With Big Deadline Just Days Away, 7 Things Baby Boomers Need to Know About Obamacare

Category: Health Issues

September 23, 2013 — Love it or hate it, Obamacare, otherwise known as the Patient Protection and Affordable Care Act, is going into effect. As a baby boomer you need to be prepared for an important first deadline that goes into place next week on October 1. That is the date that you can begin signing up for 2014 coverage at one of the health insurance marketplaces (exchanges) created by the Act. This article will outline 7 things you need to know about Obamacare, so you can be adequately covered and guarantee your rights under the new law. As you can see below, boomers too young for Medicare but not covered by their employer can probably save thousands of dollars on their medical insurance under the new law.

But first, we need to discuss your current health care insurance situation because, based on that status, the new law will affect you in different ways.

If you are currently on Medicare
If you are covered by Medicare the new law does not have a great effect on you, and the changes that are coming are mostly positive. Since you already have health insurance with Medicare, you do not need to go to one of the new exchanges for coverage. Your premiums will be unchanged, but you will have some new coverages.
– Under The Affordable Care Act, Medicare now covers certain preventive services such as mammograms or colonoscopies without charging you for the Part B coinsurance or deductible. You also can get a free yearly “Wellness” visit.
– If you’re in the donut hole, you’ll also get a 50% discount when buying Part D-covered brand-name prescription drugs.

One understandable fear with Obamacare is that doctors will stop accepting Medicare because of the reduced fees they will receive. The facts suggest there will not be a large number who do this. USA Today reported in August that more doctors than ever are accepting Medicare (1.25 million), in contrast to a Wall St. Journal article that reported that 9,500 doctors opted out of Medicare in 2012 (vs. 3,700 in 2009). Apparently more new doctors are accepting Medicare than older doctors leaving the system. USA Today reported 90% of primary care doctors accept Medicare.

Currently have health insurance through your company
Assuming your company continues to provide you with health insurance, you do not need to go to one of the health insurance exchanges for coverage. If you are in a higher income bracket, there might be some additional taxes and fees levied on you and/or your employer. You will also see some of the benefits attributed to the Affordable Care Act:
– Your adult children can be covered under your policy until they reach the age of 26.
– As of Jan. 1, 2014, annual and lifetime limits on “essential health benefits” are eliminated (except for certain grandfathered plans). This means that if you develop a very expensive medical problem, your coverage will not be shut off.
– No more pre-existing conditions. Insurances can’t deny you or charge you extra because of a pre-existing condition, or if you become sick after you take out a policy (but they can charge more based on your age and some other factors).
– Essential medical services. All plans, individual or group, have to include certain basic benefits in 10 categories. Those include: emergency services, maternity and newborn care, substance use disorder services, chronic disease management, outpatient services, pediatric care, etc.

Not currently covered by Medicare, Medicaid, or your employer
This situation applies to baby boomers who are no longer working, not covered by their employer, or who are not yet old enough (65) to qualify for Medicare. If you do not currently have health insurance (the Commonwealth Foundation estimates 20% of people age 50-64 did not have health insurance at some point last year) Obamacare requires you to get coverage, starting in 2014, or pay a fine. If you have health insurance and are paying for it yourself, the chances are very high that you qualify for a tax credit that will pay for most of those premiums.

Seven Things You Need to Know
The seven points below assume that you are not currently covered by Medicare, Medicaid, or your employer.

1. Find out if your state has its own Insurance Marketplace or uses the one provided by the federal government.
Currently 27 states have decided to use the federal marketplace. If your primary residence is in one of those states, you will use the federal exchange. If you live in one of the the states that have set up their own health insurance exchange, you will use that one. The federal government’s Healthcare.gov website makes this relatively easy – just go there and an easy menu will direct you to your correct exchange.
healthcare
2. Determine what type of coverage you need
There are 4 types of plans available under Obamacare: platinum, gold, silver, and bronze. Although the same basic essential services must be covered, the level of benefits and their associated premiums differ. For example with a platinum policy you might pay no deductibles, but you will pay much higher premiums. It is often a question of your budget, and how many medical services you think you will need. People under 30 can have a “catastrophic” policy, which protects them against serious medical costs.

