As healthcare reform changes move ahead, more employers may choose to give a set amount of money to workers so they can purchase their own health insurance on private employer-sponsored exchanges, rather than providing their healthcare insurance plans for them.
Currently, only about 5 percent of companies are using this approach, in five years, half of all companies will be offering these private-choice dollar benefit plans, according to Alan Cohen, chief strategy officer of Liazon, a firm that sets up private exchanges.
On Oct. 1 of this year, state and federal insurance exchanges will be ready for open enrollment.
People who work for large companies will likely see fewer changes than everyone else at first. However, people who have no insurance, work for small employers, or buy their own insurance will see dramatic changes in the near future. Here’s what to expect:
Your Taxes in 2012 May Affect Your Future
You may to qualify for subsidies. People who earn 400 percent of the federal poverty level or less will have their premium costs capped and excess premium covered by tax credits.
Singles earning $44,680 or a family of four earning $92,200 would see their health insurance costs capped. Premiums are set to be less than 9.5 percent of household income. Lower incomes would qualify for lower caps and higher subsidies.
Incomes of $22,340 for singles and $46,100 for families of four, will qualify for lower deductibles and co-payments. Government subsidies will pay for this.
These numbers are based on modified adjusted gross income, which is calculated like this: your tax-exempt interest income + tax-free Social Security benefits + your adjusted gross income.
Your accountant can help you determine if there are small adjustments such as contributing more to your retirement account, in order to qualify for these income thresholds.
Married couples should consider joint filing status, suggests Cheryl Fish-Parcham, deputy director of Families USA, a consumer advocacy organization. Married-separate filers will have a very hard time claiming the subsidy credits because of strict regulations.
Don’t Fall Victim to a Scam: Educate Yourself
Some experts have expressed concern that people who are now both required to buy health insurance and responsible for choosing their own may be a target for scams. Starting October 1st this year, public exchanges featuring health insurance plans that meet minimum federal guidelines will be available for enrollment. They can’t exclude people with pre-existing conditions and don’t have lifetime spending limits.
Web-based exchanges run by private companies will also be available at this time. Private exchanges available through employers will also be available. “We’re a little concerned about the confusion that might result,” McAndrew said.
All phealth insurance policies provided by these exchanges will meet the minimum federal guidelines and pricing rules. However, private exchanges may have other types of separate coverage available, like vision or dental plans. State exchanges will also check to see if there are other federal and state assistance programs you could qualify for.
To be prepared, you should analyze how much and how often do you use of your current health insurance plan. Do you go to the doctor frequently? Do you have a pre-existing chronic condition? Do you want to pay a higher premium or less for higher-deductible plans? You will have an easier time shopping for insurance if you have an idea of what your needs are.
You Can Save Money Right Now
Because Health Savings Accounts may not carry over to the future with the new Healthcare Laws, it’s probably a good idea to max out your contribution in 2012 and 2013 if you have a high-deductible plan. If in the future you cannot use an HSA, that money could come in handy later.
SOme people may see their health insurance rates go up in 2014. As insurers stretch to meet higher coverage standards, the costs to others could be affected. Some young people could find their insurance costs rising, said Sam Gibbs, president of eHealth Inc’s Government Systems division.
Ceci Connolly, managing director of the PwC Health Research Institute, said that as more workers may be switched to higher deductible plans, they may want to know more about what they are getting. After moving to a high-deductible plan herself, she started questioning her healthcare costs more carefully.
“When the first $3,000 to $5,000 is out of your own pocketbook, you might think differently about the different tests and screenings; the things that get ordered up quickly.”
If you have questions, you can find more information on government websites, or you can speak to a local expert. Call (949) 222-0444 to speak to a local insurance expert.