For independent contractors, the self employed, and those who work for an employer who does not offer group coverage, individual health insurance plans have been the way these people have insured themselves and their families. In the past, the problem has been for those with pre-existing conditions. No health insurance carrier would write a policy for an individual with a potentially expensive medical condition. For any insurance carrier it is all about risk. What happens to your car insurance after an accident and two speeding tickets?
There is about to be a major overhaul in the way people get their health coverage. The Affordable Care Act, or Obamacare for some, is turning the health insurance world upside down. Starting January 1, 2014, health insurance carriers will no longer be able to ask health questions. For people with pre-existing health issues, this means they cannot be turned down for health coverage. In essence, health coverage will become guaranteed issue. Rates can only be based on age, smoker or non-smoker, geographic location, and family composition (individual, individual and spouse, individual and children, and family).
Health insurance exchanges, or marketplace, are currently being created for an October 1, 2013, launch. Carriers will be offering the same policies on and off the marketplace. So, why go to the marketplace to get a policy? The answer is a subsidy. Subsidies will help people pay for the health coverage they need. People with income levels within 400% of the federal poverty line will be eligible for a subsidy. For an individual, that comes out to around $42,000 a year, and for a family of four around $92,000 a year. If a person's income level exceeds these amounts, a subsidy will not be offered to them.
Rates will be greatly affected. For all of those supporters of the Affordable Care Act who said rates would not increase, well, that is just not true. Go and google 'health insurance rates for 2014' and see how many articles there are discussing how rates are on the rise. Some experts are saying rates could double by next year. A person who currently does not have coverage may be asking the question, buy now or wait until January 1? If a person has a pre-existing condition, then they must wait until January 1 for the new rules and regulations to take affect. If a person is healthy, purchasing a plan before the end of 2013 will cost less.