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Obamacare

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Health insurance is now coming to you. Here’s what you need to know.

Health insurance reform—i.e., the Affordable Care Act, or Obamacare—was enacted March 23, 2010 and its mandates were upheld by the Supreme Court in 2012. The intent of this new law is to insure what was then around 40 million uninsured American people, a number which has now grown to 48 million.  The law requires that most Americans purchase health insurance, and implemented reforms regarding coverage. All insurance plans, for example, must include essential health benefits, and people can no longer be denied health insurance due to a pre-existing medical condition. Other provisions allow young adults to remain on their parent’s insurance up to their 26th birthday, and implement insurance company transparency to protect and inform consumers, among other things.

WHAT THIS NEW LAW MEANS

October 1 marked the opening date for state-based Health Insurance Exchanges, to help guide people in purchasing insurance, and inform them about some basics of the law. Thus, January 1, 2014 may be the beginning of a new period of well being in our local area. It is estimated that an additional 7,000 to 9,000 Bonner and Boundary County residents, and another 2,000 or more in Sanders County, will obtain health insurance. They will be part of the 80 percent of the total population that is expected to be eligible for greatly reduced health insurance costs. Gender pricing will be history because rates convert to unisex. Age pricing has changed dramatically so that the oldest age insured through the Exchange (64) is charged no more than three times the lowest rate.  Many 45- to 64-year-olds, especially people with health issues and females, will notice a favorable savings.  

Insurance may now be more affordable than ever. Advanced Premium Tax Credits or Cost-Sharing Reduction Subsidies will lower both the cost of insurance and cost of care. Many families will secure both of these credits! Many in America were shut out of insurance due to medical conditions that either caused them to be denied coverage or made it unaffordable, and often both. No one can be denied coverage under health reform.  

Other aspects that make insurance more affordable are broader coverage and no waiting periods or exclusions for pre-existing conditions. And there are no annual or lifetime limits. Surcharges for health history or current health status will cease with new coverage January 1, but there is still a surcharge for tobacco use. These all serve to make coverage more affordable, especially for people with health issues, who need insurance the most.  

As already mentioned, children up to age 26 can be added to a parent’s policy, regardless of marital, dependent or student status, even if they live out of state and/or have employer offered coverage. Beyond the premium savings, the major benefit is reduction in family deductible, since only two deductibles can apply per family, regardless of the family size insured.  

HEALTH INSURANCE EXCHANGES

If you live in Idaho, your first stop for health insurance might be online, at YourHealthIdaho.org Because Idaho did not embrace Obamacare, and joined in a lawsuit against it, they are late to the game in developing their site, so it  does move you into the federal site at Healthcare.gov, to review plans and review/complete the application. Montana’s site (http://csi.mt.gov/health/exchange) will do the same. These states are using the federal operating system, but only Montana is using federal health plans. Demand has been high, and both websites are experiencing glitches at this writing, but there is no reason for urgency; you have until December 15 this year to enroll for coverage that’s effective on January 1. 

You can also find out estimated costs and plan designs by visiting with a Consumer Connector, but I do recommend going to the state site first. The site is a good resource for legitimate information  and news about each state’s Exchange, and offers a list of those who have been trained to serve as an in-person assister (they can help you process your application, but cannot advise you which policy to purchase) or as a Consumer Connector—these are people who can actually help you to choose which insurance plan best meets your needs.

STANDARD PLANS AVAILABLE

Every insurance plan now offered (other than grandfathered policies) has to include what are called “essential benefits,” regardless of insurer or where you live. No longer will patients be surprised that such basic, needed coverage is not provided for under their insurance plan. These essential benefits include hospitalization; outpatient care; emergency services; maternity and newborn care; mental health and substance abuse disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; lab services; preventative and wellness service, including chronic disease management; and pediatric services, which include vision and oral care.

Insurance coverage will be represented in standardized metal plans—Bronze, Silver, Gold, and Platinum. I think it is no accident they equate to Olympic medals.  By having health insurance we all feel like winners!  

As a metal would indicate, there is a certain value to each plan offered. A Bronze plan has the lowest value, and lowest cost for coverage, while Platinum features the highest cost, but also the highest value. Bronze plans anticipate 40 percent cost sharing by the policy holder for the cost of essential and preventive benefits, contrasted to 10 percent cost-sharing for someone purchasing a Platinum plan.  

The Catastrophic Plan is high deductible and designed for people under age 30 and/or with very low incomes. The pricing for these plans is not competitive in Idaho or Montana, and are not eligible for either credit.

THIS IS PRETTY COMPLICATED

If all this sounds confusing, don’t forget there is help available. In Montana, visit the Montana Health Co-Op online, or call 855-447-2900 between 9 am and 5 pm, Monday through Friday. In Idaho, help is available via In-Person Assisters and Consumer Connectors, some of whom can place coverage in Montana as well. Your personal insurance broker may well be on this list. These are people who have been trained to help in this process, and are certified by the state to do so. You can find a list of these people on the Idaho health exchange website, or by calling 855-YHIdaho (855-944-3246).

