The Procrastinator's Guide to Surviving Obamacare
Today is the last day to sign up for Obamacare if you want your insurance to start on Jan. 1.
Just kidding! The Washington Post just reported that the administration has "quietly" delayed the sign-up date by another 24 hours. As someone I know drily noted, "I want coverage that starts January 1st, but at this rate, I think I'll just wait and sign up in June."
Still, I imagine that some of you are planning to buy insurance via the exchanges today. If you're planning to sign up, here are some things to remember:
Bronze plans have subsidies; Catastrophic plans don't. This is actually most of the difference between them, which is why Catastrophic plans seem to be, at best, only modestly cheaper. If your household income is under 300 percent to 400 percent of the federal poverty line, you may want the Bronze plan, even if you're under 30, or had your insurance cancelled by Obamacare.
People whose income is between 100 percent to 250 percent of the federal poverty line qualify for a special subsidy, but only for Silver plans. This subsidy limits your out-of-pocket expenditures if you buy a qualified Silver plan. If your income falls into this range, regardless of other situations, this is what you should buy.
Pay attention to doctor networks, not just price. A lot of the new plans kept premiums low -- often at the behest of regulators -- by sharply limiting doctor networks. Yes, corporate health insurance does this too. But these networks seem to be quite narrow. Don't just check to see that your kids' pediatrician is covered; make sure that the area's top hospitals are also included. The most important feature of insurance is not allowing you to prepay your doctor bills; it's covering you in the event that something goes terribly wrong. And when your kid gets cancer, or your husband is horribly injured in a car wreck, you will want access to the top programs, not the underutilized community hospital that was willing to take the price your low-priced insurer offered. It is much better to pay extra for a good network than it is to pay extra for lower deductibles.
Better check that prescription drug coverage, too. All Obamacare plans have to offer prescription drug coverage. But that doesn't mean they have to cover the drugs you're taking. If the drugs you take are generic, who cares? But if you've got AIDS or rheumatoid arthritis, you and your doctor are probably pretty specific about your regime. Make sure that you can stay on it with your new plan; don't just assume it's covered.
The mandate penalty is not $95 unless you are really poor. The administration has been trying to soften the negative image of Obamacare by de-emphasizing the penalty. As a result, a lot of people think that the mandate penalty for the first year is only $95. It's not; it's $95 or 1 percent of income, whichever is greater, up to the cost of the cheapest health insurance plan you could have bought. I agree with Yuval Levin that a one-year delay of the entire mandate looks more likely by the day. But understand that if you do not buy insurance by March 31, you at least risk paying much more than $95. I won't yell at you if you decide you're better off not buying insurance. But it should be an informed decision.
Obamacare plans don't necessarily cover care in other states. If you are a retiree who splits time between North and South -- or if you're in a rural area where folks need to travel to another state for advanced hospital treatment -- you may be in for a rude shock. You should check the offered coverage carefully, or speak to an insurance broker, before you commit to a plan.
Look at out-of-pocket limits as well as co-pays, especially if you've got a serious health issue. The law caps out-of-pocket expenditures at $6,350 for an individual, and $12,700 for a family. That's actually higher than even the catastrophic insurance that many people were buying before Obamacare -- and it's often the de facto deductible on Bronze plans. And if you've got a special-needs kid, or a serious chronic disease, you know that you can blow through $6,350 pretty quick. If you're basically healthy, you should go with a high deductible that's near or equal to that out-of-pocket limit. But if you've got someone sick in the family, make sure it's within limits that you can afford.
Unless you're getting a big subsidy, don't fixate on coverage for your regular costs. People tend to put a lot of emphasis on plans with low co-pays. That's stupid. How do you think the insurance keeps the co-pays so low? Answer: It makes you pay it as part of your premium. If you've got some sort of serious condition that puts you in the doctor's office every week, then you will probably benefit from a low co-pay plan. From the consumer's point of view, low co-pays aren't necessarily bad, they're just irrelevant: What you lose on the swings, you make up on the roundabouts. Focus on more important things, like provider networks and drug coverage.
You need to budget for expenses. Anecdotally, a lot of folks -- particularly the law's supporters -- seem to think that what it provides is like very generous employer insurance, or something they dimly remember having read about Canada. Those folks are going to be in for a nasty shock when they buy a Bronze plan and find out that almost everything is out-of-pocket until you hit that $6,350 limit. Right after the exchange opened, I had to convince multiple unbelievers of this by actually mailing them the sample expected out-of-pocket expenditures that the local Blue Cross/Blue Shield had provided to prospective customers. They estimated that a diabetic would come surprisingly close to hitting that $6,350 on a Bronze plan, because after that first free doctor visit, precious little was covered until you hit the cap.
Don't let that scare you away from Bronze plans: In my opinion, unless they have serious health conditions, most people should buy a Bronze plan because -- repeat after me, kids! -- you cannot save money by prepaying the insurer for routine care. But the money you save on premiums cannot simply go into the beer fund. You have to put some money aside for doctor visits, emergency room stitches and so forth. Maybe not the whole $6,350 but at least a couple thousand.
You still have three months to buy insurance and avoid the mandate. If you miss the deadline, you won't have insurance for January. But you still have a few months to sign up.
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Megan McArdle at email@example.com