A New Insurance System Begins in 2014

I am here to give helpful tips, advice and to answer any questions you may have about your medical benefits!

A set of rules that take effect Jan. 1, 2014, will make shopping for health insurance a completely different experience for those who buy it on their own—or are uninsured today. These are the biggies:

Guaranteed issue. This is the most popular part of health reform: Health plans must sell coverage to everyone, regardless of pre-existing conditions, and can’t charge more based on health or gender.

Exchanges. By this time next year, every state must have an insurance exchange—an organized marketplace where individuals and small-business owners can view, compare, and purchase qualified private health plans. It’s expected that most consumers will shop on their state’s exchange online, but they can also shop by phone or through brokers.

States have the option of setting up exchanges themselves or allowing the federal government to do the job. It’s expected that the federal government will operate exchanges in as many as half the states. (To see what an exchange looks like, visit the Health Connector run by Massachusetts, which has had a mandate since 2007.) About 20 states are expected to be ready to operate their own exchanges by late 2013. In other states, the federal government will step in to do the job.

Individual mandate. Everyone will be required to have health insurance or pay a penalty. Almost any sort of legitimate coverage will satisfy the mandate: private insurance obtained on your own or through a job, Medicare, Medicaid, CHIP, Veterans Affairs, or Tricare.

Penalty. If you don’t have health insurance, you’ll have to pay a tax penalty, starting at $95 per individual, $285 per family, or 1 percent of income, whichever is greater, for 2014. (That rises to $695 per individual, $2,085 per family, or 2.5 percent of income in 2016.)

Because the vast majority of people will already have qualifying health insurance, few will confront the choice of buying a plan or paying a penalty. Moreover, you won’t have to pay it if you make too little money to file a federal tax return or would have to spend more than 8 percent of your household income on the cheapest qualifying plan, even including subsidies. Americans living abroad, and those in prisons, are exmpt from the mandate and associated fines.

Individual subsidies. Afraid you won’t be able to afford insurance? If you buy on an exchange as an individual, you may qualify for a subsidy in the form of an advance tax credit if your household income is between 100 percent and 400 percent of the federal poverty level. (The tax system already subsidizes people who have coverage through a job by excluding the cost of their health plan from income taxes.)

For instance, a family of four with an income of 200 percent of poverty, or about $46,000 in 2012, will pay no more than $235 a month for health insurance. People with household incomes of less than 250 percent of poverty will also get subsidies to reduce their out-of-pocket costs, such as deductibles and coinsurance. You’ll learn whether you qualify for a subsidy when you shop on the exchange.

Medicaid expansion. The health care law was intended to expand the government-run health program for low-income Americans to cover up to 16 million more people with household incomes up to 133 percent of the poverty line ($14,856 for an individual and $30,657 for a family of four). That includes many at or below the poverty line who aren’t currently eligible. Read more about how to navigate Medicaid.

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Roger November 19, 2012 at 01:06 AM
You could provide a valuable resource for small business owners, telling them what it means for them. Think of those businesses that have 3-10 employees, then perhaps another bracket of 10-30, another of 30-50, and another of 50-100. These folks are not sure what the new law will mean for them. I know that the "over 50 employees" bracket has different rules. But, what about the others? One item of great concern is how much the employer will have to pay, to whom, and how. Also, if employees have to buy, what are the salary change expectations from the employer to pay for these costs. What choices will be open to the employees, and what are there expected costs? Other questions include tax credits for the first couple of years, credits to the employer supplying the insurance, or credits to the employee for getting their own insurance. What about part-time, full-time employees... what are the expectations and requirements? These are important questions for the small business owner, who has no time to try to sort through these matters. These folks have no HR department to get educated, and make recommendations to the owner.
Erika Bogden November 19, 2012 at 04:50 PM
Roger You have many great questions. Your questions cannot be answered correctly until our state picks the exchange. As of right now, we believe PA is opting the federal exchange and not doing their own. There is very little that the government told the agent force. And believe it or not, even the insurance companies. Very poor delivery! The only way I can put your mind to rest right now is to tell you that the exchanges for under 50 group size is just an option, you can still get group and individual choices. Roger, we will certainly keep your post and update you in the future as we hear more information. 2013 is certainly going to be a challenge for businesses and the health insurance industry.
Erika Bogden November 19, 2012 at 05:43 PM
Our IT people are working right now to put a link "Reform 2014 - Employers Penalties" on our home page. Please check it out! www.PennsylvaniaHealthInsuranceExchange.co
Roger November 20, 2012 at 03:53 AM
Thanks for the reply. The best business op for the next couple of years: Understand Obamacare, and open a consulting practice!


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