The Affordable Care Act is here.
And many people are practically foaming at the mouth in excitement.
I’ve never been excited about the legislation for a number of reasons, but I recently learned three very important items that scare the hell out of me.
I’ve written several articles about Obamacare, but I have yet to read or see anything that goes into any detail like what I’m going to explain.
And that’s scary. Because I think the examples that follow are just the tip of the rapidly melting iceberg that is the Affordable Care Act. Two of the following examples will drastically affect both accessibility and affordability. And that’s a nightmare.
In order to make health insurance more “affordable”, insurance companies are severely narrowing their networks
And when I say “narrowing” I’m talking skinnying it down from a nice round apple shape to one the thickness of a piece of string cheese.
I understand why the insurance companies would do this- they can’t deny applications, are very restricted in premiums that can be charged and can’t exclude pre-existing conditions. So the only way left to control costs of any sort is to limit the size of the provider network. So with a much smaller network, this means you will probably incur a lot more out of network costs and therefore pay more out of your pocket.
So, yes, paying $100 a month for health insurance on the exchange seems like an awesome idea. But what are you giving up instead?
When you’re looking for a health insurance plan, whether tomorrow or in a few months, you need to look at the provider network. Without fail.
If the network sucks, sure you might save $500 a month in premium, but your hospital visit may end up costing you $10,000 as opposed to $5,000. Unless you plan on never getting sick…..Let me know how that works for you by the way….
So please, please, please (pretty please?)- check the network of any plan you’re researching. Otherwise, you could be in for a VERY nasty surprise.
If your health insurance company offers an early renewal option, seriously consider it
For individual health insurance, many of our companies are offering a December 1 early renewal option. What this could mean for you:
- Lock in current rates- our largest company, Anthem, just got their individual plans approved. I have plan descriptions. But no rates yet. And no clue of when I will have them. Perhaps locking in the rate isn’t that bad of an idea since I have no information to the contrary. You may feel the same……
- New 12 month rate guarantee. It’s exactly what it says- rates are guaranteed for 12 months.
- Preserve your existing provider network (this is a BIG deal in my opinion- especially if many companies put the squeeze on their networks).
If you get info offering an an early renewal option, don’t throw it away. Read it. Call your health insurance agent. Talk about it honestly. Get as much information as you can before you make a decision. Because once you do, that’s it. There’s no going back.
Affordability applies to premium only, NOT the out of pocket expense
By law, health insurance plans have to achieve certain cost-sharing percentages. In order to reach those percentages, companies will have to make significant adjustments to plan designs. One of the adjustments will be an increase in out of pocket costs for the consumer. For example, one of Anthem’s Bronze plans (60% cost-sharing) has an individual deductible of $1,250 and out of pocket of $5,000.
Wave goodbye and blow a kiss to the days of low deductible, low out of pocket plans.
So even if someone gets significant financial assistance to reduce the premium, that doesn’t necessarily mean the deductible and out of pocket will be “affordable” to that person. Can you appreciate the distinction? I don’t know many people that can drop $5,000 without batting an eyelash.
So, if you’re expecting to see bells & whistles, low deductible plans in 2014, you’re going to be sorely disappointed.