Obamacare and you: An explainer

If you haven’t already been hearing a lot about the federal health reform lately, chances are you will soon enough. Several major provisions of the law, commonly known as Obamacare, are taking effect in the coming months.

But there’s still a lot of confusion about what the law does, how it works, and even whether it’s going to happen. (Short answer: yes.)

Here are some details on what’s happening, how it will work, and what it means for you.

1. What’s changing because of Obamacare?

There will be a new marketplace for people to buy private health insurance, wider eligibility for Medicaid, and new regulations for insurance plans.

On Oct. 1, the state’s health insurance exchange, known as Access Health CT, will begin selling health plans. Those plans will take effect Jan. 1, and they’re expected to cover people who are currently uninsured, who buy insurance on their own, or who work for small businesses. Many customers will qualify for discounted rates on their premiums and some will get help with cost-sharing from the federal government.

On Jan. 1, the state’s Medicaid program will expand to cover adults earning up to 138 percent of the poverty level. Between 50,000 and 60,000 state residents are expected to become eligible.

Also on Jan. 1, the health reform law’s “individual mandate” will take effect, requiring most people to have health insurance or pay a penalty. (There are a handful of exceptions. For more on that, click here.)

A number of changes to insurance regulations will also take effect Jan. 1. Insurers will be required to cover people regardless of their medical histories, and won't be allowed to charge people more for having pre-existing conditions. Insurance companies will also be prohibited from charging different rates for men and women, and there will be limits on how much premiums can vary based on a person’s age.

2. What is the health insurance exchange? What is Access Health CT?

Access Health CT, also known as the exchange, is a new marketplace for people to buy insurance. (You might have seen its ads.) It will sell health plans offered by private insurance carriers, including Anthem Blue Cross and Blue Shield, Aetna, ConnectiCare, UnitedHealthcare, and HealthyCT. Customers will be able to compare plans online and get help signing up online, in person or by telephone.

3. Who is going to buy insurance through the exchange?

The exchange (also known as Access Health) is intended for people who buy health insurance on their own and for small businesses.

It will not replace the state’s existing individual and small-group insurance markets, so anyone who currently buys their own insurance won’t have to buy it through Access Health if they don’t want to.

But the health reform law provides federal subsidies to discount the cost of insurance for people below certain income levels, and that help is only available to people who buy their plans through the exchange.

To find out if you would qualify for a discount on insurance through the exchange, try one of these calculators (click here or here). An estimated 176,000 state residents are expected to be eligible for federal subsidies to reduce the cost of insurance, according to Access Health.

Access Health expects between 80,000 and 100,000 customers in its first year.

4. What happens to people who get Medicare or Medicaid now?

You’ll still get Medicare or Medicaid.

5. What happens to people who get insurance through their jobs?

If you work for a large company (with more than 50 employees) and get insurance through your job, nothing in the law requires your employer to change what it’s doing. In fact, beginning in 2015, your company would have to pay a penalty if it didn’t offer you coverage. (That provision was originally supposed to take effect in 2014, but the Obama administration pushed it back.)

However, it’s possible that some companies that currently provide coverage will drop their insurance plans and let their workers buy coverage through the exchange. Whether that happens, or to what extent it does, remains to be seen.

If you work for a small company, your employer might choose to offer you coverage through the exchange, or continue offering coverage separate from the exchange. Nothing in the law requires that your employer drop your coverage, but if it does, the company won’t face penalties the way a large employer would. Some small businesses will be able to qualify for federal tax credits through the exchange to help pay for the coverage.

6. What if I don’t want to buy health insurance?

You’ll have to pay a penalty, unless you qualify for an exemption.

The penalty in 2014 will be $95, or 1 percent of your household income, whichever is higher. That will rise in 2015 to $325, or 2 percent of your household income, whichever is higher. In 2016 and beyond, going without insurance will cost you $695 or 2.5 percent of your household income.

There are some exceptions. You won’t face a penalty for not having insurance if you are:

  • Not in this country legally
  • A member of an Indian tribe
  • Incarcerated
  • A member of a religious sect that has objections to health insurance
  • A member of a health care sharing ministry
  • Very poor (you have too little income to file a tax return. Many people in this category will qualify for Medicaid, which is free in Connecticut.)
  • Someone for whom insurance would be considered too expensive to buy, even with employer contributions and/or federal subsidies
  • Uninsured for fewer than three months during a year

For more details on exemptions to the individual mandate, click here.

