The health care law: Will it impact what I pay?

For many Americans who are not on Medicare, the full implementation of the new health care law in 2014 may mean a change in what they pay monthly (called a premium). And there will be winners and losers.

The extent to which the new rules will affect your health plan depends in part on when your coverage was purchased, and whether you get coverage through an employer or if you purchase coverage on your own for yourself and/or your family. The new changes will have the greatest impact on those who work for companies with 50 or fewer employees and those who buy coverage for themselves and their families on their own or through an agent.

The amount you pay monthly (your premium) may increase or decrease as a result of four primary provisions contained in the new law. They are:

  • New taxes and fees
  • New requirements regarding what medical services must be covered by insurance policies
  • New rules concerning how insurance companies must calculate members' monthly costs
  • The availability of tax credits or subsidies to help pay for health insurance for individuals and families who qualify

New Taxes and Fees

New taxes and fees included in the law will have an impact on premiums. The money collected from these fees will be used to help pay for advance premium tax credits (commonly called subsidies) which will be available to Americans in low-to-middle income ranges to help pay for health insurance. These taxes and fees also will be used to fund research into effective medical practices, to help cover the cost of the Health Insurance Marketplaces that will be established in every state and to stabilize the insurance market in the early reform years. Industry experts project that the fee collected to help fund the tax credit alone will add 2-3 percent to the cost of health insurance. Collectively, the fees could add as much as 3-5 percent to individual and employer health plan premiums.

New Coverage Requirements

Health plans sold to individuals and employers with 50 or fewer employees must cover a core set of medical services called "essential health benefits." Many of these essential health benefits were covered by Arkansas Blue Cross health plans already, such as hospitalization and emergency care. Others were offered, but the buyer in some cases had the choice of whether to purchase the coverage, such as maternity and preventive care. Beginning in 2014, these coverage requirements no longer will be optional. In addition, more preventive services have been added and the health plan must pay 100 percent of the cost of these services.

Because more services will be covered and the health plan will pay more of the cost, premiums will go up to cover the cost of these new health plan benefits.

New rules around determining your monthly costs

Historically, insurance companies have considered a number of factors when calculating premiums for employers or individuals purchasing coverage. These factors include the health condition of the individual or the employees in an employer's group plan. Those employers or individuals who have more health conditions are likely to use more medical services and are, therefore, charged a higher rate. Beginning in 2014, health insurers will not be allowed to consider health conditions in developing premiums. As a result, those who are less healthy may find their costs are less and those who are healthier will pay more in monthly premiums.

Age also has been an important consideration in establishing premiums. Older people generally use more medical services and, therefore, pay more, while younger people who are not as likely to need expensive medical care pay less. Although age still will play a role in setting rates, there will not be as a great a range between the rate charged to a 24-year-old and the rate charged to a 60-year-old. Younger people can expect to pay higher rates when these rules are applied in 2014, and older people will pay less.

These are two of a number of new rules regarding setting premiums that will begin in 2014 and will cause changes in how much people pay for coverage.

Advance premium tax credits

Beginning in January 2014, many low- and middle-income Americans who do not have the opportunity to enroll in an employer's health plan will be eligible to receive a new kind of tax credit that lowers monthly premiums. The amount of tax credit a household receives is based on their household income and family size. The lower the household income, the higher the tax credit.

If you think your household may be eligible for an advance premium tax credit, please call Arkansas Blue Cross. We will help you determine if you meet the requirements and provide you with an estimate of what your premium might be after the tax credit is applied.

Arkansas Blue Cross has the information you need

The health care law is complex and difficult to understand. Some of our members will benefit and others will not. You can count on Arkansas Blue Cross to provide the accurate and reliable guidance you need to understand how the health care law affects you and those you love.

Please don't make any changes to your health insurance coverage without talking to us first. If your current plan was issued before the law passed, keeping it may be your best option. And if you drop it, you can't get it back. If you buy coverage on your own, call your agent or Arkansas Blue Cross or come by one of our locations for a health insurance review. We are ready to help you evaluate your options and select a plan that provides the coverage you want at the lowest cost. Call 1-800-310-3778 today.