Whether you work for a large or small business, have health care benefits or not, you will be affected directly or indirectly. The question is how will The Affordable Health Care Act impact you? Starting in January of 2014 the entire world of health care is going to change. With these changes, you must be aware of them if you want to take proactive measures.

Small Business Employees

Many people who work for a small sized company were less likely to have benefits because of the high cost of health care for the employer. Health Care reform may actually become more affordable for small business owners who have less than 25 full-time employees because of government subsidies. The tax credit created by the 2010 Affordable Care Act will allow these businesses to get a 50 percent reduction in the cost of providing health coverage. The only condition is that these companies must participate in the health care exchanges set up by the states. Exchanges are new organizations that will be set up to create a more organized and competitive market for buying health insurance.  Each exchange will have a plan that offers a bronze, silver, gold, or platinum package according to their price and the type of coverage they offer.

The good news is that a 50 percent discount will provide more opportunities for employees who could not previously afford coverage to finally gain access to healthcare. The bad news is that a 50 percent reduction of a number that has doubled is no benefit at all. In other words, we will have to see if the tax credit will be enough to give small business employees enough of a cost break to maintain their current standard of living.  As of the time of this writing, some experts suggest that the cost of healthcare purchased through the state exchanges will be sold at prices below-market value. Since healthcare reform will require everyone to have coverage, employees will be less likely to remain with an employer simply because they offer healthcare and another employer doesn’t.

Large Business Employees

Employees who work for large business are certainly more likely to have healthcare now, but that could drastically change in 2014. Businesses that have over 50 employees will be forced to pay $2,000 per employee each year if they do not provide healthcare. While that seems like a hefty fine to pay, companies could literally save hundreds of thousands to millions of dollars by not providing health care.

According to Kaiser Family Foundation, the average cost of individual health insurance was $5,615 per year. Using this very simplified averaging method, an employer with 100 workers would pay approximately $561,500 in healthcare premiums. If these same firms take the penalty, they would pay $200,000. That is a $361,500 cost savings, which could theoretically be the difference between people keeping and losing their jobs.

It is nearly impossible to predict how these changes will impact small and large employees because there are too many variables to consider. Healthcare providers have to contend with increased operating costs, which drive up prices. These price increases mean that this cost will affect the people employed will pass along to both small and large employers, and therefore, those employed by these companies may take the brunt of this economic blow.

Short Term Medical Health Insurance may be a viable way to get coverage at an affordable price until you figure out how health care reform is going to affect your health insurance and health care.

Looking at Your Options…There are health insurance options which you can explore today in anticipation of health care reform. If you reside in the southern California area, feel free to contact me to explore your options, or sign up for our Newsletter which will notify you of our upcoming Insurance and Financial Planning Seminars in the Greater Los Angeles and Southern CA areas. My contact information is below…

Whether you are insured or uninsured, the Affordable Healthcare Act will change the way in which you access healthcare. For some, your circumstance will improve as you gain access to a system that prevented your participation due to pre-existing conditions. For others, you may end up being laid off from an employer or worse yet, if you own a business, you may find it difficult to keep your doors open altogether. The point here is not to paint a picture of doom and gloom, but to reveal that everyone will have a price to pay for healthcare reform.

The Insured

Plan for your employer to gradually shift some of the health care costs to you in order to maintain profitability. For example, you will most likely notice an increase in the amount you pay for doctor visits. The sheer volume of usage in the medical community is going to drive up costs, which means that insurance companies will pass on that cost to employers, and ultimately to you.

On the surface, these group health insurance plans may look better because they come with low premiums, but have higher deductibles and co-payments for doctor’s visits. Currently, workers are are typically asked to pay the first $3,000 to $5,000 of each year’s medical expenses themselves.  Undoubtedly, these figures will increase. Another cost cutting strategy, which in this instance is a win-win approach, is to offer incentives for the employees who take preventative measures such as offering weight loss and healthy living classes to cut healthcare costs.

