The most significant changes implemented by health care reform legislation will come into force on January 1st of 2014. These changes will have at least some impact on all individual and family policy holders and will also effect grandfathered policies that were effective on or before March 23, 2010. The positive changes will be for those who have been rated up or declined for health insurance in the past, for those who are currently or plan to become pregnant, and those whose income is less than 400% of the federal poverty level (I will be developing a worksheet to help you determine whether you are eligible for a subsidy). The negative changes will be for those who have an average or better than average health rating and for those on the younger end of the health insurance spectrum (20s-30s).
If You've Been Declined or Rated Up
If you have pre-existing conditions, you are now in the sweet spot of health care reform. Starting in October of 2013, health insurance companies will be able to begin accepting applications for policies with a January 1st, 2014 effective date. These policies will not use health status or pre-existing conditions to determine benefits, to decline or charge higher rates. Moving forward, the only factors that will contribute to your health insurance premium is the plan you choose, your age, and tobacco usage. I am not yet aware of how currently effective policies will transition, whether your rating will simply be removed from your existing policy or whether you will need to apply for a new policy to get rid of your rating. I will know more as we get closer to the open enrollment period starting in October 2013.
Maternity Coverage
If you are pregnant or are planning a pregnancy, starting on January 1st, 2014, all new health insurance policies will cover maternity automatically. It has not been made explicitly clear whether women who are currently pregnant will be covered. However, given the language of new policies regarding pre-existing conditions, I am comfortable in speculating that there will not be a waiting period for women who are currently pregnant and whose due date falls in 2014 and beyond. I will give updates as I become aware of definite regulations.
Health Insurance Subsidies
Health insurance policies sold through the NC exchange on or after October 2013, with January 1st effective dates, will be eligible for the subsidy. The subsidy amount will be based on your income and you will be eligible if your income is less than 400% of the federal poverty level. Based on income brackets, the premium you owe for your health insurance policy will be calculated as a percentage of your annual income. As previously stated, I will be creating a calculator to help you predict what percentage of your monthly income a health insurance policy will cost you. Health insurance agents will have the ability to assist you in purchasing a policy through the exchange.
Young and/or Favorable Health Rating
If you are young and/or have a favorable health insurance rating, in almost all cases, you can expect rate increases in 2014. This rate increase is due to required pre-existing coverage and to rate variance shrinking from young to old subscribers. The purpose of coverage penalties for currently uninsured individuals is an attempt to bring in healthy policy holders and temper this increase. There will be high deductible plans available to those who want to satisfy the health insurance mandate while minimizing monthly premium expenses.
There is a danger however, that individuals with low health care expenses will be driven to companies that have high complaint ratios, but offer coverage that fulfills the mandate, because those with poor health are likely to gravitate towards the health insurance companies that most reliably pay claims. If a scenario like this occurs, the reliable health insurance company's premiums will be driven very high, which may even cause them to go bankrupt if they are unable to attract healthy subscribers. The tragedy of this type of scenario would be that the bargain basement health insurance company would come out on top for the very fact that they don't do a good job of paying claims.
Grandfathered Versus Non-Grandfathered
If your health insurance policy was effective on or before March 23, 2010, and you have not made changes to your benefit level since then, you have a grandfathered plan. Grandfathered plans are not subject to many of the health care reform requirements, so if you are one of those who expects to see rate increases due to coming changes, it makes sense for you to stick with your current plan for now. If you are in your 20s or 30s, and/or have a very good health rating with your current plan then you probably fall in this category. However, in several years, up to 40% taxes will be applied to grandfathered plans that will cause them to lose their appeal. When these taxes are applied, then in almost all cases it will make sense to roll into a non-grandfathered plan.
When to Enroll (Open Enrollment)
Starting in October of 2013, you will be eligible to begin applying for a policy that falls under the new health care regulations. The initial open enrollment period will last for 6 months. After this time, there will be an annual open enrollment period at the end of each year (October 15th-December 7th) in which you may switch your benefit level or apply for a policy with a new company. Outside of open enrollment periods, you may change your policy during special enrollment periods created by certain life events such as moving your residence, losing group coverage, getting married, or having a baby.
How to Enroll
The enrollment process for policies sold outside the exchange likely remain much the same as they are today with two major exceptions. Medical underwriting will no longer be a part of applications and enrollment periods will be restricted as described above. Policies sold inside the exchange will have the same type of applications as outside except there will be required proof of income if you are eligible for a subsidized policy. It is not yet clear what specific documentation or tax form will be required to substantiate claims of income.
Current Policies
If you currently have a health insurance policy that you are happy with and plan to keep your policy beyond the open enrollment period, your policy will likely transition on January 1st of 2014 and be automatically modified to accommodate the new regulations coming into force. As previously stated, I am not aware of how ratings on current policies will be handled. They might stay on, in which case you would need to apply for a new policy without a rating to shed your old health rating. The more likely scenario is that non-grandfathered policies will automatically shed their health rating and transition into the new rating pool for that specific policy.
What Should You Do?!
There's nothing to do immediately. As October moves closer and the NC health insurance exchange is up and running, I will be able to provide more specific details and directions in navigating the coming changes. I wish you well and invite you to contact me with questions or concerns.
David Goebelt has been a health insurance agent serving
Blue Cross Monroe NC since 2006, of which two years were spent brokering with a variety of health insurance companies. He is located at Blue Cross Blue Shield Agency - Goebelt
Health Insurance, 212 South Tryon Street, Suite 1605, Charlotte, NC 28281, 704-733-9015.
