How will the Affordable Care Act work? Here are some of the answers

08/28/2013 5:37 PM

08/08/2014 10:18 AM

When the new health insurance marketplace opens on Oct. 1, it will give new options to Alan Pierson’s clients – and to him.

Pierson, who works for Farm Bureau Financial Services selling life, home, auto and health insurance, was diagnosed with prostate cancer in 2007 – the same year he was laid off from his previous job of 26 years.

He’s not had cancer since 2008, but the disease has left him with a pre-existing condition on his record, which makes getting affordable health coverage – or any coverage at all – difficult.

But under the Affordable Care Act, pre-existing conditions are no longer a barrier to getting insurance, and starting Jan. 1, nearly everyone is expected to have health insurance or face a penalty.

The 56-year-old says he wishes more details on the rates were available so he could look for affordable coverage for clients and for himself .

“I’m very curious to see the details on the marketplace,” said Pierson, who now pays more than $600 a month for his coverage only, and more than $300 a month for his wife and daughter. “A lot of people call and ask questions, and I don’t have a lot of answers.”

Pierson, who is considered self-employed through Farm Bureau, was able to offer a group plan for his employees and himself in order to get coverage.

For others, the cost is a barrier to any coverage at all.

The federal government is preparing for millions of Americans to get health insurance under the Affordable Care Act. In Kansas, there are more than 320,000 uninsured people, and although not all of them will be able to afford health insurance, they may be able to sign up for Medicaid or federally subsidized plans on the new online health insurance marketplace.

“The time for debate about whether the law is good or bad is not what we need to be dwelling on now,” said Mary Beth Chambers, Blue Cross and Blue Shield of Kansas spokeswoman.

“We really need more dialogue that it is the law and this is what it means for Kansas consumers. … The health care system our country has had is unsustainable with costs rising and millions not able to get coverage. But a lot of why it’s not sustainable … is the number of services Americans require and cost of those services … but Americans also need to take some responsibility and ownership of the lifestyle choices we make.”

Blue Cross and Blue Shield of Kansas covers more than 880,000 Kansans in every county except Johnson and Wyandotte.

“We certainly hope to get a big percentage (on the marketplace),” said Kit Wagar, an Affordable Care Act specialist for the U.S. Department of Health and Human Services, based in Kansas City. “The whole goal is to reduce the number of people without access to insurance. We’re not going to get every single person all at once, but the goal is as many people as possible.”

Online marketplace

People can visit www.healthcare.gov to create accounts to prepare for open enrollment, which starts Oct. 1. When open enrollment begins, people can enter information about themselves, including whether they are seeking plans for themselves or their family or are an employer seeking plans for employees.

“It’s a lot like Amazon.com or any other commercial site, except you’re buying health insurance,” Wagar said. “It’s something I think people will be familiar with once they start working with it.”

For individuals and families, the website will require certain information, including the number of people to be covered by the plan and the estimated household income for 2014. Other personal information, like a Social Security number and whether you use tobacco, will also be required.

The site will tailor its questions based on the information you give it, Wagar said. So if a person puts in a low income, the site may steer them toward signing up for Medicaid, or if they have a higher income it may steer them toward other plans so they can see how much of a federal subsidy they could receive to offset costs, he said.

So far, companies that intend to offer plans as part of the online exchange in Kansas are Blue Cross and Blue Shield of Kansas, Blue Cross of Kansas City, Coventry Life and Health, and Coventry Health Care of Kansas, according to Linda Sheppard, special counsel and director of health care policy and analysis for the Kansas Insurance Department.

Coventry is offering both a PPO and an HMO product, so that is the reason for the two different companies, she said.

If a person’s employer offers them “affordable” health insurance, which means it costs less than 9.5 percent of their income, people can still find plans on the marketplace but won’t be eligible for any subsidies, Wagar said.

Plans on the marketplace

When open enrollment in the online marketplace begins, there will be four regular plans – bronze, silver, gold and platinum – that have different levels of premiums and out-of-pocket costs associated with them, but all have to cover “essential health benefits,” including emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, prescription drugs, laboratory services, preventive and wellness services, chronic disease management and pediatric services, as well as oral and vision care.

There will also be a catastrophic plan with lower premiums and variable out-of-pocket costs that will be available for people ages 21 to 30.