The biggest concern regarding health care reform is that your employer may have to get rid of their benefits package altogether. With healthcare costs going up, you may be caught bearing the entire financial burden of medical care for your family. If you work for an employer who has less than 50 employees, they are not obligated to provide healthcare for you. While this is true, it’s probably not worth overreacting because your boss probably offers you benefits because they want to compete with other companies to prevent them from stealing your talents.

The Uninsured

You are primarily the focal point of health care reform. Whether you have a preexisting condition or live significantly below the poverty line, you officially receive access to medical care starting in January 2014. For those of you who are sick, but live above the poverty line you will have to pay for care, but theoretically your costs will not be more expensive than everybody else’s.

Within this larger group of uninsured individuals, there is a subgroup of folks who have no desire to have any coverage at all. According to the federal Health and Human Services Department, one of those groups is the “Healthy & Young,” comprising nearly half (48 percent) of the uninsured. The other group is classified as the “Passive & Unengaged” (15 percent). The federal government has incentives for you to enroll in programs because you help keep costs down. You help insurance companies lower costs for everyone else when you make a monthly payment for insurance that you do not use. Insurance companies use those funds to pay for services other sick people will have to use much more regularly.

As a country, we tend not to worry or take preventative measures regarding the unknown because we do not forecast how we will be affected. Groups who have a higher price to pay, both literally and figuratively, will begin to feel the difference in 2014. Over the next few years, the national conversation about healthcare reform will get louder as we see its implementation and feel our pocketbooks get a little thinner. Short term health insurance will often be the solution uninsureds turn to…

Chances are, you have heard of the Health Care Reform Act known as Obama Care, but the real question is, “How does it impact me?” Does it impact your health insurance? Well, we will all be quite impacted by Obama Care either directly or indirectly. There are 2700 pages of legislation to prove it. Individuals who are not covered by health insurance (either permanent or short term health insurance) by January 1 will be taxed at the end of the year starting in 2014.

According to FactCheck.org:

• The minimum tax/penalty you could pay is $95.
• The tax you owe will be phased in from 2014 to 2016. By 2016, the minimum penalty is $695 per person.
• If you make less than $9,500, you owe nothing. If you make more than $37,000, you owe 2.5% above the level to file a tax return (right now – $9,500 and $19,000 per couple).
• If you make more than $9,500, but less than $37,000, you will owe $695 by 2016
• You will never be penalized more than the lowest cost health insurance plan offered by each state health insurance plan purchased through state exchanges.
• The Congressional Budget Office (CBO) estimates that these policies will cost about $4,500-$5,000/yr. for each person, but that was in 2010.

However, people who decide how much health insurance will actually cost believe the rate hikes will be severe. Mark Bertolini, CEO of Aetna, predicted that a 20 percent increase is a modest estimate. For some people, health insurance premiums would double. “We’re going to see some markets go up as much as 100 percent,” Bertolini told Bloomberg News.

Think about individual health insurance as a public swimming pool. Before 2014, individuals with pre-existing conditions were prevented from entering that pool because they needed extra life guards to keep them from drowning. After 2014, those same individuals will have full access to that pool, which means that the other swimmers will have to help pay for the extra life-guards. Medical claim costs are the biggest driver of health insurance premiums, which means that the healthier people in the pool will have to help pay for the people who are sick.

According to the Agency for Healthcare Research and Quality:

• Five percent of the population accounts for almost half (49 percent) of total health care expenses.
• The 15 most expensive health conditions account for 44 percent of total health care expenses.
• Patients with multiple chronic conditions cost up to seven times as much as patients with only one chronic condition.

Americans have a tendency to wait until a situation impacts them directly to respond. Hopefully, you take time to educate yourself further on this issue, and avoid unnecessary financial penalties due to a lack of planning about your health insurance. If you are currently uninsured, consider a short term medical health insurance policy. It is flexible, inexpensive, and a great solution in the near term until you can figure out your permanent, longer term health insurance needs.