It was a frantic text from a client alerting me that his HIPAA guarantee issue health insurance was being increased 4.8%. His new rate would be $848 a month. With few options at our disposal to find a better rate, I am hoping the client can hold out until January 2014 when he’ll qualify for a Covered California health insurance plan at potentially half the cost.
Covered California will save money over COBRA and HIPPA
Individuals and families trapped in both the high cost insurance plans of COBRA (Consolidated Omnibus Budget Reconciliation Act) and HIPAA (Health Insurance Portability and Accountability Act) will find relief under the new Affordable Care Act rules. Like my client, when the recession hit many individuals found themselves staring at expensive COBRA plans because they were laid off, their former employer went out of business, or the company dropped the group health insurance plan to save money.
Medical conditions force families into COBRA
If they were healthy enough, people jumped out of the expensive COBRA plan and into a more affordable individual or family plan on the open health insurance market. Unfortunately, many individuals, their spouse or dependents had previous medical conditions that prevented them from being offered a plan in the individual and family market. Their only option was to stick with COBRA.
Transition to HIPAA
After 18 months of COBRA my client had to transition to another plan. Since his new employer offered no health insurance we first tried to see if he would be accepted for a straight individual plan. The insurance company denied him coverage because of his fairly innocuous medical condition. At this point, in order to maintain health insurance, he had to accept the HIPAA plan
For all the risk my client posed to the insurance company, he gets up and goes to work just like the insurance company executives and puts in 50 to 60 hours per week. He has a medical condition that requires occasional treatment, but he is being treated like some one who is sitting at deaths door.
Excessive HIPAA costs cuts into savings
His only alternative was to accept the HIPPA issue plan that the insurance company, by law, had to offer him. He has faithfully been making his health insurance premiums because he understands how important it is to have health insurance even if it isn’t for his current condition. Seriously, can you fathom a middle income man paying over $8,000 per year for health insurance?
HIPAA is not competitive but collusion
When people ask me how a health insurance agent can support the Affordable Care Act, all I have to do is point to my clients with exceedingly high cost HIPPA plans. People are forced into the “high risk” pools of HIPAA guarantee issue plans if they want to maintain health insurance. The rates from all the insurers for HIPAA plans, knowing they have a captive market where the people have no where else to turn, are all priced within a few percentage points of one another. HIPAA is not a competitive market place.
Rate relief under health care reform
For my client and others in expensive, high deductible COBRA or HIPAA plans Covered California and other state exchanges will offer some relief. Regardless of their medical conditions, they will be issued health insurance. In addition, they will also have choices on what type of plan they wish to enroll in; from a basic Bronze level plan up to a Platinum plan.
Real money savings
At a minimum, it looks my client will be able to save $235 per month or $2,800 per year. That is real money that will go into savings, retirement or spent on consumer items increasing general economic activity. The savings may be even larger for those people qualifying for the immediate tax credit to reduce the health insurance premium. For individuals and families stuck in expensive COBRA or HIPAA issue plans, health care reform can’t come soon enough.
From the Covered California cost calculator
A Silver plan purchased through Covered California is estimated to cost a 53 year old man $588 per month, with no subsidy, is a saving of $235 month over a HIPAA plan. *Final rates have not been released and will vary by location.
A Silver plan purchased through Covered California based on a $30,000 annual income with tax credit will cost $209 per month. *Final rates have not been released and will vary by location.
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