The big show that I'm talking about is the grand opening of Ohio's health insurance marketplace and it's government subsidized health insurance. However, if your income prevents you from taking part you could find yourself in a sticky situation at the start of 2014.
This isn't meant to induce a constant state of panic for the next six months, rather server as a “public service announcement” if you will. Essentially providing you with as much time as possible to prepare for this new health insurance world.
Who's Missing Out?
Here's the deal, people just above and just below the income requirements stand to suffer the greatest as a result of health care reform.
Here's a look at a rough estimate of the income ranges, based on family size, the Affordable Care Act will accommodate with subsidies:
- Individual - $11,615 - $46,600
- Family of 2 - $$15,730 - $62,900
- Family of 3 - $19,810 - $79,210
- Family of 4 - $23,800 - $95,500
If you have a family of four and your annual income is around $100,000 Obamacare will be leaving you out in the cold. This isn't to suggest that a family of four can't enjoy a very comfortable living and afford health insurance with that amount of money.
Simply, you will not qualify for the tax credits/subsidies, available to Ohio's health insurance marketplace shoppers, to help offset the cost of your health insurance.
This wouldn't be a problem for you and your family, except individual and family health insurance rates are expected to increase around 88 percent next year. Which will compound your ability to comfortably “afford” health insurance.
On the other end of the spectrum, if the Medicaid expansion is not approved, there could be a decent amount of people who make too much to qualify for Medicaid, but don't make enough to qualify for a tax subsidy inside the marketplace.
Now, I haven't spent enough time studying the economics of the proposed Medicaid expansion to know if it's a financially sound idea. I have read it both ways, one claiming it will pay for itself within a short period of time and the other saying the federal government will be leaving Ohio holding a pretty heavy bag when it's all said and done.
Regardless of the dollars and cents, not doing something to prevent this “gap” from opening is very important. You can't completely restructure how, when and where people buy health insurance and not address this issue in some way.
This problem was created when the Supreme Court ruled last year that the Medicaid expansion had to be left to the states decision if they wanted to implement that. But they had no problem upholding the mandate forcing everything to buy health insurance or pay tax at the start of 2014.
I thought they were smarter than that...
Looking on the Brightside
It's likely, with new, younger people “paying into the system” and limiting the rating (charging more) on those rounding the turn to your golden years, it's possible you might just see a little rate relief next year.
Please don't take this too mean, you WILL save money your health insurance next year, it's simply to say that if everything works the way it's suppose too, you could.
What If You're Young, Healthy and Loving Life?
You might not necessarily fall into an “income gap,” however you will get hazed by Obamacare like you were a freshman in high school again.
If you are a 20 or early 30's something who has done very well for yourself out of the gate and are self-employed, you will also find yourself in a uniquely challenging position. If you fail to qualify for financial assistance, you will see the largest increase of any age group under the ACA.
How Do You Soften Your Fall Through the Gap?
Bronze will or should become your new favorite color.
That is the lowest “medal” or amount of coverage you can buy inside the marketplace. Now, if you don't qualify for subsidies, it's unlikely you will be buying a plan in the marketplace. But for simplicity's sake we'll just go with it.
This level is where you will find your new favorite health insurance plan, a health savings account. These plans will offer you all the protection you need at a, hopefully, affordable cost. If you are unaware or unconvinced of its greatness you should watch this conversation I had with another health insurance expert about why they are the smartest option.
The Bottom Line
Some of these problems don't have good solutions, yet. It's going to take a little time for the best solutions to identify themselves while we watch this new system come to life.
However, you are going to want to start understanding what problems you could have now to be better prepared when they do.
Do you fall in either of these gaps? What are your thoughts on how they will effect you?