In talking with a self-employed friend who buys his own health insurance recently, it became clear to me that there’s confusion about whether or not the Affordable Care Act requires Americans to purchase their coverage from an exchange.
No, Obamacare will not force consumers to shop for and buy health insurance through a state-based or federal exchange. If you have access to coverage through an employer, you will continue to obtain it through your employer. If you buy individual major medical insurance for you, your spouse and your dependents, you will have a couple of options when Obamacare’s individual mandate takes effect for 2014.
1. Shop the health insurance marketplace
Each state will provide its residents a way to shop for health insurance online through a state-based or federal exchange. The marketplace will provide a one-stop shop for those who must obtain their own coverage. They can visit the website for their state’s marketplace, compare plans and apply. Note: Plan details and pricing will not become available until October 1, 2013, when we can start shopping the exchanges for 2014 coverage.
For many Americans, there may be an incentive to buy from an exchange. Plans purchased this way may qualify tax credits and subsidies that further reduce the cost to consumers. To determine your estimated Obamacare premium and tax credit, use our Health Reform Calculator, which was recognized by The Fiscal Times as one of the “Best Online Tools for the Toughest Health Questions.”
2. Buy directly from a carrier or through a licensed producer
When you buy coverage for 2014, you will still be able to purchase a plan directly from a carrier or through an insurance agent. There is a catch: You will not be eligible for Obamacare tax credits or subsidies when buying health insurance outside a state-based or federal exchange.
Licensed agents and brokers will continue to use their years of experience and thorough understanding of the health insurance industry provide an advisory role to consumers who wish to purchase coverage outside the exchanges. While the Affordable Care Act’s navigator program and other community-based organizations will help guide consumers as they shop for and enroll in health insurance plans offered on what the federal government is calling the health insurance marketplace, the individuals providing these services and information need not be licensed producers.
The same rules apply to plans sold on the exchanges and off the exchanges. They must fit into one of four metal levels and include benefits for the 10 categories of essential health benefits. Coverage will be guaranteed issue, which means carriers cannot deny applicants coverage or charge them more for having a preexisting condition. Premium will be determined by the following criteria: age, region, number of family members buying coverage, and tobacco use.
You can think of the difference between buying from an exchange or an insurance agent like buying a vacation package off a website like Orbitz or using a travel agent, or investing through a website like E*Trade versus using a financial planner. It’s all a matter of preference. What are you comfortable with? Consider how much assistance you need and expertise you desire, and determine if the tax credit and subsidies are enough of an incentive to sway you toward an exchange.
Jenifer Dorsey is a freelance writer whose specialties include health and fitness, wellness, sports and recreation. She is a competitive amateur track cyclist who also enjoys mountain biking, hiking, camping and other outdoor adventure. Jenifer received a B.A. in journalism from Columbia College Chicago and is an MFA candidate at Naropa University. She lives in Colorado.