In-Person Assisters are employees or volunteers from non-profit entities around the state who have received somewhere between 5 and ten hours of training by Your Health Idaho to help you understand what options are available to you and your family, as well as to explain the various premiums and subsidies.

Only an agent or broker can make specific recommendations about which plan you should buy. Agents and brokers are licensed and regulated by Idaho’s Department of Insurance and typically get payments or commissions from health insurers for enrolling a consumer into a plan. Some agents and brokers may only be able to sell plans from specific health insurers.

I liken the topic of health reform to what many of us learned about sex in the fifth grade. We don’t want to get our information from peers who are misinformed or who leave out important details and consequences. As when we first learned about how babies were made, some were repulsed, others intrigued and still others wanted nothing to do with it. At this stage, I can say public information about health reform mirrors these reactions. And as with sex, our health or finances, ignorance is not bliss. You need to get your information from a trusted, reliable source.  

But is online information your best resource to secure the proper tax credit and cost sharing reduction, let alone coverage? I believe not, for the same reason I don’t prepare my own tax return or repair my car. I want the expertise of those trained in these areas benefiting me, even if I have to pay for it.  But the good news is that any certified insurance agent can help you with the entire process, including enrollment in the insurance exchange, at no charge to you. Health care, and therefore the health insurance you purchase, is a personal decision that requires more than a side-by-side comparison of coverage. Purchasing health insurance is not akin to picking out cereal on the shelf and reading the label. How is it that we have come to this thought process and lack of awareness of the consequences of marketing insurance like a commodity? But then, insurance companies have been their own worst enemy, emphasizing price, denying coverage through endless exclusions and limitations, and complicating the process with lack of transparency.

BUT I CAN’T AFFORD INSURANCE!

If you’re still with me, you may be wondering just how you’re supposed to pay for health insurance. Obamacare does offer some support. Poor residents in Montana and Idaho, however, should be aware that the ACA was designed in the expectation that states would expand access to Medicaid, which neither of our states has chosen yet to do. Therefore the Act only offers tax credits to those whose incomes fall between 100 percent and 400 percent of the federal poverty level (see sidebar at right). If your income is less than 100 percent of this amount, you will unfortunately receive no help in paying for insurance, though you will be subjected to a penalty if you do not do so (more on that later).

The tax credits can be utilized in one of two ways. You can get an ‘advance’ on the credit, and the government will pay a portion of your monthly premium for insurance, after a one-month delay. Or you can choose to claim your credit when you file your 2014 taxes. If you choose to take the credit now, as help in paying for your insurance, but you misstate your expected adjusted gross income for the year, you may end up with a substantial tax liability. Most companies will allow you to enroll for insurance now with no payment, but you will be billed and must be paid before December 23 this year in order to secure coverage as of January 1.

The cost sharing reduction is a little more complicated, and comes into play when you file a claim against your insurance. If you choose to purchase a silver plan, and make no more than 250 percent of the federal poverty level, you will automatically qualify for this further discount, which is designed to reduce your deductible, co-pays, co-insurance and out of pocket expenses. Here is one example: If I qualify for the maximum subsidy (by making between 100 percent and 150 percent of the federal poverty level) it effectively reduces a $3,000 deductible Silver plan to a zero deductible and reduces the maximum amount of money I have to pay out of pocket from $6,350 to $2,250! If I want to pay less money initially, and reduce my premium costs  by buying a Bronze plan, I would not get this cost-sharing break. If I use my insurance during the year, going Bronze might turn out to have been a poor financial decision.

For those choosing this route, it’s important to choose a Preferred Provider Organization Network, especially if you live near state lines, so you have the freedom to get a higher level of critical care if needed – e.g. Rockwood Clinic, Cancer Care Northwest, and the like. Some providers have a well established PPO network in Idaho, but not in Washington; services in our sister state, therefore, might not qualify for those cost sharing subsidies.

And this is why you need an agent who knows their stuff to help you choose which plan is right for you.

BUT I SIMPLY CANNOT AFFORD THE COST!

If you find out that there’s just no way you can afford to pay for health insurance under these new regulations, you will pay a penalty when you file your taxes. The penalty for 2014 is $95 per adult and $47.50 per child up to $285 per family OR 1 percent of the adjusted gross income, whichever is greater. The penalty amount increases dramatically in 2016 to $695 per adult, $347.50 per child, for a family max of $2,085 or 2.5 percent of income, whichever is greater. If the cost of insurance is more than 8 percent of your household income, however, you are exempt from the penalty. As a concession, these families are allowed to purchase Catastrophic plan coverage, even if they are over age 29.  

If you find you can purchase insurance later in the year, penalties are pro-rated to the actual amount of time during which you were not covered.

