A Quick Guide to Health Insurance Exchanges

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The Affordable Care Act’s health insurance exchanges debuted to great — but not always positive — fanfare on Oct. 1. If you have health insurance subsidized through your employer, in most cases it will be less expensive to keep it than to pay for a plan on your own. If not, read on to find out how you can obtain coverage for yourself and your family.

4 Ways to Apply

First things first: Go to the correct website. The official website for the health insurance exchange is www.healthcare.gov. Sites such as healthcare-dot-com, healthcare-dot-net and others are not the official insurance marketplace and may even be scams. You can also apply for insurance with a paper application, by phone (1-800-318-2596, 24 hours a day, 7 days a week) or in person by visiting localhelp.healthcare.gov to find a local navigator to help you.

While most people can apply through the federal exchange, residents of some states will apply through state-specific exchanges. According to this handy diagram from the Commonwealth Fund, states that offer their own health insurance exchanges are California, Colorado, Connecticut, Idaho, Kentucky, Maryland, Massachusetts, Minnesota, Nevada, New Mexico, New York, Oregon, Rhode Island, Vermont, Washington and the District of Columbia.

If you apply by Dec. 15, 2013, coverage can begin on Jan. 1, 2014. Recently, the administration extended the open enrollment period deadline to March 31, 2014, which should be enough time to iron out the kinks in its web-based exchange platform.

What Does the Health Insurance Exchange Offer?

If you do not have health insurance through your employer (or if you are unemployed), the exchange offers the opportunity to purchase insurance from private companies. Similar to shopping for an apartment or a car online, the exchange helps you compare different companies’ plans on price, benefits and so on. An oft overlooked benefit of the Affordable Care Act is that it offers health insurance that is separate from employment. That means you can be out of work or self-employed and still be able to go to the doctor if you have cancer or are pregnant, for example.

All plans on the exchange cover doctor visits (“I have an ear infection”), emergency room visits (“I cut my finger”), well/preventive visits (“I need an annual physical”) and other services such as hospitalization, outpatient surgery, prescription drugs, physical therapy and laboratory services. Plans must also cover pre-existing conditions. This is an important difference. Previously, insurance companies could charge you more or deny coverage altogether if you had a pre-existing condition such as diabetes or asthma.

Why Should I Buy Health Insurance?

The purpose of insurance is to protect you in the event of unanticipated but often costly situations. For example, in most states, if you own a car, you are required by law to have car insurance to cover a theft or an accident. In Virginia, you must pay a fee of $500 if you choose not to have insurance under its “financial responsibility law.”

Likewise, under the “individual responsibility provision” of the Affordable Care Act, if you don’t have health insurance in 2014, you will pay a penalty of $95 per adult, $47.50 per child, or 1 percent of your income, whichever is higher. In 2015 the penalty will be 2 percent of income or $325 per person. In 2016 and later years it will be 2.5 percent of income or $695 per person. After that it will be adjusted for inflation. Some people with limited income may qualify for an exemption to this fee. In addition, if you enroll by March 31, you will not have to pay a penalty for the first three months of the year.

How Much Will My Insurance Cost?

Cost will vary based on household size, income and location. Households with annual incomes up to about $46,000 for individuals or $94,000 for a family of four will qualify for lower costs. Here is what I found while playing around with the premium estimate tool.  (Note that if you live in one of the 16 jurisdictions that provides its own exchange, you will be redirected to that site.)

  • Scenario 1: A family of four living in Ann Arbor, Michigan. Mom is a yoga teacher and Dad just lost his job. The family would pay $518 per month for a Bronze HMO Plan (covers 60 percent of costs and offers a set network of providers) or $656 per month for a Bronze PPO Plan (covers 60 percent of costs and offers more flexibility with providers). That cost works out to roughly $130 to $165 per month per person. In addition, this family would qualify for lower premium costs with an annual household income lower than $94,200.
  • Scenario 2: A single freelance writer in her early 30s living in Austin, Texas. She would pay $138 per month for a Bronze HMO Plan and $157 per month for a Bronze PPO Plan and would qualify for premium subsidies if she made under $46,000 per year.
  • Scenario 3: A young working couple living in Arlington, Virginia. They would pay $352 per month for a Bronze HMO Plan ($176 each), $418 per month for a Bronze PPO plan ($209 each) and would qualify for lower-cost plans if they together made less than $62,000 per year.

For those who qualify, the subsidies can be substantial. I looked at the Kaiser Family Foundation Subsidy Calculator and found that a tobacco-free family of three (two adults in their thirties and one child) with an annual income of $50,000 and no available employer coverage would qualify, on average, for a nearly 50 percent government tax credit subsidy toward a Silver health plan, which covers 70 percent of costs.

Catastrophic insurance is also an option for young people under the age of 30 or for those 30 and older who qualify for a hardship exemption, such as bankruptcy, foreclosure, domestic violence or even having recently received a shut off notice from a utility company. This type of insurance pays less than 60 percent of expected costs, but if you are young and healthy, it is a good option because your premium is low but you are covered in serious emergencies. In Scenario 3 above, the couple in Virginia could purchase a Catastrophic plan for $302 per month ($151 each) if both were under the age of 30.

Debra Cole is a Brooklyn-based writer and mom. She blogs about parenting at www.urbanmoocow.com

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