insurance

Buying insurance after health care reform

For many consumers, the biggest question about health care reform centers on how the law will change the way we buy and use health insurance.

If you feel perplexed about how the law will affect your own health insurance coverage, you're not alone. A Quinnipiac University poll in April found that 56 percent of respondents admitted they didn't have enough information to know how the law will impact them personally.

To help you cut through the confusion, here's a look at how the health insurance market looks now, and how it will change in the years ahead.

If you buy health insurance individually ...

Shopping

Now: "There is currently a whole range of avenues to buying health insurance on the individual market," says Bianca DiJulio, senior policy analyst at the Kaiser Family Foundation in Washington, D.C. You can purchase coverage individually from a health insurance provider, search for policies through an agent or broker or go to a health insurance website, DiJulio says.

After health care reform: Many details have yet to be ironed out, but by 2014 individual health insurance plans will be sold on state-created exchanges available via the Web and by telephone, says DiJulio. In order to be sold on the exchange, plans will have to provide a minimum level of coverage, so future individual plans will be more comprehensive than many of today's plans and will cover often-excluded items such as maternity care, says Sara Collins, vice president for The Commonwealth Fund, a health care research foundation in New York.

Plans that meet this minimum will be divided into four tiers, depending on the percentage of enrollees' medical expenses they pay on average, says Robert Zirkelbach, a spokesman for America's Health Insurance Plans, a trade group in Washington, D.C.

Applying

Now: The application process varies by state thanks to the patchwork of health insurance regulations. Once you've found a company, you fill out an application, answering questions about your medical history. The health insurance provider reviews your application and offers you a range of coverage options that may include a cheaper plan that excludes your pre-existing medical problems from coverage and more expensive plans with comprehensive coverage. Or, they may decide not to cover you, Collins says.

After health care reform: The new law prohibits increasing health insurance premiums or denying coverage because of an applicant's medical history, so applications will likely become shorter and less painful, Collins says. The only criteria health insurance providers will use to set rates will be age, geography and whether or not you're a smoker, she says.

Prices

Now: What you'll pay varies considerably based on age and medical history, says Zirkelbach. The young and healthy pay relatively little, while older and less healthy people pay much more.

For many consumers, premiums on the individual market are unaffordable, Collins says. In a 2007 study by The Commonwealth Fund, 73 percent of those who tried to buy health insurance on the individual market didn't end up buying a policy, with 61 percent citing expensive premiums as the main reason.

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After health care reform: You'll likely pay more for individual health insurance once the new law is in effect, Zirkelbach says. A Congressional Budget Office report conducted last year for Sen. Evan Bayh, D-Ind., found that the Senate bill would raise premiums for an individual by 10 percent to 13 percent.

Also, the new law will eventually limit how much your premium can be based on age, so younger policyholders will likely pay more while older policyholders will pay slightly less, says Zirkelbach.

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