Obamacare has arrived. The health insurance exchanges opened last Tuesday morning to a wave of interest that resulted in some long waits and technical difficulties.
The Affordable Care Act rollout has been a long, slow process, and the government -- and media -- haven't done the best job of explaining it to the average person. I answered many questions on launch day, both in real life and on social media. And I've collected seven of the most common questions that still linger after the launch.
(Medicaid and Medicare members have special circumstances that deserve their own answer sheet. Tune back in soon.)
Source: Pete Souza, Wikimedia Commons.
1. How and when do I buy coverage?
Click here to redirect to the appropriate online exchange for plan shopping. There may still be traffic clogs, but that's fine. There's plenty of time: The sign-up deadline isn't until Dec. 14 for plans starting Jan. 1. But the open enrollment period doesn't end until March 31, 2014, meaning individuals can shop for plans without risk of penalty until the end of March (see section six for more on penalties).
So there's time to research, compare prices, and find the right plan.
2. How much will premiums cost?
Head over to the exchange website and start shopping for plans to receive detailed premium information. Having trouble accessing the exchange due to traffic? This calculator can help estimate costs during the wait -- including potential subsidies. (For more on subsidies, see section four.)
Four different plan types exist: Platinum, Gold, Silver, and Bronze. The plans all include the same essential health coverage. But Platinum has the lowest out-of-pocket costs and the highest monthly premiums, and at the other end of the spectrum, it's vice versa for Bronze.
3. How much will I pay out of pocket?
The Kaiser Family Foundation (link opens PDF) outlined the actuarial values of the general Obamacare plans. Those numbers give an average cost-coverage percentage for each plan level.
|
Plan |
Actuarial Value |
Average Cost to Patient |
|---|---|---|
|
Bronze |
60% |
40% |
|
Silver |
70% |
30% |
|
Gold |
80% |
20% |
|
Platinum |
90% |
10% |
Source: Kaiser Family Foundation.
The actuarial values simply define a baseline. An individual's actual out-of-pocket costs will vary depending on his or her specific situation. People with low incomes may qualify for subsidy assistance to help keep out-of-pocket costs low.
4. How does subsidy assistance work?
There are two different kinds of financial assistance available, and most people will receive some sort of discount. The marketplace will inform qualifying individuals of potential savings during the application process.
Obamacare's cost-sharing subsidy allows lower-income people to sign-up for a Silver plan but pay less out of pocket. The Silver plan has an actuarial value of 70%, but that number rises for those with incomes at certain levels above the federal poverty level, or FPL, which is currently about $19,500 for a family of three.
|
Income Level |
Silver Actuarial Value |
|---|---|
|
100 to 150% FPL |
94% |
|
150 to 200% FPL |
87% |
|
200 to 250% FPL |
73% |
Source: Kaiser Family Foundation.
There's also the Premium Tax Credit, which can help lower monthly payments for qualified individuals who elect to receive the credit in advance. The advanced credits would then subtract from the total credit amount calculated on 2014 tax forms, which you'll file in 2015. If the total credits due are higher than the advance credit, the difference will come back with the tax refund.
Or individuals can opt against advanced payments and instead receive the whole tax credit with the 2014 return.
5. What changes for people who have insurance through an employer?
Nothing -- unless the employee is unhappy with the provided coverage and wants to shop the exchange. But know that the employer probably won't help pay the premiums, and the subsidies likely won't apply.
But if the provided plan's annual premiums add up to more than 9.5% of the employee's household income, the health care exchange treats the person as having unaffordable insurance and allows the employee to look for savings from exchanges.
A person who leaves a job and loses insurance can shop for a plan on the exchanges without penalty, even if it happens outside the open enrollment period.
6. Do people who choose to remain uninsured have to pay a penalty?
Most likely. The tax penalty for remaining uninsured has a three-year phase-in period and then increases yearly according to cost of living. For 2014, the penalty is the greater of:
- $95 per adult and $47.50 per child (up to $285 per family); or
- 1% of income above the relevant filing threshold.
7. What does Obamacare mean for investors?
After all, The Motley Fool is all about investing. We'll have to wait out some open enrollment sign-up data to know how much each participating insurer will benefit.
Humana (HUM 1.19%) is up nearly 40% year to date due mostly to potential gains from Obamacare. UnitedHealth Group (UNH 0.46%) has gained nearly 35%, and Aetna (AET +0.00%) is up more than 46%.
Here's a look at the insurers' Obamacare-relevant medical-membership numbers as of the end of the last quarter:
|
Covered Lives* |
Medicare Advantage |
Medicaid | |
|
Humana |
5,889,200 |
2,029,700 |
70,600 |
|
UnitedHealth |
45,000,000 |
2,920,000 |
3,940,000 |
|
Aetna |
8,395,000 |
948,000 |
1,169,000 |
Source: Company 10-Ks. *Medical coverage only; excludes dental, Part D stand-alone, etc.
What does Obamacare mean for Medicare Advantage, or MA, and Medicaid? Nothing changes on the patient end of Medicare Advantage. But Obamacare includes new requirements that may provide better coverage for the same price.
Insurers won a major Medicare Advantage victory in the spring. The Centers for Medicare and Medicaid Services said that MA payment rates -- which the government pays out to back the insurers' plans -- should rise more than 3% next year. Humana shares rose 5.5% on the news due to its heavy reliance on MA plans.
Aetna and Humana have both gainewd a stronger foothold in Medicaid coverage in the past year through the acquisitions of Coventry Health and Metropolitan Health Networks , respectively. But Medicaid's fate under Obamacare is still murky.
According to The Advisory Board, 15 states were still undecided on participating in the optional Medicaid expansion as of mid-September. The expansion aims to broaden the program's definition to allow more people to qualify for coverage. Nineteen states and Washington, D.C., have opted into the expansion, and 15 have opted out entirely.
Ultimately, UnitedHealth is arguably the least exposed to potential issues because of its low dependence on the government programs. And its high commercial membership also hints at its broad reach, which could open up more opportunities in the general health-insurance exchanges.
Foolish final thoughts
The main takeaway of this mess of information is this: Take time and do research. The closest deadline for purchasing coverage is early December. And investors who don't own shares in an insurer already should hold off until more Obamacare pieces fall into place.
