By Kelley Weiss, CHCF Center for Health Reporting
Despite promises by President Obama that people can keep the insurance they have once Obamacare is in full effect in January, millions of people nationally will have to upgrade their policies.
That’s because these people have “bare bones” plans that don’t meet the Affordable Care Act benefit standards.
Darren Hall is one of those people. He runs a pool service company in Sacramento. Since he’s self-employed he doesn’t get health insurance through his job, but buys it on his own.
He says it’s worked out pretty well until this spring when his monthly premium spiked from $250 a month to $300 dollars overnight.
So he says he looked for a better deal and found another health insurance policy for half as much.
“As a small business you have your ups and downs and so every dollar does count,” Hall says. “Another $150, that’s half a truck payment right there.”
Hall got this new policy in April and it’s another high-deductible health plan. He pays for the first $1,500 of medical care out-of-pocket to meet his deductible. He doesn’t get coverage for certain benefits but that leaves him with a lower monthly premium.
Since he’s hardly needed any medical care in the last 14 years, Hall says it’s been just fine.
“The amount of times I’ve been to see a doctor I can probably count on one hand,” he says.
But Hall says now there’s a problem. He’s going to have to choose another insurance policy soon because his doesn’t meet the standards under the Affordable Care Act.
“Folks are going to have to buy more comprehensive policies, generally, in 2014,” says Micah Weinberg, a senior policy consultant with the Bay Area Council.
He says a small portion of people might be able to keep their policy if they have a grandfathered plan, meaning they had it on March 23, 2010. But he says Hall and millions of other people have individual health plans today that won’t cut it.
“Most of the policies sold in the individual market are much skinnier than the policies provided by employers,” he says.
Weinberg says the Affordable Care Act requires all insurance policies to cover 10 benefits, including things like hospitalizations, maternity care or prescription drugs. The idea, he says, is to protect people with a high deductible plan, like Darren Hall, from financial calamity.
“A lot of what the Affordable Care Act does is prevent moments of terror, panic, bankruptcy that we didn’t anticipate were even going to happen,” Weinberg says.
Obamacare will do this, he says, by making insurers pick up at least 60 percent of medical costs. And it caps out-of-pocket spending for individuals to around $6,400 per year.
People can also get help if they buy a plan on the newly formed health care marketplaces and qualify for a subsidy. But this won’t help everyone. Take, for example, the two million people in California who buy insurance on their own today. Only about a third will qualify for tax subsidies. Darren Hall makes too much money to qualify.
Sarah Aquino, of Integrated Benefits and Insurance Services Inc., says those who don’t qualify for a subsidy will likely see their premiums increase.
To qualify for a tax subsidy an individual has to make less than $46,000 a year, or 400 percent of the Federal Poverty Level.
But Aquino says most of her clients make more than that. Regardless, almost everyone has to have insurance or pay a fee come January. And Aquino says if that insurance is going to be more expensive, people will have a choice to make.
“The penalty for the individual mandate is $95 or one percent of your income,” she says. “So the question is will people who are healthy and don’t qualify for a subsidy come into the system?”
Aquino says the most important thing is for people to learn what their options are. And, she adds, it’s not a bad idea to start now.
This story was produced in collaboration with the California HealthCare Foundation Center for Health Reporting, a nonprofit news organization that focuses on California health issues. Based at the USC Annenberg School for Communication and Journalism, the center is funded by the nonpartisan California HealthCare Foundation. The story first appeared on NPR.