A 2012 Deloitte survey of U.S. businesses found that 9 percent of U.S. employers plan to drop health care coverage for their workers in the next three years, and that an additional 10 percent are considering dropping coverage. Meanwhile, major provisions of the Affordable Care Act (ACA) take effect in less than five months, creating a new health care reality full of unknowns.
As a result, many Texans may find themselves forced to make difficult healthcare decisions in an uncertain market amidst growing misinformation and warnings to avoid fraud artists attempting to cash in on their confusion.
“Many individuals will be making tough health care decisions on their own for the first time,” said Mark Bellman, president of the Texas Association of Health Underwriters.
“The Affordable Care Act is going to create a new health care reality in Texas, placing more responsibility on individual Texans,” he said. “Many may find themselves feeling unprepared to make these important, complex decisions in a time of uncertainty and change.”
What is a Texan who loses his or her health coverage, or never had it, to do? When major provisions of the ACA take effect on Jan. 1, 2014, uninsured individuals and families will be required to purchase or obtain health insurance or else pay an annual penalty — penalties that increase every year until 2016, when they cap at $695 per person or 2.5 percent of family income, whichever is greater.
Texans who lack employer coverage but want to avoid this penalty will face a series of decisions they may be unprepared to make. Some low-income Texans will qualify for Medicaid coverage; however, Texas has decided not to expand Medicaid, forcing thousands of additional low-income Texans to obtain coverage on their own. Texans who do not qualify for Medicaid can purchase insurance through health Exchanges, organized insurance marketplaces created by the ACA.
Deciding if the Exchanges will be right for you is no easy task, as they do not yet exist and even insurers are unsure how they will be implemented. The ACA requires the Exchanges to feature four tiers of insurance coverage, “Bronze,” “Silver,” “Gold” and “Platinum.” Some patients under 30 will be eligible for the cheapest “Catastrophic” plan. Only a few states have released information about premiums in the Exchanges, however; to date, states such as New York, California, Oregon and Washington have established Exchanges with lower than expected premiums, but that is not expected to be the norm.
Information on the Texas Exchange is expected to be released in September.Signing up for an Exchange is no simple task either: The application will ask for financial data few customers will have at hand, as well as decisions regarding levels of coverage that many have never had to make.
Insurance plans that may be more suitable for some consumers will also still be available outside the Exchange, compounding the considerations that individuals and families will face.
Some Texans will be eligible to receive federal subsidies to help them cope with the requirements of the individual mandate. Individuals making less than $43,320 or families making less than $88,200 qualify for tax credits that vary by income and are structured so that an individual or family is not required to pay more than a specified percentage of their total income in health premiums. For example, an individual making between $32,490 and $43,320 would receive credits equal to the total amount necessary to ensure that no more than 9.5 percent of that individual’s income is spent on health insurance premiums.
The final option is simply to pay the penalty and continue living without insurance. Many individuals may opt for this route: A person making $45,000 annually, too much for a subsidy, would pay 2.5 percent of his or her income ($1,083) in fines, less than the expected cost of a Bronze-tier plan from an Exchange, but would still lack health insurance coverage.
Bellman said Texans should start preparing for next year as soon as possible and not wait to ask for advice.
“Texans need to recognize that big change is coming, take steps to be prepared, and seek help from credible and trusted individuals, such as employers, knowledgeable friends and family, or professional benefit advisers,” he said.