The implementation of the Affordable Care Act (ACA), often called Obamacare, leaves many in the dark in terms of understanding what it means to them. We were promised that if you liked your plan, you could keep it. We were promised that rates would go down and more people would have coverage. The reality is that most of us have only seen rates increase and most “grandfathered” plans are now extinct. Being an insurance adviser and licensed agent, I can tell you that I have not seen any rates go down without the benefits going down also. Now that the Covered CA rates are released for 2014, I can confirm that rates are not headed in the downward direction for most. So, what happened? Why are we seeming to fall short? And what’s next?
What’s already happened, in brief, is that we have states implementing the ACA at different paces. This means there are a lot of misconceptions and you have to be careful where you get your information. National news outlets may not have California specific details. Health insurance is state run, though this is a federal bill, so be sure that you have a local and licensed health insurance specialist to help you, your family and business. California has already removed lifetime limits on benefit plans and dependents up to the age of 26 can be covered on their parents’ plan. We had the introduction of grandfathered plans, which simply means your plan benefits have remained basically unchanged since prior to the bill’s passage. The preexisting conditions insurance plan, PCIP, was introduced and then ran out of funding after 2 short months. We had the introduction of small business tax credits, which you might be eligible for if you have a small workforce with wages not common in non-Silicon Valley. We have all sorts of new acronyms to learn, such as MLR, SHOP, FTE, SBC…are you confused yet? Perhaps that is why we seem to be falling short of the promises made prior to the ACA being signed into law back in 2010.
What is coming is the real issue at hand. We have had many changes but most are unaware of why their rates continue to rise. The above provides some insight but let’s now look to the future. We know there are two new taxes that will be added to health insurance plans for 1/1/14. Those taxes will result in an estimated 3.8% increase on premiums. The purpose is to provide funding for the subsidies the exchanges will offer. Many carriers will simply roll those into your premium so you won’t even know what hit ya. Additionally, we have the implementation of “essential health benefits”. This means that we all get to pay for things like pediatric dental but, overall, the essential health benefits are already part of most insurance plans we sell.
Covered California is our state’s exchange, which will open for enrollment 10/1/13. This is reported to be the first six month enrollment window, with effective dates as soon as 1/1/14. Rates are actually released and available for quoting, though they do not seem to be as competitive as we hoped. An interesting tidbit is that plans available on the exchange can also be sold off the exchange. However, if you qualify for a subsidy, you will have to enroll through the exchange. You can go onto the exchange website now to find out if you qualify for subsidies but be sure to be honest about your income because there is a big penalty! Your Covered California Certified Insurance Agent can help you understand all options, including the exchange and other public programs. Showing all options is an agreement of our contract with the state.
Reviewing the topic of ACA implementation could go on and on but, for now, I will stop here and encourage you to call with questions. Call Mika at (408) 395-3303 or email here.