Of course, life is never static, and changing circumstances do not always align with plan enrollment dates. Life events, like marriage, death, birth, adoption, and loss of a job or a reduction in work hours, or the loss of your existing insurance, allow for a Special Open Enrollment, often no more than 60 days from the qualifying event. Depending on the qualifying event, you may be able to change your health plan choice multiple times throughout the year.

Despite the information provided on these pages, this is really only a shallow look at what is a very complicated subject. In future issues we will seek to provide additional helpful information. Please share with us what specific concerns and/or questions you have. Email trish(at)riverjournal.com, or write to the River Journal with your questions at PO Box 151, Clark Fork, ID 83811.

Angela Oakes, PPACA & CMS certified, has been in insurance since 1980 and owns Affordable Insurance Solutions and Summit Insurance Resource Group. She is keen on providing a reliable source of critical and timely information for our community. This information represents her understanding of current federal and state requirements, which are subject to change at any time and may be subject to differing interpretations.

POVERTY LEVEL AND INSURANCE SUBSIDIES:

For 2013, the poverty guidelines for the 48 contiguous states and the District of Columbia (Alaska and Hawaii have different levels) begin at $11,490 for a single person. For each additional person in your household, as claimed on your federal tax filing, add $4,020. Therefore, a family of four would be at 100 percent of poverty level if their annual gross income is $23,550 per year.

While the level of subsidy changes, there are tax credits available for single people who make as much as $45,960 per year; a family of four can make as much as $89,400 and still receive a tax credit.

 

If you make less than 100 percent of those levels, however, you receive no tax credit whatsoever. Depending on your income and your assets, you might qualify for Medicaid, though the requirements in both Montana and Idaho are stringent, particularly if you do not have children.

 

Who DOESN’T Have to Buy Insurance by January 1?

• Anyone who is currently covered by a plan for next year, including Medicare and Medicaid. • American Indians • Anyone whose income falls below the federal tax filing requirement • Anyone who belongs to a religious group that is exempt from Social Security (for example, the Amish). • Anyone whose cost for insurance is more than 8% of their income. • Anyone sentenced to jail.
SOME TRICKY SITUATIONS:
When it comes to insurance, one size doesn’t fit all, and that’s certainly true even under the Affordable Care Act. Here are some situations that might trip you up:
WHAT IS FAMILY?
While we still tend to think of family as a married couple with children, that’s no longer the reality in the U.S., where less than 25 percent of “families” are of the nuclear kind. For the purposes of Obamacare, however, the definition of family is simple: it’s whoever qualifies as your household on your federal tax filing.
Unfortunately, this creates a bit of a “marriage penalty” when it comes to paying for your insurance. Here’s an example: imagine two households, each with two adults, and each adult makes $25,000 per year adjusted gross income. In the first household, the two people are not married. They apply for insurance separately, and each will pay (as non-smokers, with a silver plan, as a national average) $1,729 for their policy, for a total ‘family’ cost of $3,458.
Over in the second house, however, the couple got married. They still each earn $25,000 per year. They apply for insurance as a family of two earning $50,000 per year - and will pay $4,750 for their insurance, an almost $1,300 penalty for that marriage certificate.
NON-TRADITIONAL EMPLOYMENT
It is going to be difficult for people who are seasonally employed or commissioned (sales professions like realtors) or in transition, whether from school to the labor force, just moved, new job, bigger/smaller family, dealing with a serious illness, etc. to estimate their expected adjusted gross income for 2014. Yet this critical estimate is part of the enrollment process! If you end up making more money in 2014 than what you anticipate, and receive advance tax credits for purchasing insurance, you may find yourself with a substantial tax liability come 2015.
SMOKERS
There really has never been a better time to quit. States are allowed to charge a smoker’s premium that can cost up to 50 percent of the amount of your insurance coverage—and that portion of the amount you pay will not qualify for a tax credit reduction.
EMPLOYER OFFERED COVERAGE
If your employer offers health coverage that meets the essential provisions listed earlier, and costs less than 9.5 percent of your household income, and pays 50 percent or more of the cost of that insurance, then you must either accept that coverage, or purchase insurance on the health exchanges without receiving any tax credit.
And here’s the glitch. If you are able to sign up your family on that plan, regardless of whether the employer pays any portion of the costs, then coverage for your family also will not qualify for tax credits—you’ll have to purchase through your employer’s plan or pay full price on the exchanges.
DUAL RESIDENTS
Many Idaho residents are currently working in other states, and may find the state they work in offers less expensive coverage for insurance. Before you make the decision to change your residency status for tax purposes and take advantage of these cost savings, make sure you talk about other potential financial implications with a tax professional.

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Author info

Angela Oakes Angela Oakes Angela Potts-Bopp is the owner of Summit Insurance Resource Group in Sandpoint, Idaho. A former professional ice skater, her passions are providing insurance for the uninsured, creating bike paths throughout town, and running marathons.

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Obamacare, Affordable Care Act, health insurance, health insurance exchange

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