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Understanding the New Health Insurance Exchanges
The Different Drummer

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by Carl Petersen and Cindy Petersen

Last week 67th Assembly District Representative Melissa Melendez organized a forum at the Royal American Financial Advisor’s Convention. The purpose of the event was to help health insurance consumers find reasonably-priced insurance through the Affordable Care Act’s (ACA) exchange marketplace. To address audience questions, Rep. Melendez assembled various area brokers certified in ACA regulations; John Gustafson, Area Director of Kaiser Permanente, Peter Anderson, Chief California Legislature Policy Consultant from the Republican caucus and Maria Solano from Covered California.
The Health Care Exchanges were set up as part of the 2010 Affordable Care Act (also known as Obamacare) in order to offer choices and competition in the private insurance marketplace. They opened in October of this year, underwriting policies to take effect January 1, 2014. California is one of the states that took advantage of the opportunity to form our own exchange which is called Covered California (https://www.coveredca.com/). The Federal Exchange, Healthcare.gov, which has had a very inauspicious rollout, is only in use in states that chose not to form their own exchanges.
Individual health insurance consumers and small businesses can now shop online, by phone or by getting assistance from an insurance broker who has been trained and certified in the Program. Insurance carriers that are participating in Covered California include Blue Shield, HealthNet, Kaiser Permanente, Anthem Blue Cross, Sharp, CCHP and Western Health. Customers do not have to buy their insurance plans through Covered California, but it is the only place where will they be eligible for tax incentives.
Health insurance with a minimum level of coverage is now mandated for all Americans and those who refuse to take responsibility for their health care can be charged a tax penalty. If you have insurance coverage through your employer, Medicare, CHIP or the Veterans Administration, you are considered in compliance with the law. If you are a legal resident and either your employer does not offer health insurance or your premium is in excess of 9.5% of your family income, you are eligible to use the exchanges. Financial assistance may be available based on your income.
There is also a small business marketplace called Small Business Health Options Program (SHOP). It is designed to simplify the process of buying health insurance for businesses with no more than 50 employees. Some business owners will qualify for a health care tax credit if they purchase their plan through SHOP.
When using SHOP, the employer controls the coverage they would like to offer and how much they will pay towards employee premiums. The employer selects plans from among the different tiers (i.e. levels of coverage) based on the cost they are willing to absorb. The employees then select from these plans based on the cost, benefits and choice of doctors and hospitals. Both HMOs and PPOs are offered. An HMO has a network of participating doctors while a PPO allows the consumer to choose his own doctor.
One attendee complained that his premium had increased tremendously in the past year. Mr. Gustafson explained that this could happen if the consumer’s insurance plan had had very limited coverage and had to be upgraded to meet the minimum requirements of the ACA. These improvements include:
All plans must offer emergency care, hospitalization, prescription drugs, maternity, newborn care and free preventative care (including immunizations, screenings).
It is now illegal for insurance companies to deny coverage to anyone because of pre-existing medical conditions.
Young people may stay on their parents’ insurance plan until they reach the age of 26.
Elimination of annual and lifetime limits on insurance payouts.
Insurance companies spend at least 80% of your premium dollars on health care not on administrative costs including salaries.
Elimination of rate differences based on health (Mr. Gustafson praised the ACA for this benefit because it means that individuals not covered by group plans at work that have health issues will not be priced out of the market).
A summary of provisions can be found at http://obamacarefacts.com/affordablecareact-summary.php.
These minimum requirements also explain reports of people having their policies dropped. Not all insurance companies are taking advantage of the Grandfather Clause (http://obamacarefacts.com/grandfathered-plans.php) that allows some plans that existed prior to the law being passed to continue although the plan’s provisions do not meet the minimum requirements of the ACA. People affected by their insurance company’s decision should shop on the Exchange to see if they can get an affordable, comprehensive policy and to see if they qualify for assistance.
The message that was emphasized was that we all should educate ourselves by going online or by talking to a professional. The law has its flaws and these can be addressed over time. Most importantly the objective of the law- to make healthcare available to all- will benefit us all.

Latest Activity: Nov 13, 2013 at 2:53 PM

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