Your Options Under the Health Care Reform Bill

Caduceus on West 14th Street (New York, NY)

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Last week, Congress passed, and President Barack Obama signed, a health care reform bill that requires every American to purchase health insurance. Those who have religious beliefs against it, Native Americans and those who can prove financial hardship won’t have to purchase health insurance if they do not want to. (Of course, if you think you qualify for one of these exceptions, it will have to be proved in some manner satisfactory to the government.)

Here are some of the scenarios that many of us will face under the health care reform bill. While there are some immediate impacts to your situation from the health care reform bill, for the most part you will have until 2014 to figure out what you are going to do about insurance coverage. Premiums are still likely to increase as they have over the past few years, since health insurance companies will be allowed to set their own rates and coverage.

If You Already Have Health Insurance

If you already have health insurance through your employer, chances are that you won’t see any huge changes. The New York Times, in its rundown, points out that premiums and coverage are likely to remain as they are for those with plans from large employers. What’s new is that insurance companies won’t be able to drop you any more if you get sick, and that children can’t be excluded for pre-existing conditions. (Starting 2014, no one can be excluded for pre-existing conditions.)

If your insurance is provided by yourself (i.e. if you are self-employed, or if your company doesn’t cover you), you will be able to access state-run health insurance exchanges starting by 2014. These exchanges will provide different price levels and plans so that it is possible to compare your options and buy insurance from companies participating on the exchange (and regulated by states; there is no national plan). If you don’t want to buy through exchanges, you can still buy directly from the insurers or from insurance agents and brokers. Insurance companies will be required to offer plans comparable in coverage and price to those they are offering on exchanges.

Those with Medicare coverage will begin seeing a close in the “doughnut” hole now, phasing out this unpopular gap in coverage.

If You Don’t Have Coverage

The biggest changes come for those who don’t currently have health insurance coverage. You will be required to purchase health insurance, or pay a penalty, based on your income level. (So there is an “opt out” possibility — if you are willing to pay the penalty.) For those who are concerned about costs, there are some changes being made to aid in paying premiums:

  • Medicaid will be expanded to cover those with an income of up to 133% of the poverty level. Using current numbers, that means that households of four earning up to $29,327 would be eligible for Medicaid.
  • Subsidies for those making between $29,327 and $88,200 for a family of four would be provided on a sliding scale to help with purchase through state-run insurance exchanges.
  • Premiums will be capped at between 3% and 9.5% of income.
  • Those under 30, and those who cannot find a plan costing less than 8% of income no matter their age, will have the option to buy a special high-deductible catastrophic policy.

One thing you can do now, to prepare for the future, is to look for high-deductible plans that can be combined with Health Savings Accounts. This can provide you with a lower premium, health insurance coverage, and a tax-advantaged way to save for co-pays, deductibles and medical services and products not covered by your health insurance plan.

Whatever you think about the health care reform bill, it is important to note that now is the time to consider your options and prepare for the changes — especially if you are going to be one of those who will have to purchase health insurance.

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