3. Register and choose a policy
At your state or federal exchange you will answer some basic questions about your age and number of people to be covered. Once you have chosen the type of coverage you want and can afford, you will be provided with a list of insurers so you can compare their coverages and premiums. Policies will vary in terms of which providers are in their networks, among other things. You will need to compare the plans and costs carefully, then you decide which company go with.


4. You might qualify for a tax credit or subsidy
During the application process you will be asked about your annual income, family size, and tobacco use. Assuming you are a baby boomer who is not working or who is underemployed, this is probably good news for you. Although the Affordable Care Act was designed to help lower income folks afford their health insurance premiums, the upper income limits are surprisingly high, up to 4 times the poverty level. So you could qualify for a tax credit if your income is $62,040 for a family of two, and $45,960 for an individual.

Additionally, there are tax credits and some limits on deductibles and co-pays, depending on the type of plan you have. You can determine how much you are going to save by using the Kaiser Foundation’s Health Insurance and Savings Calculator. We used the calculator to see what kind of theoretical savings a family of 2 (both aged 60 and non-tobacco users) might experience. The answer is – a lot. Of the estimated non-subsidized annual premium of $16,382 (for a silver plan), the subsidy in the form of a tax credit would be $10,682, knocking the cost down to $5,700 (9.5% of income). You can choose to have this tax credit paid directly to the insurer, making it available immediately in the form of a reduced premium. The cost and the subsidy would be a lot less on a bronze level plan.

5. You might have to pay additional taxes
If you are wealthy you will probably face some new taxes to help subsidize insurance premiums for folks who are less well off. For example if your adjusted gross income is more than $200,000 (individual) or $250,000 (joint-filing) expect to pay an extra 3.8% on your investment income and 0.9% additional Medicare premium. There are a host of other taxes and changes. Those include a 40% tax on so-called “Cadillac” health plans, as well as a 10% tax on tanning services.

6. Your insurance can’t be cancelled, but your rates can go up.
The good news here is that even if you get sick your insurer cannot cancel your insurance or jack your rates up. That is not to say that rates cannot go up every year, but at least they will be based on the experience of everyone in your class, not just you.

7. If you don’t have coverage you will have to pay a tax.
The idea here is to make sure everybody has health insurance. The penalties for not having health insurance start out small in 2014 ($95 for those making between $9,500 and $37,000), and increase to $695 by 2016. If you make more than $37,000 there is a complicated formula to determine the penalty, which in no case can go above the cost of a “bronze” plan (for those making more than $200,000 per year).

Bottom Line
Perhaps no other in American history has generated such controversy, passion, and misinformation. We hope this article has helped set out the basic facts that you need to be concerned about as a baby boomer. The new law might be a benefit to you (particularly if you have a pre-existing condition) or don’t have much income. It might cost you if you are a big earner. Either way, the law is about to be implemented (for the moment!), so you might as well get prepared for it.

Comments
We have done our best to present the facts and helpful links to more resources about this dramatic new change in the health insurance landscape. If you have some good resources the rest of us should know about, please add them as Comments. Likewise if you have opinions about the best coverages to take or your experiences with registering at a health insurance exchange, we would all love to hear about them. However, the one thing we don’t want to hear about is political rants about Obamacare, pro or con. As Sgt Friday said, “Just the facts, m’am”. Political comments will be removed.

For further reading
Results of Topretirements poll about Medicare
Prices Set for New Health Care Exchanges (Wall St. Journal online
So You Are Turning 65 – Your Medicare Guide 101
5 Things to Know About Obama Care Coverage (Yahoo.Finance)

Posted by Admin on September 23rd, 2013

22 Comments »

  1. Thank you for another excellent, and well researched article on an extremely important topic. The links provided are a huge help in attempting to answer secondary questions and smoothing the process of navigating the new “health care” system.
    You folks at TopRetirements.com have always been helpful with articles targeted to the needs of retirees and “soon to be” retirees, but this health care information has taken your team up to a new and much higher level of service to each of us….thanks! 😎

    Editor’s Comment: Thanks Dave. Your kind words mean a lot. Glad to help, this is a complex subject and the need to know is great.

