If you don’t want to read beyond this first sentence, then get a new policy effective January 1, 2014. These new PPACA compliant plans are referred to as Qualified Health Plans (QHPs).
If you think ahead about your finances, read on.
You Make Under 400% of the Federal Poverty Level
This applies to most people.
First, you need to know your income, called Modified Adjusted Gross Income (MAGI). Here’s the IRS page for MAGI.
Got it?
You might find the TurboTax explanation simpler to digest.
Second, you need to know where your MAGI falls in the Federal Poverty Levels. Here’s a site with a useful table for perspective.
There’s also a well-known subsidy estimator that even healthcare.gov refers to.
Third, consider your net premium costs. Keep in mind that your MAGI estimate will reconcile when you file your taxes the following year. So if your income fluctuates, i.e. you are not salaried, then consider OVERestimating your MAGI or you might find yourself directly paying back some of those subsidies.
Fourth, choose your metal. Step 3 might make it clear which metal levels you can’t afford. Bronze is cheapest and includes those plans eligible for Health Savings Accounts (look for HSA in the name). Then Silver then Gold. Don’t even bother looking at Platinum, if you can even find it. So, say you can afford some companies’ Silver plans. Silver will have richer benefits up front compared to Bronze. They’ll also have higher premiums which is like pre-paying for services, regardless of whether you actually use them. Rule of thumb, if you tend to be healthy and spend little time seeking medical attention, you are better off choosing a Bronze and even considering an HSA eligible plan (don’t forget to set up the HSA). If you have health conditions that warrant multiple medical services throughout the year, you likely want to get the richest coverage you can afford, so move to Silver in this example. As an aside, catastrophic “just in case” coverage is available to those under age 30; these plans do not qualify for subsidies.
Fifth, consider the networks. This will be a moving target as carriers adjust their networks as they transition away from the broken “fee for service” delivery model. However, you’ll at least want to be sure the providers that you know you will see are in network now. THE OUT OF POCKET UPPER LIMITS ONLY APPLY WHEN IN‑NETWORK. Am I yelling? YES. This is HUGE. Recall that when PPACA mandated free preventive services, they only had to be free if IN-NETWORK.
Finally, should your new plan begin January 1, 2014 or wait until your current plan renews mid-2014? If your subsidy is significant, then why wait? If your subsidy is trivial, and your current plan’s premium is favorable compared to your net QHP premium after subsidy, then it depends on your gambling temperament. You can save on premium by waiting until your old plan reaches its renewal date in 2014, when you must switch to a QHP. But, any out of pocket expenses on your old plan will not be credited toward your out of pocket expenses on your new QHP.
Additional caveat: If you have a grandfathered plan and wish to keep it, then you’ll need to keep it until the following January 1. Why? Because renewal of a grandfathered plan does not qualify for Special Enrollment, i.e. you must wait until the usual Open Enrollment in late fall to move to a QHP on January 1.
For my help on the HIX, you’ll need my name – Garth Hassel, user ID – ghassel, and NPN - 10064627. It’s free to you, but not to me, so please include this info. Thank you.
You Make Over 400% FPL Or Simply Won’t Participate In Government Subsidies
Begin with the Third step in the previous section. However, buy off the HIX, which is referred to as Direct. The direct application process is much quicker and simpler.
Only when purchasing direct, there is at least one exception to the rule of out of pocket expenses not accruing from the old plan to the new QHP. One of the established companies has decided to only sell direct. Policyholders currently with that company will be able to carry their out of pocket expenses from their current plan into the QHP mid 2014. This company is focusing on HSA plans because HSA plans tend to be more popular with higher income, healthier people seeking to keep premiums down.
Healthy and under age 30? Consider the catastrophic plans.
Plan on having cash to cover a worst case scenario of about $6350 per calendar year maximum for in-network out of pocket expenses (double that for a family).
My next post will feature some of PPACA’s “Gotcha’s.”
