Getting Ready for theTrain Wreck

October 1, 2013 is opening day for you to enroll in your choice of four (4) health insurance policies demanded by the Federal Government, whether you want it or not. Once you enroll, your new health insurance goes into effect on January 1, 2014…and you must want it as a majority of you voted to keep the Federal mandate back in November 2012.

If you already own individual(or one covering you and your family) health insurance now, meaning you are not covered by health insurance provided by your employer AND if that health insurance policy went into effect before March 23, 2010 AND if you have made no changes to your policy since then, your insurance policy is “Grandfathered”. If you own a grandfathered policy, you may keep it, and you can skip enrolling in one of the Federal Government mandated plans.

If you already own individual(or one covering you and your family) health insurance now, meaning you are not covered by health insurance provided by your employer but such health insurance was effective AFTER March 23, 2010, your health insurance policy is NOT grandfathered, and you are required by the Federal Government to replace your present health insurance, on or before it reaches its anniversary date in 2014, with new government mandated coverage.

All is not lost, however, and there is a way to postpone being forced to buy Federal Government health insurance if you now own non-grandfathered individual health insurance which you wish to keep for a bit longer.

Contact your present health insurance company and ask them if they would be willing to renew you current policy in December 2013 to December 2014. Assuming your present health insurance company is willing to grant your request, expect your premium to increase some, as it does every year as your age advances. That gives you all of next year to keep the health insurance you like and to settle on which of the forced Federal health insurance plans you must purchase for 2015.

The four new Federal Government mandated health insurance policies will be provided by commercial health insurance companies; however, age, the area you live in, number of people in your family and whether or not you smoke, are the only factors which may be used to calculate the premiums starting January 1, 2014. As a person’s health history is no longer a factor in setting premiums, expect premiums over-all to Increase. As we age, statistically, healthcare costs rise…because older age generally means more trips to the doc. (Healthy older folk keep the statistics in balance.) I expect premiums will increase sharply for younger adults but may not rise as much for those fifty and older.

Until now, if you were in poor health your premiums were higher, to recognize the extra claims risk being assumed by your insurance company…or you may have been unable to qualify for health insurance at all. Health insurance companies, as any other business enterprise, must operate at or above break-even level or go out of business. They could have offered health insurance to everybody, regardless of health history, all along but premiums would have been over the roof and nobody would have bought their product. Now the Federal Government demands that health insurance companies cover everybody, and it forces you to buy a product or pay a cash penalty at a cost you would have rejected in a free market.

To partly offset the Federal Government mandated health insurance premium costs, those of you earning less than four times the federal poverty income level*, will qualify for a partial premium reduction in the form of a tax credit…meaning part of your premium will be paid by you and the remainder (the tax credit) will be paid directly to the health insurance company by the federal government…read, your neighbors down the street.

The amount of the tax credit will depend upon the actual premium required by the health insurance policy selected, amount of household income, and other factors. Starting October 1, 2013, to determine if you qualify for a premium tax credit (the part of your premium to be paid by your neighbors down the street), you must apply for Federal Government mandated health insurance through a “Marketplace”…originally called an Exchange. These are web-sites and phone numbers….or you can contact your present health insurance agent and access the Marketplace via your agent.

Washington, D.C. claims to be on schedule to launch its Federal Government mandate on 10/01/2013, but when you start fiddling with one sixth of the US economy it can bite you in the behind…big time. So, I expect the roll out to hit some spectacular bumps in the road.

Carpe Diem

* In 2013, the federal poverty lever is $11,490.00 in annual income for a single person, and $23,550.00 for a family of four (4). Four times these poverty levels equals $45,960.00 for a single person and $92,200.00 for a family of four. (These are slightly higher amounts in Alaska and Hawaii)