Obamacare (Affordable Care Act)

Obamacare, or the Affordable Care Act, is reshaping the health insurance marketplace and it comes with rewards and challenges for consumers. Some of the key health insurance changes enacted by the law include:

  1. A requirement for insurers to sell insurance to virtually everyone (often called “guaranteed issue”) regardless of health status or pre-existing condition
  2. Penalties for individuals without health insurance and for many employers that do not provide health coverage
  3. Subsidies for individuals and tax credits to small businesses
  4. State and federal exchanges for the purpose of selling health plans

Most consumers are confused about Obamacare. This guide will quickly answer your questions regarding:

What are the new Obamacare plans and how are they different than existing insurance plans?

There are four basic Obamacare health insurance plan categories: Bronze Plan, Silver Plan, Gold Plan, and the Platinum Plan. Plans in each category require you to pay a different level of out-of-pocket costs. The Bronze plan, which typically has the lowest premium, charges you the highest out-of-pocket costs for medical services. On average, you will pay 40 cents out-of-pocket for every dollar healthcare services cost. Platinum plans, on other hand, have you pay 10 cents out-of-pocket for every dollar healthcare services cost but the premiums for these plans are generally the most expensive. Our health plan comparison tool enables you to evaluate not only the premiums and benefits of these plans against one another but also their quality.

Every one of these plans must cover the same essential health benefits. Briefly stated, these benefits are: physician care, emergency services, hospitalization, lab tests, prescription drug coverage, maternity and newborn care, pediatric care, and mental health services. Many health insurance plans currently available do not include all of these benefits. However, the essential benefits will be mandatory for plans starting in 2014 and health plans cannot be sold to consumers without these benefits.

Will I have to change my health insurance even if I like my current plan?

Millions of Americans will need to enroll in a new qualified health plan during the implementation of Obamacare. The maximum out-of-pocket limits and minimum health benefits required by Obamacare make most existing health insurance plans unqualified for ongoing sale. However, a health insurance plan may receive a special status as a “grandfathered plan” that allows it to remain in force if it was in existence by March 23, 2010. “Grandfathered” is not a permanent status for a health plan and may be lost due to a variety of factors.

If you have existing coverage that does not Obamacare requirements, your employer or insurer should notify you of the need to change plans. The sections below explain how and when to change plans and provide guidance on how to select the best health insurance for you needs. If you need health insurance in 2013 prior to the open enrollment period, you can compare health insurance plans on our site.

How will my monthly premium be affected?

Since many people will be changing plans, this is a difficult question to answer objectively. Some of the key factors that will influence an applicant’s premiums are the type of health insurance plan chosen and whether the applicant qualifies for some form of public assistance like a health insurance subsidy or enrollment in Medicaid. In the absence of public assistance or other premium subsidy, it is reasonable to assume the broader benefits of an ACA plan will cost more than an existing plan with fewer benefits. Additionally, new regulations against denying coverage to people with pre-existing conditions will likely increase costs and insurers will pass a portion of those costs onto consumers. The new restriction on how much an insurance plan may allocate towards overhead and other services outside of member health benefits should mitigate some level of the premium increase driven by new benefits and members with pre-existing conditions.

However, since premiums can vary significantly among insurers offering the same type of coverage (as the Medicare market demonstrates) comparison shopping can potentially reduce costs by thousands per year. Plan quality should also be evaluated and treated with equal importance as monthly premium. Similar premiums do not imply similar quality among health plans. There are some very expensive health plans that have poor quality and some very affordable health plans with quality scores better than more expensive competitors. HealthPocket’s health plan comparison tool allows you to review our quality ratings of plans alongside their premiums and benefits.

Where can I buy health insurance?

Health insurance can be purchased from an insurance company, a health insurance exchange, or an insurance broker. The HealthPocket web site allows you to compare plans first, including quality scores, before you commit to purchasing a plan. When you decide which plan is the best combination of cost, benefits, and quality, HealthPocket will display multiple options where you can purchase the plan you want. In some cases, you may be eligible for a subsidy on your monthly premium.

When can I buy health insurance?

In 2013, most people will be able to enroll in a new plan starting October 1st. This first open enrollment period for Obamacare health plans will be long and will expire on February 28, 2014.

After the close of the first Obamacare open enrollment period, all subsequent open enrollment periods will begin October 15th and end March 31, 2014. Enrollments in new policies during this period will begin on January 1st of the following year.

What health insurance plan should I choose?

Short answer: You should choose the plan that’s best for you. In practical terms, this means that you need to evaluate the plans available in your area on three main categories:

  • Price (monthly premium, deductibles, copayments, and the highest out-of-pocket expense limit for each year)
  • Benefits (the coverage and services you receive through the plan and how they align to your medication usage as well as any chronic conditions you have)
  • Quality (how well the plan performs on issues such as customer service, preventative care, managing a chronic condition, etc.)

HealthPocket simplifies the above process through its health plan comparisons. Price, benefits, and quality can all be evaluated at the same time.

Can I keep my current doctor?

It depends on whether your doctor accepts your new insurance coverage. Most plans have a network of doctors, hospitals, pharmacies, and other healthcare providers that will accept reimbursement from the plan. HealthPocket links to physician network sites that allow you to see if your doctor is part of a plan’s network. To use this feature, compare plans and then click on the Plan Details link for the plan that interests you. The Plan Details page will include a link called “Check for Your Doctor.” Since there is a movement in the industry towards “narrow networks” (i.e. a smaller number of providers authorized to accept a health plan’s insurance), it is essential for you to validate your doctor’s participation in an insurance plan’s provider network unless you are willing to change doctors.

Do I qualify for any assistance or subsidy?

This will depend on you and your family’s income and its relationship to the Federal Poverty Level (FPL). Obamacare makes millions of lower income Americans eligible for premium subsidies. These subsidies come in the form of a tax credit. Below is a table summarizing the premium subsidies.

Modified Annual Adjusted Gross Income (MAGI)Premium After Government Subsidy
Up to 133% FPL2% of income
133% to 150% FPLSliding scale of payments starting at 3% of income and ending at 4% of income
150% FPL to 200% FPLSliding scale of payments starting at 4% of income and ending at 6.3% of income
200% FPL to 250% FPLSliding scale of payments starting at 6.33% of income and ending at 8.05% of income
250% FPL to 300% FPLSliding scale of payments starting at 8.05% of income and ending at 9.5% of income
300% FPL to 400% FPL9.5% of income
Above 400% FPLNo government subsidy

These subsidies are based on the premium for your state health exchange’s selection of a representative Silver plan. What does this mean? In each state, there is a Silver Plan that the state exchange designates as the benchmark for Silver Plan premiums. Let’s imagine that in your state, the yearly premium cost of that Silver plan is $10,000. If your subsidy caps your premiums at $2,500 a year based on your relationship to the FPL, your subsidy would be a tax credit of $7,500 ($10,000 minus $2,500). What if you don’t choose a Silver Plan? It doesn’t matter. Your subsidy is based on the premiums of a benchmark Silver plan even if you pay less for a Bronze Plan or more for a Gold or Platinum Plan.

Do I have to buy health insurance if I don’t have it already?

Yes. If you don’t buy health insurance, you will face a penalty. If you are an individual under the age of 30 and find it financially difficult to pay for a Bronze plan, you may qualify to enroll in a Catastrophic Plan.