Today’s launch of Obamacare’s exchanges represents the start of sign-ups for the law’s two new entitlement programs. To guide individuals seeking to understand the process, we’ve compiled answers to some basic questions about the exchanges.
What are exchanges?
In theory, exchanges are just a fancy term for insurance marketplaces, where consumers can shop for the plan that best meets their needs. In practice, however, Obamacare’s exchanges have taken on many regulatory functions that will restrict the choice of plans offered.
Who may use the exchanges?
Any American citizen or legal resident can purchase an exchange policy. However, exchange insurance subsidies are generally restricted to those individuals who 1) do not have access to “affordable” coverage provided by an employer, 2) are not eligible for benefits under Medicare or Medicaid, and 3) earn income under 400 percent of the federal poverty level (about $94,000 for a family of four). Individuals who meet these criteria may qualify for federal insurance subsidies provided on the exchanges.
What kinds of plans are being offered?
Under Obamacare, plans will offer a package of government-mandated “minimum essential benefits” in four tiers—bronze, silver, gold, and platinum. The “richer” the metal level, the lower the enrollee cost sharing—and the higher the premiums. A study in the prestigious journal Health Affairs last year concluded that all of Obamacare’s exchange plans will likely have richer benefits, and potentially higher premiums, than a majority of pre-Obamacare plans sold on the private market.
Will the plans be affordable?
The Congressional Budget Office concluded that premiums on the exchanges could be $2,100 per family higher due to Obamacare. While a recent report by the Administration claimed that premiums will be “lower than projected,” it did not say that premiums will be lower than in the current market. Moreover, many of the people receiving coverage under the law will be enrolled in Medicaid—a government program not accepted by many physicians, where patients often have poor health outcomes.
Will I be able to see my current doctor?
That depends—but in many cases, physician access on exchange plans may be limited. Recent articles in The New York Times and Los Angeles Times have emphasized that, to keep down premium increases, many insurance companies have restricted the number of “in-network” doctors or hospitals. Patients may face a choice of traveling longer distances to visit in-network hospitals, or paying higher co-payments to see an out-of-network physician.
What happens if I don’t purchase coverage?
Individuals who do not have insurance through an employer or a government program like Medicare or Medicaid, and who do not buy coverage, may be subject to tax penalties beginning next year for violating Obamacare’s individual mandate. However, because the penalty for violating the mandate starts at $95 in 2014, some may find it preferable to pay a small annual penalty rather than higher monthly premiums.