Sep 25, 2013

Obamacare – What Boomers Should Know Moving Forward

As of January 1, 2014, under the reforms of the Affordable Care Act (ACA) or Obamacare, most every American will be required to have health insurance. By March 31, 2014, those who do not will have to purchase a plan or pay a tax penalty.

This is why October 1, 2013, is an important date in the ACA’s timeline, signifying the start to open enrollment in the Health Insurance Marketplace, also referred to as the health insurance “exchange.” With the exchange, Americans will be guaranteed to find comparable, affordable health coverage.

The ACA and exchange means especially big things – and potentially big gains – for the Baby Boomers in particular. The following are answers to 7 key questions many boomers may have about the ACA and exchange policies:

Q. Do I have to have to purchase an exchange policy? A. No, you are NOT required to purchase an exchange policy if you receive coverage through your job; you are 65+ and on Medicare/Medicaid; or you are on certain military or veterans’ plans.

Q. What’s the penalty if I choose to forego any health insurance coverage, exchange or otherwise? A.  In 2014, you will face a tax penalty of 1% of your income (or $95, whichever is greater); and in 2016 this will rise to 2.5% of your income (or $695, whichever is greater).

Q. Who is providing exchange policies, how do I apply, and are there any restrictions? A. While all policies are offered by private insurance companies, the exchange is run by either your state or federal government. You can apply by mail, in-person, or online. You must enroll in your state (but multistate policies will likely be available for persons who split their time between states).

Q. What are some major difference between how health care premiums are determined now versus how they will be handled in the future under the ACA? A.  Health insurance companies will no longer be able to deny, charge more, or exclude coverage due to health status or pre-existing conditions. They also cannot raise premiums for policyholders who become ill. Premiums also cannot be more than 3x the rate they are for a young person. As well, during open enrollment periods you will have access to next year’s premium prices and can switch plans if necessary. And, insurers can only raise premiums from year to year for everyone in a policy group – in other words, everyone who bought the same plan for the same year.

Q. Is there a difference between the core coverage of an exchange policy and any other private insurance policy? A. No, exchange policies will cover the same core benefits as any other private policy. These are called the essential health benefits and include 10 fundamental items and services.

Q. What’s new in ACA reforms and exchange policies? A. Now insurers will be required to cover the cost of preventative care at 100% – including annual checkups, cholesterol and blood pressure screenings, etc. Plans for men and women can no longer have disparities. “Well-women” physical and preventative screenings will have no co-pays. And insurers can no longer put lifetime (or annual) limits on the dollar amount of covered healthcare expenses.

Q. ACA reforms and exchange policies are such a recent development, what else should I be aware of that might not be known? A. Experts feel that exchange plan premiums may rise for 2015 after companies better realize what these policies cost them. And you should be aware of how the exchange will affect your taxes based on how much government subsidization you qualify for (members qualify who earn up to 400% of the federal poverty level) and how and when you apply the credit(s) – this is important for those whose incomes fluctuate throughout the year, as they may either fall in or out of the qualifications for government subsidies and therefore could either owe at tax time or be owed.

Visit our Health Care Reform page for more helpful information and updates, or check out this Yahoo Finance post to get more facts and figures related to the Affordable Care Act and exchange policies.