How will the Affordable Care Act Affect Consumers?

With its beautiful fall foliage, October is a month of many changes. However, the leaves aren’t the only things to change this autumn. October 1, 2013 marked the start date of the open enrollment process for the Affordable Care Act (ACA) Health Insurance Exchange/Marketplace.

Yet, with all the ongoing changes to the healthcare reform and the recent government shutdown, most people are still struggling to understand what this dynamic change means and how it will affect them.

With the changes to the healthcare system, the responsibility of finding and securing health coverage is shifting from the employer to employees, giving workers more control over their healthcare options. However, this shift is an unwanted one.

In a 2013 Aflac WorkForces Report, 54% of workers stated that they would prefer to not have greater control over their insurance options. This is a grave error on behalf of individuals, making it easy to be taken advantage of during this transitional period.

As of September 13, employers were informed that they would no longer be penalized if they did not notify employees about their options under the healthcare reform by October 1. This message was not meant as a sign for employers to neglect to inform employees on the matter.

According to the Wall Street Journal, various carriers such as Humana Inc. and certain branches of Blue Cross Blue Shield, threatened customers with increases in their rates if they did not immediately renew their policies for 2014. Other companies worded their notices in a misleading manner or only acknowledged the Marketplace in a footnote, said the Wall Street Journal.

These actions developed from the carrier’s desire to have as many healthy people on a plan as possible, concludes the Wall Street Journal. Under the ACA those with pre-existing health conditions, who were uninsured before, will receive health insurance for the first time.

“What [insurers are] gravely worried about is they won’t get enough healthy people to pay for the costs of the sick people,” said Robert Laszewski, president of Healthy Policy and Strategy Associates LLC, in an interview with the Wall Street Journal.

Business Insurance Magazine put together a series of graphs detailing the estimated cost trends of the healthcare system under the reform. In 2014, the chart showed an 8.3% increase in the annual overall costs of health insurance. This spike is a result of the sudden intake of customers by insurance companies. Premiums will increase to offset the number of people gaining insurance for the first time.

Consumers must now weigh their options under the ACA and decide whether it is best for them to:

  1. Renew their insurance policy with their current carrier,
  2. Switch to a different carrier, or
  3. Search for coverage through the Marketplace.

About the ACA:

In summary, the ACA is a way to ensure that everyone in the United States maintains some level of health insurance. This coverage can be found either through employers or the new Health Insurance Exchange/Marketplace (the Marketplace). If employees decide to opt out of their employer’s health plan, they risk losing any contributions towards those costs from the employer.

The Marketplace requires consumers to enter personal information and then select the level of coverage they want to receive. Plans will be separated into four categories: bronze, silver, gold, and platinum. The following information is gathered from the National Association of Insurance Commissioners (NAIC):

  • Bronze Plan: On average, the plan pays 60% and the consumer pays 40%.
  • Silver Plan: On average, the plan pays 70% and the consumer pays 30%.
  • Gold Plan: On average, the plan pays 80% and the consumer pays 20%.
  • Platinum: On average, the plan pays 90% and the consumer pays 10%.

Coverage purchased through the Marketplace will go into effect as early as January 1, 2014. The open enrollment process for the Marketplace ends March 31, 2014.

*This article is written for informational purposes only and should not be construed as providing legal advice.