People covered by Medicare, Medicaid, the Children’s Health Insurance Program (HUSKY B), TRICARE or VA health benefits are considered to have insurance and won’t face penalties.

7. I can’t afford health insurance now, so what’s going to change in 2014?

It depends on your income.

If you earn up to 138 percent of the poverty level, you’ll be eligible for Medicaid, which is free in Connecticut. That level is, in 2013 dollars, about $15,971 for an individual and $32,734 for a family of four (but the limit will be slightly higher in 2014). (Technically, the law sets the income limit for Medicaid at 133 percent of the poverty level, but it allows a certain amount of income not to count toward this calculation, making the effective limit 138 percent.)

If you earn below 400 percent of the poverty level, you’ll be eligible to buy a health plan through the exchange at a discounted rate (subsidized by the federal government). You’ll be eligible as an individual if you earn up to about $46,000, or as a family of four earning up to about $94,000, in 2013 dollars (the threshold is likely to go up a bit next year). Access Health expects that about 72 percent of Connecticut residents have income levels that would qualify them for subsidies.

If you earn more than 400 percent of the poverty level, you won’t qualify for any federal assistance buying insurance. About 49,000 people in Connecticut who are currently uninsured are expected to fall into this category.

8. How do these insurance “discounts” work? How much help will people get?

The federal subsidies will vary based on your income. They'll be set so that a person or family won't pay more than a fixed percentage of their income for health insurance if they select a certain exchange plan.

If you earn less than 150 percent of the poverty level, the federal government will cover enough of your premium costs so that you’re left paying no more than 4 percent of your income. That percentage will increase as a person’s income does. Those earning 300 percent to 400 percent of the poverty level will pay up to 9.5 percent of their income on their premiums.

Those levels are based on the cost of a certain exchange plan (the second-lowest cost silver plan; more on those definitions below).

The subsidies will be paid directly to your insurance company. You’re only eligible to get them if you buy your insurance through the exchange.

The subsidies are considered advanced tax credits, which means that you’ll get them right away. But if your income is higher than you initially expected and you get more in subsidies than your total-year income entitles you to, you’ll have to repay at least part of the difference with your tax return. The amount people must pay will be capped, and that will vary by income. For more information, click here.

People earning up to 250 percent of the poverty level will also be eligible for help reducing the out-of-pocket costs they’ll face for things like deductibles and copayments.

9. What kind of insurance plans are available through the exchange?

For 2014, four private insurance companies intend to sell plans through Access Health. Anthem Blue Cross and Blue Shield and HealthyCT have submitted proposals to sell plans through both the individual and small-group exchange markets. ConnectiCare Benefits plans to sell insurance through the individual exchange, while UnitedHealthcare intends to sell plans to small groups. (Aetna initially filed proposals to sell plans through the individual exchange but withdrew in August.)

10. What choices will exchange customers have?

You’ll get multiple choices from each insurer. Carriers will offer the plans with varying levels of coverage, known as “actuarial value.” They’re identified by types of metals: bronze, silver and gold. In addition, people under 30 will have the option of buying a “catastrophic” plan that offers less coverage but costs less.

The difference between the different metal plans is the amount of your health care costs the plan will cover. People with bronze plans will have to pay more out-of-pocket when they get medical care than people with silver or gold plans.

The trade-off is in what the plans cost in premiums: A bronze plan will have lower premiums than the gold version.

Why would someone pick one over the other? Someone who is relatively healthy and doesn’t use much medical care might decide to opt for the lower premiums of a bronze plan, taking on the risk of having to pay more if he or she requires medical care. By contrast, someone who uses a lot of medical services might find it worthwhile to pay higher premiums to buy a gold plan so that he or she will have lower out-of-pocket costs when getting care.

Carriers can offer two different types of plans through Access Health. One is a standard plan, based on guidelines established by the exchange, which will allow consumers to make comparisons between their options. Insurers can also offer a second type of plan that doesn’t necessarily fit all the requirements of the standard plans. For example, the non-standard plans could have more limited networks of health care providers. The idea is to allow insurers to experiment with different models that could potentially bring down the cost of insurance.

