The Affordable Care Act and its implementation have left many wondering what to do for this year as there is an unknown about 2014. By unknown I mean we hear costs will go up 50-100% once the exchanges open and all of the essential benefits are incorporated. We hear that, but I guess we do not know factually.
We have also been told that health insurance claims expense is expected to rise nationally 32%. Ohio and Wisconsin it is projected to increase 80%, Indiana 67% and Illinois and more than 50% in Illinois. What I know from being in this business for as long as I have, is that if claims go up 32% so do your premiums.
Now we also have to figure in all of the mandates that come with the law, by mandates, I mean benefits that will be required to be in every health plan, some by all plans whether inside or outside the exchange, some by the exchange only. The more mandates the more your insurance will cost. The government keeps referring to it has FREE preventative care, trust me it is built into the premium.
For the past four months, I have been recommending to my clients that if they need to change plans due to rate increases and what not, to move to a short term plan. A short term plan is just what it says for a specified period of time. In most states it is twelve months, in Ohio, it is six months. That is what I have been recommending this year due to uncertainty.
Within the last week, there is now some certainty. United Health Care said, their Golden Rule division would not participate in the exchanges. That gives them some more flexibility. They will still need the guarantee issue and the essential benefits, but they will not be forced to have a maximum deductible of $2500. They will not need everything that the exchange plans will have. With this said, United Health Care believes that their rates come 2014 will only increase 15-20%. Now compare that to 100%. Just for simple math, let’s say you are currently paying $500 per month for your health insurance. A 100% increase doubles your premium to $1000 per month. A 15 % increase would only be $575.
If you purchase a plan outside the exchange you are not entitled to any form of a federal subsidy. However, they have said that a family making over $93,500 would not be entitled anyway, so for many people who would not qualify United Health Care makes a lot of sense. If you do get a subsidy, of say 30%, you would still be paying $700 by my current example. So again you should look outside the exchange.
United Health Care also said if you qualified for an underwritten plan this year, it will also be advantageous as you will not be subject to the larger premiums we will see when the underwriting goes away. This makes sense because they will maintain a “healthy” block of business to go with the guaranteed issue block, which would have to cost more as you are then insuring pre-existing medical conditions.
Talk to an experience broker, and know your facts before purchasing insurance.
Thanks for reading.
Eric Wilson is President of I Sell Health, Inc, based in Romeoville, IL which is in the Chicago Suburbs.