The Affordable Care Act, also known as Obamacare, has so many different moving parts and miniscule pieces that it could be financially devastating for an individual (or a business) that misunderstands. That said, it may be better to break ACA down into sections and ensure that you’re looking at this complex legislation in the right context for you.
This article is far from a thorough summary of the ACA, and should not be taken as accounting or legal advice, but I hope these basic steps will help you, your employees, or your clients reach a level of manageable understanding. That way, you at least know the questions that need asking to meet your specific needs.
Whether you currently have coverage to compare to, or are enrolling for benefits for the first time, start here:
Ask yourself: Does your combined deductible and out-of-pocket maximum (you should add these together with most plan designs) meet the requirement for not exceeding the $6,350 maximum per year per individual under ACA? (This should be at the top of your plan summary just under the deductible information.)
If yes, it may already be compliant with ACA for this specific requirement. If no, you will want to find a specific combination, like a reduction of the individual out-of-pocket maximum with the same deductible, to meet ACA guidelines with the lowest premium increase possible.
Ask yourself: Does your current plan consider the family deductible met with two family members or three family members? (This should be at the top of your plan summary with the deductible information.) [What this means: If you have three family members with high claims exceeding the deductible and out-of-pocket maximum, the third family member will be paid by the plan going forward instead of you. Since this increases the potential claims paid by the insurance, it will probably increase the monthly premiums you are required to pay.]
If two, it is already compliant with ACA for this specific requirement. If three, it requires the adjustment to two for compliance within ACA guidelines, and you may see the increased monthly premiums.
Coinsurance – In my experience, this has been one of the most widely misunderstood parts of any health insurance. With lowered out-of-pocket maximums, it should not be used as a catalyst for decisions in health plans the way it has been presented by agents and carriers in the past. Coinsurance is simply the percentage you and your health plan each pay, but only after your deductible has been satisfied, and only up to your out-of-pocket maximum. So if you are satisfied that your total out-of-pocket costs for the year are covered and don’t exceed $6,350 defined under ACA, the percentage may not be as relevant as it was for prior plans with a $15,000 or $25,000 out-of-pocket maximum. (This should be at the top of your plan summary with the deductible information.)
If your coinsurance percentage is adjusting this year, or you are enrolling for the first time, ask yourself this: With a hospital claim reaching $100,000, how relevant it is to pay 20 percent, 30 percent, or even 50 percent coinsurance? Any way you break it down, you pay up to the annual maximum (not to exceed $6,350 for any ACA compliant plan), and the qualified plans pay 100 percent of the remaining eligible charges.
Your coinsurance percentage will be more noticeable with an unexpected $5,000 claim than a $100,000 claim. However, at this point, it will affect what you pay by hundreds per year, not thousands or tens-of-thousands. If you can reduce premiums slightly with a higher coinsurance percentage, don’t be afraid of how this will affect high claims. As long as you understand your out-of-pocket maximum for the year, you can use the coinsurance percentage to adjust premiums up or down more confidently to fit your overall needs and take calculated risks.
Prescription deductibles may or may not apply, but it is worth verifying. If you do not have a deductible specifically for your Rx benefits now, but the new plan has one, look to see if the deductible applies to generic medications or only to medications that are non-generic.If you always take/request generic medications, and the deductible doesn’t apply except to non-generics, don’t worry too much. The health plans typically use the Rx deductible as a tool to help reduce their costs for high-dollar medications that are non-generic.
If you take regular non-generic medications (i.e. diabetic insulin), this will affect you. But, instead of letting it scare you, break the information down. If you now have a $500 annual deductible for non-generic medications, but the plan has cost savings in other areas, you may still come out ahead at the end of the year as far as actual out-of-pocket expenses.
Lab work and physician co-pays are always a bit confusing, and it tends to shock people when a lab bill shows up that’s separate from the physician visit. Be sure you look to see if lab work is included under the office visit co-pay or if it is subject to deductible and coinsurance. (This will be under the Lab and X-ray section of your plan summary.)
If your plan summary shows lab work is subject to deductible and coinsurance, you should plan on receiving a bill specifically for the full re-priced amount of the lab services assuming you haven’t met your deductible yet. When lab services are covered under the office visit co-pay, there is typically a requirement that the lab work is billed by the physician receiving your co-pay.
It is ultimately your responsibility to ask the physician’s office at the time of services that they make sure the labs are billed with their office visit to the insurance in order to minimize your costs regardless of the insurance plan. Preventative Care and Wellness benefits are 100 percent covered in all ACA compliant plans … if you utilize an in-network provider. Some plans will allow out-of-network providers and cover 100 percent, but not many. Be sure you know your network, and use it, to get the most out of your benefits.
Like service providers ≠ Like charges. You can pay $411 to $3,895 for the exact same service depending on where you choose to go for an MRI of the knee within ten miles of zip code 76248.* With higher deductibles and premiums on the rise, it is up to each and every one of you to look up pre-scheduled visits to see if you are doing what is best for you and your family’s finances as well as what is best for your health insurance renewals. Several pricing tools exist at little or no cost for individual use.
Ultimately, there are hundreds of variations in plans and networks and prices, and any one of the little tweaks can have a lasting effect on each of us. This list is not all-inclusive by any means, but it is meant as a starting point for each person. Now, people should be able to look at their benefits with some certainty about what they do or don’t have, what they may or may not be paying for differently from previous years, or at the very least, what questions to start with in a discussion with their agent or broker.
Break it down. Take a hard look at how you typically spend your healthcare dollars—both your personal funds and what your health insurance is paying for you. List your medications, regularly scheduled physician visits for preventative care or maintenance issues, and how many times you typically have a “sick visit” in any given year. If you have access to a Flexible Spending Account (FSA) option at work, allow yourself to pre-tax some of the known expenses by running it through your FSA. If you have a higher deductible than you are comfortable with, add an accident or critical illness policy that pays you so you aren’t necessarily feeling the out-of-pocket costs. Each of those policies typically cost less than $1 a day on average. You do have control, and you are responsible for the decisions you make.
Most health insurance plans, and the ACA in particular, have a whole bunch of moving parts that are hard to keep up with even for those who do it every day. Take these tools and start to take control with some degree of confidence. Don’t allow the massive amount of information and confusing terminology to intimidate you. Start with the seven items above, and break it down. You’ve got this!
Note: If you are enrolling for the first time, all Marketplace plans will meet ACA requirements, while Off-Exchange plans (such as those you may get direct from carriers or agents not through Healthcare.gov or your state’s specific exchange website) may not. Additionally, it is each individual’s responsibility to ask if your plan is compliant because you are the one that will be penalized if it is not.