Obamacare Explained: What It Means for Those Who Already Have Health-Insurance Coverage


obamacareWhen President Obama signed the Affordable Care Act into law, he hoped it would help give everyone higher-quality affordable health insurance. But now that Obamacare is much closer to taking full effect, millions of Americans who already have health insurance are worried about whether they’ll be able to keep their current policies under Obamacare, and if so, whether they’ll have to accept changes in coverage or pay more for their benefits.

How Obamacare will affect your current policy depends on what kind of coverage you have. Let’s look at the two main scenarios people face with their health insurance under Obamacare.

President Obama signing Obamacare into law.

Scenario 1: You have individual coverage rather than a policy provided by an employer.
Individual health insurance has long been a financial minefield for those who don’t get coverage from an employer. Because relatively few people have to resort to the individual plan market for their insurance, prices tend to be high, and benefits are often limited, with high out-of-pocket maximums and deductibles.

Obamacare requires insurance companies to provide a certain baseline minimum of coverage that goes beyond what more than half of all existing individual policies currently provide. That means that to offer individual insurance under Obamacare, some insurers will have to offer more benefits than they currently do, with costs likely to increase as a result. In addition, with requirements to cover those with pre-existing conditions, some companies are simply choosing to get out of insurance markets in some states entirely. Over the past month,UnitedHealth Group (NYSE: UNH ) and Aetna (NYSE: AET ) both said they would stop offering individual policies in California, forcing 58,000 existing policyholders to seek alternatives.

Ultimately, the impact will depend on which state you live in and what choices are available under the health-insurance exchanges that states and the federal government are setting up. For instance, in Vermont, rates will remain about the same under Obamacare, in part because the state already offers benefits that are similar to Obamacare’s provisions. States with lower-quality plans now will probably see increased costs as insurers add required provisions under the health-care law.

Scenario 2: You have employer coverage.
If you already have coverage through work, then the odds are much better that it’s of high-enough quality to avoid any major changes. A study last year found that almost two-thirds of employees who had group coverage at work had policies that would cover 80% or more of their health-care costs, compared with just 2% of individual health-insurance policies. Under Obamacare, adequate insurance need cover only 60% of allowed medical expenses to avoid penalties, which has spurred many small and mid-sized employers to look at high-deductible health plans with fairly high upfront deductibles and lower premiums. According to a Kaiser Family Foundation survey, almost a quarter of those covered by employers with fewer than 200 employees had HDHPs, compared with 17% at larger employers. Such moves will probably continue, as both employees and employers seek to reduce their premium costs.

The bigger potential impact on employees could come from employers that take moredramatic steps to avoid providing insurance at allDarden Restaurants (NYSE: DRI ) is one of many restaurant chains that has looked at increasing the number of part-time employees they hire to avoid the 30-hour-a-week threshold that triggers Obamacare insurance requirements. Theater operator Regal Entertainment (NYSE: RGC ) reduced hours for many of its hourly employees back in April, citing the need to comply with the health-care law. Yet convenience-store operator Cumberland Gulf Group has said it plans to convert 1,500 of its employees to full-time status and provide health-insurance benefits in an attempt to attract higher-quality workers.

Net-net, until this give-and-take in the labor market gets resolved, both current employees and new hires will face massive uncertainty in their health-care costs. Moreover, now that theObama administration has delayed employer penalties until 2015, workers probably have another year to wait before they’ll know what happens on the employer front.

Waiting for the dust to settle
Unfortunately, even with important Obamacare provisions taking effect within the next few months, there’s still a lot of uncertainty about how states and the federal government will coordinate to meet the law’s requirements. Until they figure things out, it’ll be impossible for you to predict for sure exactly how Obamacare will affect your insurance.


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  1. Let’s do some basic math. Insurers currently spend less than 50% of the collected fees on coverage. ObamaCare requires that this number increase to 80%

    The difference will cover preexisting conditions and provide better care to existi g patients.

    Can we please recognize that this is a good thing?

  2. so now instead of having 50% to pay for all the associated costs of running a company they will have 20%. this translates to cuts elsewhere and increases to premiums. Salaries cuts – not for the execs. office supply cuts – a drop in the bucket. insurance for employees cuts – nah. job cuts – bingo! so we will see increased expenses for employers that pay premiums or individuals that pay along with job cuts at insurance companies = poorer service. and of course with more expenses on employers that pay premiums – there will be job cuts and/or reduction of hours.

    sorry – cannot recognize this as a good thing.

  3. Reality, how can it be a good thing? I just got word from my insurance plan this weekend that coverage will end dec 31st — BEFORE the contract is up btw! — at which time I will have to choose an obamacare plan. Not only will I have to pay more, but my coverage will be worse. Thanks a heap obama! grrr…

  4. #1 you re delusional since obamacare passed my premium went up by 600$ a MONTH AND I DON T HAVE A JOB BUT I M NOT ELIGIBLR for medical help cause the social services lady told me I live in a certain area therefore I must have money I don t so you may have to go to court to fight your case against these caseworkers good luck there were some illegal immigrants who looked quite happy after their interview I heard them talk in Spanish they I did nt understand

  5. I worked as a consultant to one of the big companies. They are cash cows. Making them spend more on patient care is a good thing. Squeezing out administrative costs could result in lost jobs. The numbers are very small and the net economic impact will be incredible.

    Again, this is fantastic news for you if you are anyone other than an executive or an underperforming bottom feeder.

    #3, if your insurer cuts your coverage before the end of your contract then contact your lawyer. That one has nothing to do with the president.

  6. I agree with Respect. The insurance companies are eseentially a gatekeeper to healthcare run for the benefit of executives. The first concept of insurance was to create a large group of people to spread catastrphic risk across larger numbers. There was no such thing as “pre-exisitng conditions”. Insurnace companies invented this concept to lower risk.
    Healthcare today is channeled through insurance companies for a fee. If you work for a large company, State, Local or Federal govt., belong to a union or have some way to participate in a group plan you will generally have good to excellent healthcare coverage for a low to reasonable fee. If you are self-employed, temorarily unemployed or working in a low wage position your healthcare coverage is poor to fair at a cost that is high to exhorbitant. Healthcare does not benefit by economies of scale which is how our current system is strucutred today by offering Large groups (employers and unions) lower costs for better coverage than everyone else.

  7. Unbelievable. In general, how can socialized healthcare and medicines be a good thing. You should be in control of what doctors you see, when you see them, as well as your medical history. The government, not to mention the IRS (the supposed gate keepers for Obamacare, because it is a tax you see) should not have your medical information at all. Unless you are on Medicaid (and not Medicare) then maybe they should have some. Most people on Medicaid is getting this type of healthcare coverage from the government because they are on some type of assistance from Big Brother.
    We should be in charge of our health, privacy, and choices in life in general