11. What are the out-of-pocket costs?

If you buy a bronze plan -- the cheapest available for anyone 30 and older -- you’ll have a $3,250 deductible (it’s twice that much for family coverage). Once you spend that much on medical care, you’ll still have to pay 40 percent of the cost for many services, including visits to specialists, outpatient hospital services, emergency room visits and lab work. You’ll also have to pay 40 percent of the cost of non-generic drugs. But each customer’s out-of-pocket costs will be capped at $6,250, or $12,500 for a family plan. After that point, the plan would pay the full cost.

Silver plans have similar deductibles - $3,000 for medical services, plus $400 for prescription drugs; both of those figures are doubled for family plans. But once you hit the deductible, you will generally pay fixed copays for medical services and prescription drugs, rather than a percentage of the total cost. Primary care office visits will cost $30, specialist visits will cost $45, emergency room visits are $150, and lab work is $30, for example. As with the bronze plan, your out-of-pocket costs would be capped at $6,250 for an individual or $12,500 for family coverage.

Gold plans cost the most, but people who buy them will face the lowest out-of-pocket costs. There’s still a deductible, but it’s lower: $1,000 for medical services, and $150 for prescription drugs (again, double that for family plans). As with the silver plan, once you hit the deductible, you’d have fixed copays for most medical services and medications, including $20 for a primary care visit, $45 for specialist visits, $150 for an emergency room visit and $20 for lab work. The maximum amount you’d pay out-of-pocket is lower too: $3,000 for an individual and $6,000 for a family.

All those figures are for health care providers in the particular plan’s network. Deductibles and cost-sharing are higher for out-of-network providers.

12. What will these plans cost?

For people who buy their own insurance, the monthly premiums will range from $197 for a 21-year-old in Hartford County to $894 for a 64-year-old in Litchfield County. The chart below has more examples, based on customers in Hartford County. You can find a full list of rates by clicking here.

How are these calculated? Each plan has a base rate, which is the starting point for calculating a person's rate. The base rate gets adjusted up or down based on the county where the customer lives, and will either stay the same or be increased depending on the person's age.

On the individual exchange market, the base rates are:

Bronze: $236.59 for Anthem, $215.17 for ConnectiCare, and $245.45 for HealthyCT.

Silver: $299.21 for Anthem, $269.66 for ConnectiCare, and $310.02 for HealthyCT.

Gold: $346.91 for Anthem, $309.64 for ConnectiCare, and $321.22 for HealthyCT.

The base rates for small-group plans are:

Bronze: $277.95 for Anthem, $298.05 for HealthyCT, and $271.91 for UnitedHealthcare.

Silver: $351.42 for Anthem, $340.96 for HealthyCT, and $361.26 for UnitedHealthcare.

Gold: $407.32 for Anthem, $390.05 for HealthyCT, and $435.72 for UnitedHealthcare.

13. How will my rates be determined?

The plans will each have a base number that’s used as a starting point for calculating premiums. From there, your particular premium will be based on three factors: Age, location, and which type of plan you choose.

You can start by picking a plan type -- bronze, silver or gold. In general, bronze plans will have the lowest premiums but leave you to pay more when you get care in the form of deductibles, copays or coinsurance. Gold plans will have the highest premiums but the lowest out-of-pocket costs when you get care. People under 30 will also have the option of buying a catastrophic plan, which costs less but provides less coverage.

Plan costs will also vary by age, with younger people paying lower rates. A 64-year-old will pay three times as much for the same plan as his or her 21-year-old neighbor.  (In the current market, that difference is even higher, with some older people paying as much as six times what their younger counterparts pay.)

The location variation is based on county. In general, people in Fairfield County will pay the most for their insurance, while people in Hartford and, in some cases, Litchfield counties will pay less.

Unlike the current individual market, men and women will pay the same rates. And your medical history won’t be a factor in determining whether you can receive coverage, or how much you pay.

In some states, insurance rates will vary based on whether a person smokes or not, but that won't be the case in plans sold through Connecticut's exchange.

14. Where can I learn more?

Access Health CT: 860-757-5300

Questions@AccessHealthCT.com
www.accesshealthct.com

Office of the Healthcare Advocate: 1-866-466-4446

Healthcare.advocate@ct.gov

www.ct.gov/oha

The Connecticut Insurance Department’s consumer affairs division: 1-800-203-3447 www.ct.gov/cid

U.S. Centers for Medicare and Medicaid Services: www.healthcare.gov

Comments

comments