WINNSBORO — Not purchasing insurance during the Affordable Care Act open enrollment period is a serious risk, according to representatives from Blue Cross and Blue Shield of South Carolina.
As a service to its members and the Fairfield County area, the Fairfield County Chamber of Commerce hosted Blue Cross and Blue Shield representatives Nov. 12 for a presentation on the Affordable Care Act.
Stephanie McLellan and Sherry Nicewonger provided summaries of key areas of the law, including the health exchange market place that went online in October. Thus far, they said that 11 group plans and six individual plans are available to South Carolinians on the exchange markets.
South Carolina runs a fully Federally Facilitated Marketplace. Subsidies are only available through that federal exchange. While the Blue Cross representatives gave out information, they recommended people contact local insurance brokers for advice before tackling the open marketplace.
“People cannot pick up coverage mid-year,” McLellan said. “They must purchase insurance during open enrollment.”
She said people who developed an ongoing condition like cancer or diabetes while they were uninsured would be hit hardest by such a choice. Those individuals would be forced to pay out of pocket for medical bills until the next open enrollment period.
The speakers estimated that 700,000 people in South Carolina currently do not have health insurance. McLellan said they expect the majority of companies who offer group health insurance will continue to do so as an incentive to attract and retain top talent.
“Smaller companies may opt not to insure employees, in which case the employees would shop either for individual or family coverage on the exchange,” she said. “(To that end) Blue Cross will offer plans on the Federal Exchange next year.”
For 2014, people shopping for insurance will use a grid outlining various plans and rates for various age groups and subgroups, regardless if one is healthy or sick. Age, tobacco use and area of residence are the only factors that impact rates for 2014.
Fairfield County, with its high rates of obesity and diabetes, would be subject to a geographic rate variation. However any geographic variation would be no more than a 20 percent addition to one’s rates.
Subsidies are available as tax credits with the amount of a subsidy being tied to one’s income related to the federal poverty level.
If a family qualifies for subsidy, the funds could be applied in part to the insurance bill, totally to the bill or all of the subsidy would be available to the consumer as a tax refund. If the consumer chose the tax refund, then he or she, at some point, would have to pay the full cost of the premium, though.
A family of four with an income of $94,200 still would qualify for some form of subsidy under the ACA but the subsidies only apply to individual plans purchased in the Exchange.
Nicewonger said that each plan carries a $6,350 maximum out of pocket cap and that if ones medical bills exceed that figure any insurance carrier would be responsible for the remainder of the cost. She said the insurance industry in general expects individual claims will increase in number. Preventative and proactive treatment programs for conditions such as diabetes will factor into one’s insurance as well.
Deductibles and out-of-pocket payments could be reduced based upon one’s income level.
The Affordable Care Act eliminates lifetime limits on insurance coverage and it restricts insurance company annual limits on coverage, say for physical therapy. So far, they said, elderly coverage through Medicare has not been impacted, so the over 65 market had not been impacted yet.
Penalty for no insurance
If people choose not to purchase insurance, there is an individual mandate penalty. In 2014 the penalty would be $95 for an adult and $47.50 per child with a maximum cost of $285 per family or 1 percent of one’s annual income, whichever is greater.
In 2015 those rates increase to $325 per adult and $975 maximum per family or two percent of one’s annual income. By 2016 the penalty per child is $347.50 with a maximum of $695 per adult and $2,085 per family or 2.5 percent of one’s annual income, whichever is greater.
The penalty is paid when one’s taxes are filed. Penalties are prorated and there is no penalty for a single gap in coverage of less than three months.
For now the deadline to enroll in the Open Marketplace is March 31. A probationary period will be in place for new employees. Qualifying events, like losing one’s job, getting married, etc. would allow people to apply for insurance at other times. In 2014 the open enrollment period will be from Oct. 15 to Dec. 7.
There are fully insured options like the SHOP exchange. There is a self-insured ASO option that is not yet available in the South Carolina market, but according to McLellan and Nicewonger that option could be available for small businesses in 2014.
At this time there is no penalty if a small business (under 50 full-time employees) chooses not to offer health insurance. Some plans have been grandfathered in, but other plans have a non-grandfathered status. The non-grandfathered plans are ones where people potentially could lose benefits.
There are penalties to employers of 50 or more full-time employees. For ACA a full-time employee works 30 or more hours per week. However, seasonal employees (less than 120 days per year) do not count toward penalties. Nicewonger said the penalties come into play in 2015.
According to the presentation, penalties create an incentive for companies to not drop coverage on employees. Under the ACA with large group policies rates could change depending upon one’s pool of applicants and its overall health. Employees can be grandfathered into a current plan if they had the plan prior to March 15, 2010.
Under the ACA there are “age bands” where rates vary based upon age. For instance a sixty year old pays around six times the premium of an 18-year-old. People are guaranteed access to health insurance regardless of age or health conditions. Riders on conditions such as high blood pressure or diabetes can not be used by insurance companies to cap the amount of payment, or in some cases restrict payment, on pre-existing conditions.
There are taxes and fees that carriers must pay the government, and according to Nicewonger and McLellan those fees are passed on to consumers by insurance companies. ACA taxes and fees pay for premium aid and for subsidies.
For more information on subsidy calculation, they recommend one research the Kaiser Family Foundation site at www.kff.org.