your existing individual plan to be considered “grandfathered”, (1) you have to have been enrolled on this plan before the ACA was passed in 2010 and (2) the plan has to have maintained fairly steady co-pay, deductible and coverage rates until now.
Many insurers in the individual marketplace have already acknowledged that the majority of their existing individual plans do not meet Obamacare standards for 2014 and they are currently working to ready new product lineups for 2014.
In the future, consumers buying individual plans will be able to choose between four levels of coverage: platinum, gold, silver, and bronze.
Platinum plans will carry the highest premiums but will offer the lowest out of pocket expenses, with enrollees paying no more than 10%, on average. At the other end of the spectrum are the bronze plans, which will have the lowest monthly premiums but will have higher deductibles and copayments totaling up to 40% of the out of pocket costs on average.
Starting also in 2014, all Americans will be required to carry health care coverage or face fines. Those penalties will start at $95 per adult or 1% of the adjusted family income, whichever is greater, and will escalate in later years.
Individuals will annual incomes of up to 400% of the poverty line (or roughly $45,000 for an individual and about $92,000 for a family of four) will get federal subsidies to help defray the premium costs.
Most individual plans sold next year, even the lowest level bronze plans, are likely to charge higher premiums than today’s most “bare-bones” individual insurance plans. Many consumers feel the costs will be offset by having lower out of pocket costs and more comprehensive coverage than their current “bare-bones” plan offers.
In today’s marketplace, with deductibles of $10,000, an individual can buy a policy and then when they get sick, they may go broke because the policy leaves them with such a high level of out of pocket expenses to pay. Many insurance industry experts feel, however, that consumers may now wind up with more coverage–and higher monthly costs– than they want. As a result, some individuals may just choose to simply pay the fine instead of obtaining health insurance coverage they will not use or can not afford.