Column: Dear entrepreneur, we are canceling your health insurance
NEW YORK (Reuters) - As President Obama's health care overhaul begins to change how Americans get their health insurance, the nearly 22 million people who are self-employed will see some of the most dramatic changes, with perhaps half of them headed for the new health exchanges in the fall.
I'm one of them - I recently received notice that the insurance I had been buying for three years would "terminate." I will be shopping for coverage on one of the new health insurance exchanges.
The Congressional Budget Office has estimated that 9 million people will buy their 2014 health insurance on one of the new state marketplaces, after they open on October 1. By 2016, that will rise to 23 million, the CBO says.
"The vast majority of people know it is coming, but it is a very abstract thing," says Katie Vlietstra, director of government affairs at the National Association for the Self-Employed, an organization that has sold health insurance to its members in the pre-Obamacare world. She figures that roughly half of all self-employed people will be shopping on the exchanges.
In late May, I received notification from The Entertainment Group Insurance Trust that my existing insurance - an Oxford Health sole proprietor plan in New York - would terminate December 31. TEIGIT has administered plans for sole proprietors, small businesses and members of participating arts and entertainment associations since 1965.
"We will not have other plans to offer you," TEIGIT noted in a follow-up email. "No other brokers will have alternate options available." (Oxford's parent company, UnitedHealthcare, did not respond to a request for comment.)
With New York state's health insurance exchange not yet open and no way to shop immediately for a new plan, I felt the momentary rush of panic. What would I find to replace my corporate-like health plan, which had covered me for both in-network and out, with a low deductible. Would it be as good, and what would it cost?
While there's no way to know how many self-employed people are getting letters like this, I'm sure that I'm not alone. Whether your health insurance is going away at year-end because it fails to meet the terms of health reform, because of an insurer's business decision or some other reason, you might be in the same boat I am - left waiting for the exchanges to open with big, unanswered questions.
NO MORE 'FIG LEAF' COVERAGE
The Affordable Care Act mandates that all health insurance plans eliminate annual caps on coverage and expand preventive services and other benefits. These requirements will affect corporate plans, but the impact will be far more dramatic for the self-employed, who have often bought bare-bones insurance to keep monthly premiums down.
That could cause sticker shock for those who'd been buying the cheapest plans available and scrimping on medical care.
"People have been buying policies with a fig leaf of coverage," says Karen Pollitz, senior fellow at the Kaiser Family Foundation. "Everyone is going to move to coverage where it will pay the bills. These faux cheap rates are not going to be there anymore."
THE NEW HEALTH EXCHANGES
The new health insurance policies on the state marketplaces will be available in four tiered levels with a range of deductibles and copays. Out-of-pocket costs (including deductibles and cost-sharing, but not premiums)would be limited to $6,350 for individuals and $12,700 for families in 2014.
New subsidies, structured as tax credits, will be available to those whose incomes do not exceed 400 percent of the poverty level, or approximately $46,000 (in adjusted gross income) for individuals or $94,000 for a family of four in 2014.
The vast majority of self-employed people will get some subsidy: CBO has estimated that all but 1 million of the 9 million people expected to get insurance through the exchanges this year will qualify. If you're under those limits, you can get a sense of what it might mean for you with the Kaiser Family Foundation's health insurance subsidy calculator here
As for me, I've moved past my moment of panic. I hope I'll have decent choices and I think I'll see my premiums go down, as I've been paying for a full-featured plan.
(The writer is a Reuters columnist. The opinions expressed are her own.)
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