As America gets set for the opening of the health insurance marketplaces on Oct. 1, we have had many calls and questions from local businesses and customers who purchase their own health insurance.
Probably the biggest question has revolved around cost. Will health insurance cost more or less as a result of health care reform? Well, that depends on your definition of “cost.” The true cost of delivering health care has not been reduced. The costs of services we purchase health insurance to cover (e.g. medications, office visits, MRIs, etc.) have not been reduced as a result of health care reform. What will change is the way many Americans will pay for health insurance. There will be subsidies available for many customers (group and individual), which will reduce their “cost” of health insurance. Remember, the premiums will not actually be lower. In fact, from what we have recently seen from one insurance carrier, they may actually be higher.
One of the reasons for the higher cost is the new definition of qualified health plans (QHP). Most of our current customers’ plans will be converted to plans with lower deductibles and lower out-of-pocket costs. In insurance, there is a fairly easy equation between individual responsibility (and risk) and insurance company responsibility (risk). The more responsibility you are willing to take, the lower your premiums are. With health care reform, we will see lower deductibles and out-of-pocket maximums, thus increasing the premiums.
The subsidies for purchasing health insurance will only be available through the Marketplace. While this may sound like a friendly neighborhood store, the Marketplace is simply an online tool where you can enter your information (age, zip code, family information and income). The marketplace will allow you to see all of the plans available in your area and subsidy eligibility. Insurance brokers can go through training to be certified to assist on the Marketplace. Benefit Logic will have six certified agents. Just as it is today, there are no additional costs when enrolling with a broker through the Marketplace.
Here are some ways to prepare for health care reform.
If You Purchase Your Own Health Insurance: First and foremost, if you have an individual health insurance plan that is “grandfathered,” please be very careful not to lose this status, unless you have clearly identified that you will be eligible for a subsidy.
You will want to see if you are eligible for a subsidy. This can be done by going to https://www.healthcare.gov/ (when it opens Oct. 1) or by working with an insurance agent who is certified to assist on the Marketplace.
If you are not likely be eligible for a subsidy, then you may want to hang on to your current plan as long as possible. Here is a strategy. Your policy will be required to conform to the new health care reform rules when your plan renews in 2014. So, if you wish to maintain a higher deductible plan for as long as possible, you could apply for a new policy (even with your existing insurance carrier) for a November or December effective date. This would allow you to keep your lower cost plan for as long as possible. This may sound like a lot of trouble, but if you consider such a strategy could save you up to $100 per month, it may be a strategy worth considering. We can help you with this.
If You Purchase Group Insurance: Small businesses will have access to the Small Business Health Options Program (SHOP) beginning Oct. 1 as well. The SHOP will be available to businesses with fewer than 50 employees. Some businesses will qualify for tax credits ranging from 35 to 50 percent of the employers contributions toward the cost of health insurance. Qualified businesses must have at least one full time eligible employee (excluding owners and dependents) and coverage must be offered to all full time employees (30+ hours/week).
If you already have a group health insurance policy, you may want to work with an insurance broker to see if your business is better off with a SHOP plan or with your current plan. FBM
Benefit Logic is an independent insurance agency based in Flagstaff, and owned by NAU Alumni Ed and Shelly Gussio. The Benefit Logic team is committed to assisting individuals and businesses through health care reform and beyond! Come by and see how we can help you.