5 ways to save from health insurance reform

5 ways to save from health insurance reform © Jim Vallee/Shutterstock.com

Raise the subject of Obamacare around the dinner table or after work among friends, and chances are someone will ask: What’s in it for me?

Answer: plenty.

While many Americans have withheld judgment on President Barack Obama’s sweeping health insurance reform law until they could actually kick the tires on the new state health marketplaces, or exchanges, a host of Affordable Care Act provisions have already been saving you money.

“Mandatory coverage of pre-existing conditions, which starts for adults in January 2014, has been in effect for children since 2010, as has coverage for young adults under their parents’ plan until age 26, and preventive care at no extra cost,” says Gerald Kominski, director of UCLA’s Center for Health Policy Research. “Most people have no idea that these things have been in effect for three years, and that they have, in a sense, already benefited from them.”

More of Obamacare’s budget boosters have arrived with the marketplaces, and still more will take effect in the new year.

How might health care reform save you money? Here are five ways.

Help with your monthly premiums

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Answer a few questions to see if you'd qualify for subsidized health insurance under the Affordable Care Act and what you'd pay.

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Your birthdate indicates you’re in your golden years- which means an Obamacare plan isn’t for you.

Instead, you’d qualify for Medicare, or other senior coverage.

See Your Senior Coverage Options

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Mixed news for your household.

At least one of you is in your golden years (age 64 ½ or older) and not eligible for Obamacare. Instead, those family members would qualify for Medicare, or other senior coverage.

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Other family members qualify for Obamacare coverage (that is, are younger than 64 ½) and should explore their options separately from the older members of the household.

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Good news!

Your household income qualifies you for a tax credit to cut the cost of a health plan in the Obamacare health insurance exchanges, or marketplaces.

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Your income and household size don’t qualify you for subsidized coverage in the Obamacare health insurance exchanges, or marketplaces.

But we can still direct you to some great plans at great rates.

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Your income and household size don't qualify you for subsidized coverage in the Obamacare health insurance exchanges, or marketplaces.

But you may be eligible for free or low-cost coverage through the Medicaid program, depending on the rules in your state.

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Your household income qualifies you for a tax credit to cut the cost of a health plan in the Obamacare health insurance exchanges, or marketplaces.

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Shoppers on the new state online marketplaces may be surprised to find that most sites automatically calculate premium discounts available through Obamacare. You see instantly if you qualify for a federal subsidy to help pay your monthly health insurance bill.

You get the savings if you make up to $45,960 a year for individuals or $94,200 for a family of four (based on 2013 estimates). Your subsidy amounts to a federal income tax credit that lowers your monthly insurance premium. According to the Congressional Budget Office, the average subsidy will knock $5,290 off the cost of health insurance in 2014.

Federal data will be used to verify incomes and subsidy eligibility on the 34 state exchanges operating under the federal HealthCare.gov website. The District of Columbia and 16 states operating their own marketplaces are using an honor system until 2015 while they upgrade their systems to provide real-time income verification.

Consumers shouldn’t expect to score similar savings on individual plans offered outside the marketplaces, says Deborah Chollet, manager of health insurance research for Mathematica Policy Research in Washington, D.C. “If you want a lower premium because of the premium tax credit, you have to go through the marketplace,” she says.

Lighter out-of-pocket expenses

Lighter out-of-pocket expenses © racorn/Shutterstock.com

Your insurance premium is only part of the financial equation of health insurance. There also are those expensive “cost-sharing” items, such as deductibles, copayments and coinsurance, which your health insurer requires you to pay on your own. It would defeat the purpose of the Affordable Care Act if you obtained health insurance but couldn’t afford the out-of-pocket expenses to use it.

To avoid that scenario, health insurers offering plans through state marketplaces must reduce your out-of-pocket costs. There are savings if, for example, you’re an individual earning $28,725 or less, or a family of four with income up to $58,875 (based on 2013 estimates).

“It’s an arrangement with the carriers; (the government) reimburses the carrier for the unpaid cost-sharing,” explains Chollet.

With the cost-sharing reduction, you get the out-of-pocket savings of the marketplace’s higher-priced platinum- and gold-level policies, though you buy a lower-cost “silver” plan.

Dania Palanker, senior counsel for the National Women’s Law Center in Washington, D.C., says if your income qualifies you for the cost-sharing discount, you’re automatically eligible for the premium tax credit.

“Not only is your premium going to be less expensive, but your deductibles and copays will also be lower,” she says.

Young adults ride along on parent’s policy

Young adults ride along on parent's policy © Pressmaster/Shutterstock.com

One of Obamacare’s most popular money-saving provisions spares young adults just starting out in life from shopping for insurance and paying their own premiums. Insurers must allow them to remain on a parent’s family health plan until age 26.

According to a survey by the Commonwealth Fund, as many as 6.6 million young people jumped at the opportunity to remain on or rejoin their parents’ plans in the first 18 months of the new law.

The lone exception to the rule: Older, “grandfathered” employer-based group plans can still deny coverage through 2013 to young adults if they’re eligible for group coverage through their own employer.

Kominski says health insurance reform couldn’t have come at a better time for a generation that had just graduated college into the Great Recession.

“My daughter graduated the year before and fortunately found a job with coverage that was better than ours, but many of her classmates were not as lucky,” he says. “I can’t tell you how many parents told me how grateful they were that this law had gone into effect because their daughter or son was already off of their policy but now could be added back on.”

Preventive care that’s on the house

Preventive care that's on the house © Monkey Business Images/Shutterstock.com

A health care reform provision in effect since 2010 requires most health plans to provide a laundry list of preventive screenings, shots and services without charging you a copay or coinsurance, even if you haven’t met your annual deductible. Some screenings, such as colonoscopies, may be available only at certain ages, however.

“The point is, there’s no longer a barrier to you as an individual not to get a preventive service because you have a high copayment or a deductible,” Kominski says.

Women in particular benefit from a host of no-cost preventive services, from human papillomavirus, breast and cervical cancer screenings to breast-feeding support for pregnant and nursing mothers.

“What people don’t realize is that prenatal care is now free — it’s a preventive service,” Chollet says. “That’s huge.”

“We’ve heard stories from women who have put off screenings or going to the emergency room because they’re scared of what the cost would be,” Palanker says. “The ACA (Affordable Care Act) can be a lifesaver for them.”

No more higher rates based on health or gender

No more higher rates based on health or gender © auremar/Shutterstock.com

Beginning next year, health insurers can’t charge you more or deny you coverage for a pre-existing medical condition or discriminate against women, all of which were common practices before health insurance reform.

The new rules represent a long-sought boon for the up to 1 in 5 nonelderly Americans — an estimated 25 million people — who have pre-existing conditions and are uninsured. However, grandfathered plans in the individual insurance market (as opposed to employer group plans) are still free to set higher rates based on pre-existing conditions.

Chollet says finding coverage on the individual market has been particularly frustrating for those with a health flag in their file.

“Some companies would ‘carve out’ (exclude) the condition to the point where it was ridiculous, such as, ‘We will insure you for everything except your circulatory system,’ or your brain, if you have chronic migraines,” she says. “Plus, it was unpredictable.”

Palanker calls the Obamacare protections for people with pre-existing conditions a financial lifesaver. “This should reduce the medical bankruptcies that these families faced,” she says.

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