Why is My Coverage Being Terminated?
By now everyone is familiar with President Obama’s statement that “If you like your health plan, you can keep it.” The statement was likely intended to reassure those who have stable coverage through employment or Medicare, but it was an unwise statement, more political than anything else.
The fact is that the Affordable Care Act requires most individual and small group plans (two to fifty employees) to change, adding benefits like maternity to individual plans, expanding mental health and other benefits and changing the way insurance is priced. In addition, most of the coverage people had as individuals who qualified based on their good health will be eliminated. When relatively healthy people are moved into a risk pool with individuals with pre-existing conditions, the cost of insurance increases for healthy individuals. In sum:
Pricing as of 2014 is primarily based on location, age (but not in New York), and whether you are a smoker.
Products are changing to be consistent with the metal tiers you’ve read about – bronze, silver, gold and platinum. Bronze simply means a lower premium for a higher deductible. Platinum, the most comprehensive coverage, has lower out-of-pocket costs, but the highest premium. Platinum plans are not available in all areas; in which case Gold would be the richest product for purchase.
Other factors like the provider network, the prescription drugs on the approved formulary and whether or not the plan requires a referral to see a specialist are also considerations in selecting any new insurance for 2014 as well as the premium.
What about Grandfathering?
Many believed they would be entitled to keep their plan if it was in existence in March of 2010 when the Affordable Care Act was enacted and no changes were made to the plan. Some are upset because they thought they had a grandfathered plan but it’s still being terminated.
Remember, many of the popular features of the Affordable Care Act were implemented, like:
Keeping your dependent on the plan to age 26
Adding unlimited hospital benefits
Preventive care with no out-of-pocket costs
So most plans have changed since 2010.
Other facts about grandfathered plans: In general, a grandfathered plan is not a good long-term alternative for insurance protection anyway. A grandfathered plan by definition doesn’t accept new applications for enrollment. Any insurance product that doesn’t have a proportion of healthy people enrolling, becomes a product that tends to have the risk pool of older, sicker, people. As a result, over time it’s not a very good deal because premiums increase more than non-grandfathered plans. The best case scenario for a grandfathered plan is if you are in your sixties and have a short period of time until you are eligible for Medicare.
This is a time of major reform.
Many are understandably concerned, even upset, because they have good coverage now and are losing it, and they don’t need the added benefits provided by the Affordable Care Act. The fact is, the only choice you ultimately have is to change — perhaps sooner or later — but to change — unless Congress enacts legislation that amends or repeals part of the Affordable Care Act. Unfortunately, that fact should have been made clearer.
It’s time to move on, do your homework and make the best possible decision you can for you and your family in 2014. Good choices are available but many who already had individual coverage will be paying much more.