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Untangling health care reform

The individual insurance market has been dominated by one or two insurance companies in most states. That may be about to change. The new Health Insurance Marketplace (also called the Exchange) is designed to offer Americans more affordable choices and to allow them to make side-by-side comparisons of plan costs and benefits. But change causes anxiety.

“Information is the best tool for alleviating anxiety about health care changes,” says Barb Wollan, Iowa State University Extension and Outreach family finance specialist. “High-quality, unbiased information enables consumers to take advantage of available benefits.”

All Marketplace plans must offer comprehensive health benefits, including doctor visits, preventive care, hospitalizations, prescriptions, and more. No one can be turned away or charged more because of an illness, pregnancy, or medical condition. 

No doubt there will be start-up problems with the Marketplace. Just as when Medicare was new, the initial problems will be magnified.

“Consumers who raise questions should be able to work their way through any glitches,” Wollan says.

Here are a few starter questions. 

Q. If I have individual insurance, why drop it and sign up for a Marketplace plan?

A. Beginning in 2014, you may qualify to get lower monthly premiums for private health insurance in the Marketplace. Depending on your income, you also may qualify for lower out-of-pocket costs and pay less for deductibles. “The Marketplace makes comparison shopping easier because all policies are displayed in the same clear format, using consistent definitions of terms,” Wollan says. If you’re satisfied with your current health insurance, you may keep it.

Q. Will I be able to keep my own doctor?

A. It depends. Insurance plans on the Marketplace will list their participating network of hospitals, doctors, specialists, pharmacies, and others. “You may check with your health care providers to make sure they participate in any plan you’re considering,” Wollan says. 

Q. Do I need to drop my employer insurance and use the Health Insurance Marketplace?

A. Probably not. If you have job-based coverage, you’re not eligible for premium assistance in the Marketplace unless:

1. Your share of the premium for individual coverage exceeds 9.5% of your income; or

2. The plan pays less than 60% of your health costs.

Most employer plans will pass these two tests. If so, using the Marketplace would leave you paying the entire premium on your own.

Q. How do I get help with paying my health insurance premiums?

A. The only way to get lower costs based on your household income and size is through the Marketplace. “An individual making up to $45,960 or a family of four making up to $94,200 may qualify for lower costs,” Wollan says. To estimate your eligibility, visit healthreform.kff.org/health-reform.You’ll find out if you’re eligible, based on your income, when you complete an application after October 1 this year. Coverage begins January 1, 2014.

Q. What if I can’t afford to buy health insurance in the Marketplace?

A. If you don’t earn enough to file a federal tax return, you’re exempt from penalties. You’re also exempt if you’d pay more than 8% of your household’s income for health insurance, even if you receive help from an employer or the government.

Q. If my current insurance doesn’t meet the minimum requirements in the Affordable Care Act and my insurer raises the standards, can the premium be raised?

A. Yes, your premium may rise, along with the level of medical care and services that are provided.

Q. How does the Health Insurance Marketplace affect me if I’m covered by Medicare or VA benefits? 

A. Currently, 80% of the population has employer coverage (including COBRA and retiree coverage), Medicare, Medicaid, the Children’s Health Insurance Program, VA benefits, or Tricare. These all satisfy the requirement to have insurance coverage.

On October 1, you’ll be able to access your state’s Marketplace online or by phone. Until then, visit heathcare.gov for details.

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