It is true that many Americans who purchase individual health insurance will be receiving letters shortly from their health insurance carrier telling them that their policy is being canceled. Why is that? This is especially disheartening when there was a promise that “if I like my coverage, I can keep my coverage” that dates back to 2010 when the Affordable Care Act (ACA) was signed into law.
Individuals, who purchased their insurance policy before March 23, 2010, and still have that same policy, can keep that policy. It is considered a grandfathered individual health policy. Grandfathered is a term used to describe a policy that was issued before March 23, 2010. These policies do not have to comply with all the market changes that have gone into effect since March 23, 2010.
So what will happen to these millions of people who will be receiving these letters over the next few weeks? Well, most of them will be transitioned to an ACA compliant plan. They will have access to a full range of essential health benefits (something their current policy may not offer). Their benefits will include preventive services, mental health and substance abuse coverage, maternity care and pediatric dental services just to name a few. They will also have maximums on what they will pay out of pocket annually as well as limits on what the issuer can charge for a deductible. I have seen health insurance plans issued in the last two years that have had $8,000 and $10,000 deductibles attached to them. The monthly premiums are low but wow, when you need coverage, it just isn’t there.
For example my friend was looking into treatment for a chemical dependency addiction. He had an individual insurance policy but the treatment center required $10,000 up front because his policy didn’t cover mental health or substance abuse services. With the new ACA compliant policies issued on Jan. 1, that won’t happen. Coverage is provided and the maximum out of pocket any individual would have to pay in 2014 would be $6,350 for medical services.
These new benefits and rules do come with a cost and that cost is reflected in one’s monthly premium. I recommend individuals receiving these letters to see if they qualify for a tax credit that will be paid directly to the insurance company on their behalf. These credits will reduce the cost of their monthly premiums. To see if you might qualify for a tax credit, check out the credit calculator.