    by Dave C. — September 24, 2013

  2. Ditto Dave C. I appreciate the info written in a clear and concise laymen’s language that anyone will be able to understand.

    by Bob H. — September 24, 2013

  3. I’m sure your readers who are retired or disabled veterans would be interested in how ObamaCare impacts TRICARE, TRICARE for Life and VA benefits. (There has already been talk about raising TRICARE Prime fees, and imposing a cost on TRICARE for Life.) Not much has been said about these programs vital to veterans and their families, and when few are talking about something, one has to wonder.

    by John Garlinger — September 25, 2013

  4. I am as concerned about proposed increases to military retiree health care as John is. We went from the “promise” (which Congress said they didn’t make) of life-time healthcare for 20 years of service to continuously creeping costs for coverage. This is an unethical way to take away retirement benefits by putting the cost of healthcare back on the retirement checks of veterans. Contrary to the article, you won’t have to big earner for this to hit you in the pocket book.

    by Steve — September 25, 2013

  5. Thank you for the very informative article. One topic that you did not cover, and which I’ve seen very little coverage about is the category where you have health insurance coverage by an employer, but the the employer contribution is minimal so the employee has to pay an excessive amount for the coverage. I have seen articles mention this case and imply that there are instances where the employee could qualify to use the Exchanges and also be eligible for a tax credit or subsidy. Do you have any further information or references on this situation? Thank you!

    by Ray E. — September 25, 2013

  6. For those of us who live in places like NJ, where the cost of living necessitates a higher “income,” the subsidy cap penalizes us for the luxury of breathing. We continue to look for a way out of here, including a downsizing on most fronts.

    by Dan — September 25, 2013

  7. Dear John Brady, Top Retirements.com:

    Would you please address effects on military veterans and families – concerns expressed in comments above? and address/respond to, Dan’s concern with the subsidy cap in states where the cost of living is much higher than most (comment from Dan, above)? I want to learn more to better understand these aspects of “Obamacare”.

    by Maria MLM — September 25, 2013

  8. 1. You might have to, if you haven’t already, go find another part-time job if your employer wants to cut everyone’s hours back to less than 30. For my son, he just received notice that he couldn’t work over 30 hours any longer. That represents a 25% cut in pay. He starts working part-time at Costco this weekend. He has had to move to a smaller place and has told us that he can’t come for Christmas. His girl friend was cut down to 30 hours several months ago. They, being young and very healthy, both do not have, do not want, or do not need health insurance. Our government tells them that they will have to buy it or be fined.

    2. You may have to go find a new doctor if your company’s insurance company is not part of the plan. You may have to do this in spite of promises that you will not have to change your doctor. Be prepared.

    3. Premiums, in spite of promises they wouldn’t, are going to rise. With so many added benefits and new people getting insurance, premiums will have to rise. Plan on at least a 25% increase in your budget. My daughter’s premium increased 27%. She is going to have to do some major cutbacks to pay for it. You might have to too.

    Good luck.

    by MadJayhawk — September 25, 2013

  9. What I find amazing is how every side of this issue is ignoring the fact that IBM, GSK, Time-Warner and several other corporations are moving their retirees to the exchanges. I can tell they plan to abandon retirees to their own healthcare devices.

    What really makes me somewhat angry id MSNBC is completely ignoring this fact, especially when interviewing anti ACA spokespersons.

    by Ed — September 25, 2013

  10. Could you address Federal (Civil Service) annuitants using the FEHB and under the age of 65.

    by David Dias — September 25, 2013

  11. Please note that rates displayed in the media for the Obamacare plans are per individual! And most, not all, of these plans will have much higher deductibles than plans people currently hold. Max, repeat max and not min, out-of-pocket for a family plan is $16,700 and for individual at $6,350. Carefully analyze your current plan against the new plans taking into account premiums, deductibles, subsidies, etc. See reports such as: http://finance.yahoo.com/blogs/the-exchange/5-things-know-cost-obamacare-coverage-191050885.html

    by Dee — September 25, 2013

  12. When getting information about the ACA, always consider the source.
    If you have questions about issues raised by talk show hosts and politicians, why not go straight to the horse’s mouth for answers?
    https://www.healthcare.gov/how-does-the-affordable-care-act-affect-me/

    by Judith Keefer — September 26, 2013

  13. The healthcare site is good for general information. There are specifics in IRS tax bulletins and, in a few days, on the exchanges which will vary by state. Compare the exchange plans with plans outside of the exchanges against your current plan, if it isn’t pulled. Our decisions will likely lie in the details – such as deductibles, premiums, etc. All plans will be guaranteed issue.

