Self-insured or uninsured? Here’s what you’ll pay in 2014

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Self-insured or uninsured? Here’s what you’ll pay in 2014

This post is by staff writer April Dykman.

Four years ago, I quit my job. As a result, I also became one of an estimated 15 million Americans who buy their own health insurance.

And during these last four years, my premiums have increased 34 percent, despite shopping around for lower rates and increasing my deductible. I only go to the doctor for a yearly checkup and I have no preexisting conditions, so I admit I’ve been somewhat annoyed each time the premium went up. What am I paying for, exactly? (Still, I’m grateful that I can afford insurance or get a policy at all.)

But starting in 2014, the Affordable Care Act (ACA) will change individual market premiums and coverage plans. Now, I know that this is a politically charged topic, but that’s not what this article is about. Whether you’re for them or against them, the new regulations go into effect in just a matter of months, That means that your options and/or premium are about to change, especially if you buy your own insurance or if you aren’t insured. So my plan is to just stick to the facts, ma’am.

First off, let’s look at why ACA will change premiums.

Why individual market premiums will change

According to The Kaiser Family Foundation (KFF), these are the four main changes under ACA that will affect premiums for the individual market:

• New groups entering the market. Starting in 2014, people with pre-existing health conditions can’t be discriminated against. So as they enter the market, premiums will tend to rise. The idea is that the costs will be offset by another new group who will enter the market: younger, healthier people who are mandated to buy insurance by ACA.

• No more surcharges. Insurance companies used to base premiums on factors like health status, age, and gender, but that won’t be allowed under ACA. So if you’re older and have a chronic health condition, your premiums will likely go down. If you’re a 21-year-old male and the picture of good health, ACA will likely increase your premiums.

• A minimum coverage level. Some individuals have pretty bare bones health insurance plans. Maybe they are rarely sick (like me) or maybe it’s the only kind of coverage they could afford. But the ACA establishes a minimum level of coverage, which will raise premiums for those will minimal coverage. On the other hand, out-of-pocket costs should be lower than they were on their previous plan.

• A reinsurance pool. Insurers will be reimbursed for high-cost participants in the individual market from a $10 billion reinsurance pool, which should help to lower premiums.

Plus, there’s another factor that will affect premiums: tax credits. From Healthcare.gov:

The Affordable Care Act provides a new tax credit to help you afford health coverage purchased through the Marketplace. Advance payments of the tax credit can be used right away to lower your monthly premium costs.

But the amount of credit is hard to quantify because it depends on so many personal characteristics, like age, income, family size, etc. Even CPAs are scratching their heads.

“We’re in the process of getting up to speed on this,” says Maggie Mayer, CPA, and owner of Mayer & Associates. “It’s concerning that a lot of CPAs aren’t even attempting to get up to speed, though, because enrollment begins October 1. Many don’t feel the urgency because it won’t affect them until tax season.”

So here’s what I’ve been able to glean: My premiums will probably increase because I’m youngish and healthy, but decrease because I’m female, but increase because of the coverage minimum, but decrease because of the reinsurance pool. But maybe if it increases, a tax credit will offset the cost. If I’m eligible.

Ugh. I just want some numbers with dollar signs in front of them! Mayer says her clients share my frustration. “They just want to know, what are the numbers? What do they mean for me?” she says.

So Mayer had been directing her clients to Kaiser’s Subsidy Calculator, which is “very clear and easy to understand,” she says. “You can play with the numbers and see if you’re eligible for any credit.” So I did.

My results? According to the calculator, my annual health insurance premium will be $3,570 on the Silver plan, which is the calculator’s default plan. The Gold plan is more comprehensive, the Bronze plan is less comprehensive. That works out to $297.50 per month, and I’m not eligible for a tax credit subsidy. If I went with the Bronze plan, which offers minimum coverage, it will be $2,959 per year, or $246.58 per month. For reference, my current premium is $200 per month.

And speaking of my current plan, there might be another option: keeping it. If you have existing coverage, you can keep your plan, but only if it’s a “grandfathered” plan. Here’s what that means, as described on Healthcare.gov:

Grandfathered plans are those that were in existence on March 23, 2010 and have stayed basically the same. But they can enroll people after that date and still maintain their grandfathered status. In other words, even if you joined a grandfathered plan after March 23, 2010, the plan may still be grandfathered. The status depends on when the plan was created, not when you joined it.

To find out if your plan is grandfathered, check your plan’s materials or call your insurance provider. Also, it’s important to note that grandfathered individual plans are not required to offer the following consumer protections:

• Free preventive care

• Guaranteed right to appeal

• Protected choice of doctors and access to emergency care

• Protection from excessive premium increases

• No yearly limits on coverage

• Coverage even if you have a preexisting health condition

In addition, grandfathered plans are not eligible for the tax credit under ACA.

Options for 20-somethings

There also are a couple of options for the under-30 crowd.

First, if a parent’s plan covers their children, the children can be added or kept on the health insurance policy until they turn 26 years old.

Also, people under 30 (and some people with limited incomes) may buy a “catastrophic” health plan, which protects you from very high medical costs. From Healthcare.gov:

A catastrophic plan generally requires you to pay all of your medical costs up to a certain amount, usually several thousand dollars. Costs for essential health benefits over that are generally paid by the insurance company.

With a catastrophic plan, you’ll pay a lower premium, but you’re only covered in worst-case scenarios.

What does it mean for you?
“People want to know the numbers that pertain to them,” says Mayer. “They want to know the bottom line.”

So if you’re self-insured or uninsured, how do you get your numbers? To learn more about your options, start with Healthcare.gov and fill out the questionnaire. Then, get a cost estimate for the various plans using Kaiser’s Subsidy Calculator. Those two sites should give you a better idea of your options and costs, so you can figure out a game plan for 2014.

Readers, what do you plan to do about health insurance in 2014? Are you covered by an employer, or are you shopping for individual coverage?