Individual health insurance under Obamacare
What has changed and what hasn't since passage of Affordable Care Act
Although most Americans get their medical insurance from an employer or from the government, individual health insurance is designed for people who are self-employed or do not have access to an employer-sponsored or government health plan. Historically, individual insurance in almost all states involved medical underwriting prior to 2014, which meant that securing a policy was often difficult for people with pre-existing conditions.
Most health insurance companies are for-profit entities and even non-profit carriers cannot operate at a loss. They have to take in more money in premiums than they pay out in medical claims.
In the individual market, medical underwriting was traditionally the way they accomplished this. People with pre-existing conditions could be declined for coverage or offered a policy with an increased premium or exclusive riders that eliminated coverage for pre-existing conditions.
The Changes in 2014
The ACA made individual health insurance guaranteed issue as of January, 2014. This means that medical history is no longer a factor in determining whether an applicant can get a policy or how much the policy will cost. Individual health insurance is issued with modified community rating, which means premiums can vary based on geographical area, age and tobacco use. But increased rates based on medical history. Increased rates based on medical history are no longer allowed, nor are pre-existing condition exclusion riders and applicants can no longer be declined for coverage based on a pre-existing condition.
Health Insurance is a necessity and it's also now required by law
All, but the most wealthy among us need health insurance to protect against bankruptcy in the event of a serious illness or injury and to secure access to expensive, life-saving medical care if we need it. Although lawmakers saw that removing medical underwriting from the individual health insurance market was necessary in order to extend coverage to everyone, they also knew this had the potential to create significant adverse selection in the market. There was just too much potential for people to wait to apply for a policy until they needed medical care, knowing that the coverage would be guaranteed issue.
So, Obamacare includes two previsions to prevent this: With very few exceptions, everyone is now required to have health insurance or pay a penalty and individual health insurance is only available for purchase during open enrollment windows. Open enrollment for 2017 will start on November 1, 2017 and continue until January 31, 2018.
Outside of the open enrollment window, individual policies are only available for people who have a qualifying event (including things like birth, adoption, marriage, a permanent move or loss of other coverage).
What can you expect?
Individual health insurance is available both in and out of exchanges. You can purchase health insurance through a trusted broker, directly through a carrier or via your state's exchange.
The first thing to do is figure out if you qualify for a premium subsidy or cost-sharing subsidy based on your household income. If you do, you'll definitely want to get your health insurance through the exchange, because that's the only way the subsidies are available.
Individual ACA-complient plans are rated with "metal" designations, which helps consumers compare apples to apples. There is plenty of variation from one carrier to another, both in terms of plan design and price, but policies are labeled based on their actuarial value, or the percentage of costs that the plan covers before the out of pocket maximum is reached.
Bronze plans will cover roughly 60% of the costs, Silver plans 70%, Gold plans 80% and Platinum plans 90%. For people under age 30 or those with hardship exemptions, catastrophic plans are also available. Subsidies are not available to offset the cost of catastrophic plans however, so only a very small percentage of enrollees have selected them thus far.
All plans are subject to out of pocket maximums, which cannot exceed $7,150 for an individual or $14,300 for a family in 2017.
Cost-sharing subsidies are only available on Silver plans in the exchange. Premium subsidies for eligible applicants can be applied to any of the "metal" plans in the exchange.
Better to buy direct or from an agent?
Most direct-to-consumer websites present Individual Affordable Care Act (ACA) plans as a straightforward proposition. Experience shows that may not be the case. Each plan is state-specific, so it's advisable to see the advice of an experienced advisor who can help you with your enrollment and plan selection based on your choice of doctors and prescriptions.
Working with an experienced health insurance advisor will ensure that you have “peace of mind” in selecting the most cost-effective and best coverage given your unique health care needs, both now and in the future.
There is never a charge to meet with us. We are compensated by the insurance company should you decide you’d like us to help you with your enrollment and plan selections.