    by Dee — September 26, 2013

  14. As a retired federal employee, I find Obamacare confusing and I have a deep suspicion that the Federal Employees Health Benefit Program I am covered under for medical coverage will be amended at a later date to cover other shortfall in Obamacare. But my real question is: should I sign up for Medicare Part B if I have my own medical coverage? I do not want to pay the Medicare Part B premiums if I already have coverage under the FEHP.

    by Rob Quinlan — September 26, 2013

  15. MadJayhawk…you say your son and his girl friend do not want and do not need health insurance. My son is 28 and is also healthy, but he pays for health insurance. What happens to these healthy people if they get into a car wreck (for example) and end up with an astronomical medical bill including recurring costs? I’m talking about amounts that far exceed the medical coverage through a typical automobile insurance policy. Who would pay for that?

    by Chuck — September 26, 2013

  16. @ Rob Quinlan:

    The only authoritative answer you are going to get regarding your Part B question is from your particular plan itself. There are nearly a hundred different plans under FEHB, and only the particular plan you carry (or switch to during open season) can authoritatively tell you their requirements about carrying Part B or not. If you can’t decipher your plans brochure, pick up the phone, dial the 1-800 number on the back of your card and ask for a benefit’s counselor. As a fellow retired Fed with FEHB coverage, I share your concerns that change is in the wind, but relax and enjoy life. Right now Obama care doesn’t affect you or I a whit, currently you and I and our fellow retired feds enjoy possibly the best health plan in the world, and who knows how change may affect us down the pike. Enjoy the ride … nothing much we can do about the future anyway.

    by Dave Starr — September 27, 2013

  17. Madjayhawk…I have three grown children who have all have college degrees or in the process of getting one. The companies they work for do not offer health insurance. They feel fortunate just to have a job. Recently two of the three (who were healthy) experienced health problems which required a doctor/hospital visits/tests. Luckily they did not require hospitalization (which could ruin them financially for awhile) but did leave them several K in debt. Because they did not have insurance they needed half the cost of the tests upfront, which they didn’t have, so their retired mother (living on limited income) needed to fund …or…watch her children suffer or who knows ? It’s not just the young healthy ones who can become affected by no health insurance…it’s everyone….their family….their friends…their employer…and on and on.

    by Iwashere — September 27, 2013

  18. @Chuck:

    You have a very valid point Chuck. You and I and every other insured person in the country would pay for those that do not buy health insurance because “they don’t need it”. Unless the person only sits in front of the televieion 24 hours a day there is always a possibility of an accident through no fault of their own. Even sitting in front of a televieion would make them more likely to have a heart attack. “Accidents” can also happen in the bedroom which can cost over half a million over the next 18 years

    by LarryD — September 27, 2013

  19. This is a terrific summary No one can predict when we will need health care but every one will someday MadJayHawk Your arguments support the age old one of the individual vs the community & I can’t imagine where our country would be if we had never pooled together My son a bright scientist jusst lost his job do to the sequester Done not furloughed, not hours cut back. So who do you trust more big government or big business

    by MadDove — October 2, 2013

  20. This website should cover the multi-state health insurance options for the “snowbirds”. Currently, they use a “wraparound network”, which might be going away with the new exchanges.

    by Dave McKay — October 2, 2013

  21. I think MadJayHawk is missing the point of the ACA, no one is a superhuman, everyone gets sick and will need medical care sometime in their life,we cannot afford not to get everyone insured. The fact is the more young and healthy people in the insurance pool the lower the rates for all us and the more power over the insurance companies to meet our needs.

    by Bob H. — October 3, 2013

  22. Yes Bob, that’s so fair to all the young folks without much money. They should pay for all the rest of us. This ACA is about weath distribution, not healthcare. My children are in their early 20s and have no money for this forced plan.

    by Pat — November 15, 2013

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