Starting October 1, millions of Americans who lack health insurance can sign up to obtain coverage through online marketplaces, or exchanges, that are being established as part of the Affordable Care Act. Each state will have its own marketplace – a resource for one-stop shopping where people can compare health plans and apply for subsidies to lower their premiums. Rutgers Today recently talked to Joel C. Cantor, director of Rutgers’ Center for State Health Policy and a distinguished professor of public policy, to find out how the Health Insurance Marketplace will work, who should apply and what financial assistance is available.
Rutgers Today: How can people access the Health Insurance Marketplaces in their state, and who will run them?
Cantor: The marketplaces, where health insurance will be sold, are going to be accessible through a website and toll-free number. People without other forms of health insurance can sign up for subsidies through the marketplace [if they qualify] to help pay for coverage. In New Jersey, the Marketplace will be run by the federal government and can be found here.
Almost anybody without other forms of health insurance (such as from a job or a public program) is eligible to enroll through the website, Healthcare.gov. The one big exception is people not legally living in the United States. Undocumented immigrants are not eligible for any government help to buy coverage. The new coverage options are effective starting January 1. An “open enrollment period,” when people can apply for coverage, starts October 1 and the deadline to sign up is the end of March 2014.
Rutgers Today: If residents have insurance through their employers, do they need to seek coverage for next year in the health insurance marketplace?
Cantor: No, if you have qualifying health insurance coverage through a job, you may not obtain subsidized coverage through the marketplace and do not need to seek coverage through the marketplace. In some cases where an employer offers only very limited insurance benefits people can get subsidies through the marketplace. If you think that this might be the case for you, contact the marketplace and ask how to proceed.
Rutgers Today: What help is available to defray the cost of insurance and who can apply?
The Affordable Care Act, also known as Obamacare, has two major ways to defray the cost of coverage. First, low-income people living below 133% of the federal poverty level (about $15,282 for a single individual) will be eligible for Medicaid with no premium costs. Each state has to decide whether to expand the existing Medicaid program to that level, and New Jersey will be expanding its program.
The other mechanism provides subsidies through a sliding scale to help pay for private health insurance through the marketplace. These subsidies are available to people with incomes above the eligibility threshold for Medicaid but earning no higher than 400% above of the poverty level (about $45,960 for a single individual). The amount of the subsidy available will depend on your income. There is even help to pay for cost sharing, such as deductibles, for people with very modest incomes.
Rutgers Today: What are some of the benefits to obtaining coverage through the exchanges? What will be different for people obtaining coverage under the new system compared to having to obtain coverage individually?
Cantor: The biggest difference is that financial help is available to pay for the cost of coverage for those who are eligible. Many of the plans available directly from insurance companies, that is, not through the marketplace, will be identical as those offered within the marketplace. All of the health plans offered to individuals – whether in the marketplace or not – will have to comply with the same market rules. For example, all of the plans will offer certain preventive services without cost sharing and none will be permitted to charge more, or deny your coverage, if you have a pre-existing condition.
Rutgers Today: Are all individuals required to sign up for coverage through the Marketplace in 2014 if they don’t have insurance? What will happen if they don’t?
Cantor: Most people will be required to have health insurance coverage in 2014. If you have a job-based plan or are on Medicare or Medicaid, you will meet the requirement. Most uninsured people will have access to the expanded Medicaid program or subsidized private insurance through the marketplace. Individuals can apply through the marketplace for an exemption if they still cannot afford insurance or have other hardships. For example, families still struggling to recover from Hurricane Sandy may be eligible for an exemption. If you do not purchase coverage, and do not qualify for an exemption, you will be charged a penalty when you file your 2014 federal income tax returns. Next year the penalty for not having creditable coverage will be $95 per adult ($285 per family) or 1 percent of income, whichever is higher. The penalty will increase in future years. Starting in 2016 it will be the greater of $695 per adult ($2,085 per family) or 2.5% of income.
Rutgers Today: Will the cost of health insurance be higher in 2014 because of the health reform law?
Cantor: The answer is “it depends.” Premiums for New Jersey have not been made public yet (we will see them by October 1st), but my expectation is that they will not change much on average compared to 2013. But the way premiums are calculated will change. For example, the Affordable Care Act will allow higher premiums for smokers (which is not the case in the current New Jersey market), so smokers may pay more. Also, people who were enrolled in low-cost plans that offered limited benefits now will have to move plans with more comprehensive coverage, which may have higher premiums. In spite of possible increases for some, the subsidies available in the marketplace are likely to make the premiums people of modest means pay much lower than health insurance costs in today’s unsubsidized market. So, it depends on one’s individual circumstances.