Having access to health insurance used to be a huge challenge for millions of U.S.-based freelancers.
But the passage of the Affordable Care Act in 2010 has made it possible for everyone in the U.S. — regardless of pre-existing conditions — to purchase health insurance.
That’s the good news. The bad news is that the law is complex. Most people don’t understand their options or where they should shop for plans.
I’ve personally given up trying to decipher this complex issue. And instead, I recently sought the help of Jeff Smedsrud, co-founder and CEO of HealthCare.com, to help me answer some of the biggest questions I get on this topic from fellow freelancers.
Jeff is a leader in the health insurance industry, growing insurance marketing companies for over 20 years. He has served as a healthcare reform advocate for much of his career. And he’s intimately familiar with all the ins and outs of this new law and how it impacts self-employed professionals in the U.S.
The notes that follow are a very basic, unedited summary of the show. There’s a lot more detail in the audio version. You can listen to the show using the audio player below. Or you can subscribe in iTunes or on Stitcher to get this show delivered straight to the Podcasts app on your smart phone, tablet or iPod.
Give us an overview of the Affordable Care Act
The Affordable Healthcare Act, also known as Obamacare, has fundamentally changed health insurance, especially if you buy it yourself.
- It eliminates medical underwriting. No one can be denied coverage.
- It creates an open enrollment period, which runs from November 1 to the end of January.
- It creates additional opportunities throughout the year to buy health insurance based on certain events, e.g. changing jobs, getting married, etc.
- It creates subsidies based on income. If you qualify, you get premium tax credits to help pay for your health insurance.
- It creates standards for benefits. All health insurance plans have to cover the same things, based on different levels.
Is this similar to the health insurance you get as an employee?
Yes. In fact, some employers are now paying employees a bit more so they can buy their own coverage. Often, it’s just as affordable. As a result, more people are shopping for health insurance than ever before.
How do you start the process?
Through Jeff’s site, HealthCare.com, you can search and compare plans anonymously.
You can also shop through HealthCare.gov, state-based exchanges and local insurance brokers.
Are some sources better than others depending on your income?
HealthCare.com shows all plans, including those from state exchanges and HealthCare.gov.
If you’re applying for a plan that’s eligible for a subsidy, at some point you’ll need to connect with a state or federal exchange because they have to verify your income.
How do you know if you qualify for a subsidy?
It’s based on income. People earning up to $92,000 as a family qualify for some kind of subsidy. You can find online calculators at healthcare.com, healthinsurance.org, and the Kaiser Family Foundation (kff.org).
What if you have a plan that was grandfathered into the system? How do you know how it compares to other plans?
You should shop and compare every year. Look at your plan’s network of physicians and providers, the deductible and the monthly premium. Compare these elements to what else is available.
You can often save a LOT on your healthcare insurance plan by shopping around.
You may find huge differences in premiums.
Tell us about open enrollment
You can start shopping on November 1 to buy plans that begin January 1, 2016. The last day to have a plan that starts on January 1, 2016 is December 15, 2015.
Most plans are updated in the days and weeks before November 1. Before then, you’re looking at 2015 pricing.
Why the variability?
Sometimes companies price lower to win new business. Sometimes companies have had too many claims so they raise their rates. These swings may lessen over time.
What happens if you don’t buy health insurance?
You may have to pay a penalty. Next year it will be in the range of 2.5% of your income. The system works best if everyone participates.
What variables should people look at when comparing these plans?
The main things to consider are:
- Providers in the network
- Rx plans covered
- Deductible amount
- Level of care you need
- Reputation of the insurance company.
It’s worth taking the time to carefully review your plan and make thoughtful decisions.
What if you have a significant preexisting medical condition?
There’s no limitations or lifetime maximum on covered expenses. But it’s really important to understand which providers are in your network. If your provider is out of network, you might have to pay substantially more.
How does Medicare factor into all this?
You’re eligible for Medicare if you’re over 65 (or earlier in some cases). Most people on Medicare choose to buy a Medicare supplement, and many are buying Medicare Advantage Plans. These plans have low premiums, but the network of providers may be severely restricted.
So the process is similar. You need to shop around. Understand what your plan covers, and what providers are in network.
Is there anything else we should be aware of?
We all tend to think that nothing bad is going to happen in the next year. So we pick the least expensive plan and then regret it. Pick a plan that’s realistic.
Tell us more about healthcare.com
HealthCare.com is easy to use and allows you to shop for and compare plans. You can also find out which plans people have chosen in similar circumstances. You can enroll through an insurance agent, call center or online.