The Affordable Care Act’s financial protections and coverage requirements are likely to help older adults (50+) the most.
State-based health-insurance exchanges created by the 2010 Patient Protection and Affordable Care Act opened for business on October 1. For those who can’t get insurance coverage through work, or for the self-employed who have been buying coverage as sole proprietors, the exchanges will serve as clearinghouses for evaluating and buying health plans. These policies take effect Jan. 1 and must cover 10 “essential benefits,” including: preventative services, hospitalizations, mental health and prescription drugs. Also, insurers can no longer exclude people with pre-existing conditions.
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Going Without
- This is good news for individuals ages 50 to 64, who typically have more health problems than those who are younger.
- Twenty percent of the 50-to-64 demographic went without health insurance for at least part of 2012, up from 15% in 2005, says the Commonwealth Fund, a New York-based nonprofit that focuses on health-care issues.
- 20%-29% of people in that age group were rejected when applying in 2008, the latest year for which figures are available.
- Many older people with insurance at work would like to make a change but are clinging to their jobs for the health coverage
- Because insurers can no longer turn people down, it is much easier to obtain coverage under the new law.
Young Subsidize Old
Employers now have until 2015 to provide coverage for their workers in order to avoid a penalty. Individuals are not so fortunate, however, as they must purchase a policy for 2014 or face a $95 or 1% of income tax penalty. (This will rise to $695, or 2.5% of income in 2016).
- Timothy Jost, a law professor at Washington and Lee University in Lexington, Va. notes that the new policies taking effect in January will benefit older consumers who tend to spend more on health care, because they will provide more comprehensive coverage with lower premiums.
- Insurers can no longer charge higher premiums based on health status, nor can they charge the oldest consumers more than three times the average premium paid by a 21-year-old (a possible savings of $1,800 per year).
- “Early retirees will benefit most from the health-care law,” says Prof. Jost in Virginia. Younger, healthier people will “pay higher premiums to subsidize the rates of those who are older and sicker,” he adds.
- If however, younger, healthier people decide to pay penalties instead of buying insurance, it could drive the cost of coverage up in 2015 and beyond.
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Tax Credits
- Tax credits also factor into the premium equation. Individuals with incomes of up to $45,960 and couples earning up to $62,040 may be eligible for tax credits that cap their premiums between 2% and 9.5% of income. Older people will benefit the most from these caps, since they are usually charged higher premiums by insurers.
- For example, a 55-year-old Denver resident who earns $45,000 a year and picks a policy that Anthem Blue Cross & Blue Shield plans to offer there for $597 a month would be eligible for $240 in monthly tax credits. A 27-year-old with the same salary and policy would pay $281 a month and receive no tax credits, according to the nonprofit Colorado Consumer Health Initiative.
Please click here to read the article in its entirety written by Ann Tergesen. You may also want to visit the ClaimLinx Exchange as well as the interactive guide to health reform for additional resources and information.