Guest Post: The Reality Of Health Insurance Exchanges

The legislation has passed and the legal challenges are, for all intents and purposes, exhausted. It’s time for American businesses and individuals to start dealing with the reality that the Patient Protection and Affordable Care Act, also known as ObamaCare, is now the law of the land.

Health Insurance Exchanges

One of the most important provisions of the PPACA created state and federal health insurance exchanges, online marketplaces that will offer people and businesses the opportunity to shop for health insurance plans on the Internet and choose the plan and premiums that fit their needs. They will be able to start buying insurance on Oct. 1, 2013, but the plans won’t go into effect until Jan. 1, 2014. And, if all goes according to White House predictions, the exchanges will help individuals and small businesses shop for insurance coverage and get a better deal than they’ve been able to garner in the past.

In fact, the federal government will subsidize health insurance premiums for many Americans. For instance, Washington will pay for part of your premiums if your annual income is between $15,302 and $46,021 for an individual and from $31,155 to $93,700 for a family of four. Those who earn less than $15,302 probably qualify for Medicaid, which is not available through the health insurance exchanges. At the same time, if you currently have high-end coverage, holding on to it may cost you big time in the form of taxes.

Depending on your point of view, the health insurance exchanges will either fuel competition among insurance companies and increase the size of the insurance pool, which will in turn make insurance more affordable and more accessible, or the exchanges will burden American taxpayers and the country’s economy as a whole with ever-increasing health care costs.

Financial Sense

If you own a business, you’ll have to decide what makes more financial sense: providing your employees with some type of health insurance plan or letting them purchase their own insurance through the newly-established health insurance exchanges.

Businesses and individuals will be able to buy one of three levels of health insurance from the exchanges. The most expensive plans will have lower deductibles, while those insured under the least expensive plans will have higher out-of-pocket costs. Deductibles will be no more than $5,950 a year for individuals and $11,900 for families. According to the White House, an estimated 23 million Americans will buy their health insurance through the exchanges.

Health Plans Will Cover…

All plans sold under the health insurance exchanges will cover:

• Emergency services;
• Hospitalization;
• Maternity and newborn care;
• Mental health and substance abuse services, including behavioral health treatment;
• Prescription drugs;
• Rehabilitative services and devices;
• Preventive and wellness services, as well as chronic disease management;
• Pediatric services, including oral and vision care.

Probably the most controversial parts of the PPACA are provisions that (1) prohibit insurance companies from denying coverage based on pre-existing conditions, and (2) permit individuals to get around the rule that they must have health insurance by paying a fine that is less costly than the insurance itself. This could mean that some people will pay the fine ñ a tax, actually, according to the Supreme Court ñ until they get sick, at which point, they will buy health insurance.

In the past, insurance companies have refused to pay for necessary health care because of pre-existing conditions. According to a study by the House Committee on Energy and Commerce, between 2007 and 2009, the nation’s four largest insurers ñ Aetna, Humana, UnitedHealth Group and WellPoint ñ rejected 212,800 claims for this reason. This will no longer be an option for insurers.

In addition, the PPACA will get rid of lifetime and annual limits on plans purchased through health insurance exchanges. This will eliminate the possibility of financial ruin for individuals ñ and the employers who insure them ñ with long-term and unusually expensive medical issues.

Who Will Run The Exchanges?

The states now have until Feb. 15, 2013 to decide whether they will set up their own health insurance exchanges. Unsure of the ultimate cost of doing so, many states have chosen to let the federal government handle that job.

As of the end of 2012, 18 states, mostly in the far West and the Northeast, had chosen to establish their own health insurance exchanges. Twenty-five states, many of them in the South and the Midwest, had decided to let the federal government operate the exchanges, while another seven states had opted for a partnership with Washington.

Regardless of who is operating the health insurance exchange in your state, the way you purchase insurance is going to change. You probably won’t know for sure who the winners and losers will be in the new world of health care until all the provisions of the Patient Protection and Affordable Care Act are implemented.

How will these new rules affect you and your family? Do you see the centralization as a good thing or a bad thing?

This post was provided by John Egan is managing editor of Insurance Quotes, a popular insurance website that provides online services to consumers seeking Auto Insurance knowledge and savings on their car insurance policies.