ObamaCare introduces four new health reforms that encourage more people than ever to purchase their own health insurance, without involvement from an employer. This type of insurance is called individual health insurance.
The four new reforms coming in 2014, that will "push" millions of Americans into the individual health insurance market, are:
Individual Mandate: The individual mandate, recently re-branded as the individual shared responsibility, requires nearly all US citizens to be covered under health insurance, or pay an annual tax penalty.
Individual Health Insurance Marketplaces: Each state will be opening an online marketplace where individuals can purchase an individual or family health insurance plan. The individual health insurance marketplaces will present plans in tiers of coverage, to help people compare plan options "apples to apples." The marketplaces will be run publicly, either by the state government, the federal government, or a combination of both. The marketplaces will also be the only place where consumers can access health insurance discounts via the health insurance tax subsidies. (Look up your state marketplace here.)
Health Insurance Tax Subsidies: To help make individual health insurance premiums more affordable, there will be health insurance tax subsidies available to eligible consumers. You will be eligible for the discounts if you meet certain income requirements and do not have access to employer-sponsored coverage or through a government program. (Read more about the health insurance tax subsidies here.)
Guaranteed-Issue Individual Health Plans: Starting in 2014, all individual health insurance plans will be guaranteed-issue, meaning you cannot be denied or charged more because of your medical history.
Which Individual Health Insurance Plan Should I Choose?
Buying an individual health insurance plan for yourself and your family is probably a new experience for you, and perhaps intimidating. First, work with a health insurance broker to help you navigate choices. If you're company offers a pure defined contribution plan, where they reimburse you for a portion of your individual health plan, they may have a broker assigned to help you with this.
Additionally, here are six tips when researching different plans through the individual health insurance marketplaces.
1. Understand the Categories of Coverage
In the past, it’s been hard to understand the coverage levels of plans. That’s no longer the case. As of 2014, individual health plans will be categorized in four standardized levels of coverage. These are also called the metallic tiers of coverage.
Each tier is assigned an "actuarial value," a term that which refers to the share of health care expenses the plan will cover, on average. With Platinum plans, you will pay more for the monthly premium, but pay less when you receive medical care. With a Bronze plan, you will pay less for the monthly premium, but pay more when you receive medical care.
Simply stated: When you shop for a plan, they will be organized in these four categories, by a standard level of coverage.
2. All plans Will Offer Essential Health Benefits
Although the individual health plans offered in marketplaces will vary from state to state, all new health insurance policies sold in the individual and small group markets must provide a minimum level of coverage known as "essential health benefits". Essential health benefits includes these ten categories: prevention and wellness, ambulatory (outpatient) care, laboratory services, emergency care, hospitalization, maternity and newborn care, pediatric care (medical, dental and vision), mental health and substance use disorder services, prescription medications, rehabilitation and habilitation.
Simply stated: In 2014, all new plans will be required to cover the 10 essential health benefits.
3. Estimated the Amount and Cost of Care You'll Need
Now that you understand plans will be offered in tiers (categories) of coverage, and the basic services plans must cover, how do you know which tier of coverage to select?
First, estimate your total medical costs from the past year, to help estimate your medical needs for the next year. To do this, ask questions such as: how many prescriptions do I purchase each month? Do I have any upcoming surgeries planned? Do I have a chronic illness? How many times a year, generally, do I visit the doctor? This will help you compare the different coverage levels. Make it situational - if my medical expenses were similar to last year, I will pay X amount with each coverage level.
Simply stated: Take the time to work through your specific medical needs to understand how much you will be paying monthly, and at the time of service. Weigh the amount of the premium with the amount you will pay at the time of service.
4. Review the Network of Providers
Now that you've selected a general tier of coverage, which plan to choose? As you're reviewing plans, check out the network of doctors and hospitals available. The network of providers may vary by tier of coverage, and by insurance company. The network of providers will give you discounts at certain providers, and coverage may be limited (or cheaper) for doctors in your insurance plan's network (sometimes called "in-network"). If you have preferred doctors, or a chronic illness, having a specific doctor may be very important to you.
Simply stated: Review the network of providers for each plan to make sure you'll have access to your preferred doctors, at the best price.
5. Not all Plans in the Same Tier Are Identical
Once you have settled on a tier, carefully review the details of each health insurance plan offered in that category, including the cost of monthly premiums, deductibles, copayments, and coinsurance. While the overall coverage levels are the same within each tier, it will be structured differently.
Simply stated: Compare the mix of deductibles, copays, and coinsurance in each tier of coverage.
6. Work with a Health Insurance Agent
We've already mentioned this, but it's worth reiterating. A health insurance agent can help navigate these considerations, and help you select a plan that best fits the needs of your family. It doesn't cost you any more for having a health insurance agent help, and they can help you enroll in the individual health insurance marketplaces or through "non-marketplace" policies. Studies show that when individuals work with a health insurance agent, they are happier with their individual health insurance plan and find more cost-effective coverage.
Simply stated: Work with a health insurance agent.
What are your tips for choosing an individual health insurance plan for yourself, or for your clients? Leave a comment below.