2014 promises to be a Brave New World for health insurance. What is not entirely clear whether it will be an Orwellian nightmare or a Huxlian utopia. (As an aside: for those who haven’t read Huxley’s ‘Island’, it is a worthwhile read and can be downloaded for free at Huxley.net). But changes are coming and you can get a glimpse of what you will be paying for health insurance today. For Californians, you can find out your estimated 2014 health insurance costs at this link. And to read more about how to actually sign up for health insurance, check out my article on the pros and cons of ACA health insurance.
Beginning on January 1st, 2014, California (and all other states) will begin to operate their health insurance exchanges. These exchanges will allow consumers to shop and compare health insurance policiesand enroll in one directly through your state’s Health Insurance Marketplace websites.
Every state will have a Marketplace, but each state can choose how it will operate. Seventeen states and the District of Columbia will run their own state-based Marketplace, seven states will partner with the federal government, and 26 states will offer federal Marketplaces. The differences between federal and state programs will be subtle. You can access your state’s Health Insurance Marketplace at healthcare.gov.
The policies available through these Marketplaces will be sold by insurance companies and will provide a package of 10 essential benefits, including emergency services, hospital care, lab services, prescription drugs, doctor visits, preventive care and rehab services. They will be available to any American who is not covered by employer-provided health care. An estimated 2.6 million Californians will qualify for subsidies. Millions more won’t, but can buy unsubsidized plans from Covered California or on the open market.
The health plans will be divided into four different levels — bronze, silver, gold and platinum — each offering similar benefits but with a different cost structure. The bronze plan will have the lowest monthly premiums but have the highest out-of-pocket costs, while the platinum plans will have the highest premiums but the lowest deductibles and co-payments. The Marketplaces must also offer a toll-free hotline to help you choose a plan that meets your needs and budget.
To help make coverage affordable, sliding scale tax-credits will be available if you earn less than 400 percent of the poverty level — that’s $45,960 for a single person and $62,040 for couples. These tax-credit subsidies will provide immediate savings off your monthly premiums. California estimates that a single 45-year-old earning $50,000 per year would pay about $416 per month for fairly good health insurance coverage. The Sacramento Bee reports that a married couple, ages 32 and 35, make $65,000 per year and have a 4-year-old daughter. They would pay $515 out-of-pocket each month for a midlevel plan, after receiving a subsidy of $347 per month. Their share would drop to $276 per month if their annual income were $45,000 because they would receive a larger subsidy.
The Kaiser Foundation has created a similar calculator that helps consumers estimate their future health care costs.
And for persons looking to keep their costs as low as possible, Covered California will offer a catastrophic plan for young adults under 30 and for individuals who cannot find affordable health coverage. This plan will have the lowest premium, but all costs (except for preventive care and the first three office visits each year) are out-of-pocket until the $6,400 annual deductible is reached. In order to take advantage of these new programs, consumers can submit a Marketplace application as early as October 2013, or when you decide to enroll.
My advice: Put this item on your calendar for October 1st. Your health insurance costs are important and it is better to get a handle on them sooner than later.