The actual rates for some states that run their own marketplace have already started to be released. However, for Kansas, which is going to have a federally run marketplace, the rates from the four companies likely won’t be available until open enrollment begins.

The amount of subsidies people will qualify for on the marketplace will depend on their income. For example, some amount of subsidy will be available to a family of four if they make less than $94,200 per year, or for an individual who makes less than $45,960 per year.

Certain people on the marketplace who purchase certain plans will also be able to qualify for additional help with co-payments and out-of-pocket maximums, Wagar said.

“For moderate-income people, this is a game changer to have help as if they had an employer helping them pay for health insurance,” Wagar said. “It puts a solid plan and protection within reach of the middle class. Frankly, now if they don’t have an employer helping, most insurance is out of reach.”

Determining rates

There are now only four ways that insurance companies can determine rates in the individual market: age, geographic location, family size and whether or not a person uses tobacco.

For Blue Cross and Blue Shield, the biggest questions remain unanswered: How many new members will there be? How many members will jump to other insurers? Are the bulk of people joining Jan. 1 those with pre-existing conditions?

If young, healthy people don’t sign up for insurance under the law, there are concerns that the insurance pools won’t be able to offset the costs of sick people with pre-existing conditions who will now have coverage.

Wagar says that one way the law has tried to help that issue is by allowing dependents to stay on their parents’ plans until they are 26 years old. He also thinks that with the subsidies on the marketplace, younger people will be able to get more affordable insurance.

But others aren’t so sure.

“I think the common thinking on that is that a lot of the young and healthy will stay out of the marketplace, especially the first year when the tax penalty for not purchasing insurance is $95 or 1 percent of your income, whichever is greater,” Chambers said.

Under the law, older people will not be able to be charged more than three times what a younger person is charged, which may lead to an increase in rates for younger people in the individual market.

“We do anticipate that some of the younger, healthy people are likely to see premiums that will be higher than what they’re used to seeing and by the same token the older folks might be around the same or a little bit less, Chambers said.

“There is some upward pressure on the lower end pushing toward the middle, but we’re finding for most states it’s gone up a little for young people, while the decrease for the older ones is often dramatic,” Wagar said.

For those who don’t purchase health insurance, the penalty is $95 per adult and $47.50 per child (up to $285 per family) or 1 percent of the family income, whichever is greater, for 2014, according to the proposed rules on the IRS website.

That penalty will increase in 2015 to $325 per adult, $162.50 per child (up to $975 per family) or 2 percent of family income, whichever is greater.

For 2016 and beyond, the penalty increases to $695 per adult and $347.50 per child (up to $2,085 per family) or 2.5 percent of family income, whichever is greater. After 2016, the amount will be increased by a cost-of-living adjustment.

Small groups, businesses

Under the Affordable Care Act, employers with fewer than 50 employees are not required to offer health insurance.

The part of HealthCare.gov that focuses on small businesses will be called the Small Health Options Program (SHOP), where employers can see which plans are available. That program will have open enrollment all year, Chambers said.

For the small groups to have plans that qualify for tax credits, they must have at least 25 full-time employees who make an average of $55,000 per year or less, Chambers said. Blue Cross and Blue Shield of Kansas has more than 15,000 enrolled employer groups.

“What the marketplace does is make it all available to the public and allows you to compare plans next to each other, monthly cost per employee, premium and copays and all different benefits and how much it costs employers to provide insurance,” Wagar said. “It’s a much more transparent marketplace and we think that helps push down the cost of insurance by making the system more competitive.”

Because Kansas has a federally run marketplace, the employer will still choose a plan for the employees. But the next year in federally run marketplaces, employers can provide a stipend for employees to go and choose the plan that works best for them.

State-run marketplaces will have that ability this year, Wagar said.

“When state officials decided not to do their own marketplace, that’s one thing they gave up for small employers to have more flexibility.”

Earlier this month, the government announced $67 million in grants nationwide to train and pay for workers to help enroll people in the marketplace. In Kansas, Ascension Health (Via Christi), Kansas Association for the Medically Underserved, and Advanced Patient Advocacy received $886,000 in grants.

“A lot of people may never have had health insurance before, and they may need some hand-holding at enrollment time,” Wagar said.

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