3 Key Ways Obamacare Changes Health Coverage

1) Preexisting conditions won’t matter

You can no longer be denied coverage or charged steep premiums because of a preexisting condition—or qualify only for insurance that excludes your medical condition. And you won’t have to stay in a job longer than you want to in order to keep your health benefits. If you already have nongroup coverage, you should be able to find a better deal than you have now, even if you don’t qualify for a subsidy. So check out the new options as soon as you can on October 1.

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When you comparison-shop policies, see what the out-of-pocket costs would be for the types of doctors’ visits and procedures you tend to have, how much you would need to pay for your medications, and whether your doctors and hospitals are covered in the plan’s network. Do the math to estimate whether it’s better to pay extra for a gold or platinum policy that has higher premiums but may have lower out-of-pocket costs.

If you have a policy through a high-risk pool now, find out what will happen to that coverage on January 1. The federal Pre-Existing Condition Insurance Plan will be discontinued on December 31, but some of the state programs may let you keep your current coverage, at least until your policy expires in the middle of next year. Ask your plan about your options, and see the status report at www.naschip.org for more information.

2) Early retirees can breathe easier

Many retirees who quit their job before Medicare benefits kicked in have had to scramble to find affordable insurance. That’s especially true if they worked for an employer that doesn’t provide retiree health coverage.

In the past, early retirees with preexisting conditions tended to keep their employer’s coverage through COBRA, the federal law that requires companies with 20 or more employees to let workers stay on their health plan for up to 18 months. But COBRA coverage can be expensive because you have to pay both your share and the employer’s share of the cost (employers typically pay about 70% of the cost for employees).

You’ll still be able to keep COBRA coverage after 2014, but you may find a better deal on your own, now that you can’t be rejected or charged more because of your health. Also, premiums for, say, a 64-year-old can be no more than three times as much as they are for a 21-year-old, whether you buy coverage on or off the exchanges.

You can get the subsidy only if you buy a policy from your state exchange, and it’s a good idea to run the numbers using the tool at your exchange’s Web site to see whether you qualify. Even if you earned too much to get the subsidy while working, you may qualify after you leave your job and your income drops.

The subsidy is an advance tax credit—the money will be applied to your premiums immediately when you buy coverage on the exchanges, based on the income you’ve reported. When applying for coverage on the exchange, estimate what you expect your income will be by the end of the year, including the drop after you stop working.

Compare the cost of buying your own policy with the cost of keeping coverage through COBRA (which doesn’t qualify for the subsidies). And compare the coverage and networks. You may want to keep COBRA, even if it costs slightly more, if your doctors and providers aren’t covered under the new policies, especially if you’re currently undergoing medical treatment, says Karen Pollitz, senior fellow for the Kaiser Family Foundation.

3) Young adults may pay more

Young adults—and in many cases, parents who were subsidizing them—already got a major perk from the health care law starting in September 2010, when they were permitted to stay on parents’ policies up to their 26th birthday. That’s true whether or not you live at home, are still in school or are a dependent for tax purposes. In most cases, staying on your parents’ policy is still the best deal, especially if they already have to pay for family coverage for younger siblings.

But if you live in another city that isn’t covered by your parents’ network, or if your parents aren’t covering other children and have to pay a lot extra to keep you on their policy, compare the cost of buying coverage on your own. Unfortunately, healthy young adults looking for coverage on their own are likely to face some of the steepest premium increases under the new law. In most states, you can currently find policies for about $100 to $200 per month (except in a few high-cost states, such as New York). Those prices are likely to increase, although the new policies may be more comprehensive. In California, for example, a 25-year-old will pay an average premium of $250 per month for a silver policy.

Avalere Health estimates that about two-thirds of young adults (age 30 or younger) who are currently uninsured or have nongroup health insurance will be eligible for the subsidies. If you’re under 30, you can also buy a special high-deductible catastrophic policy. In California, a catastrophic policy can cost as little as $141 per month. These policies don’t qualify for the subsidies.

If you currently have your own policy—or you buy one before the end of the year—you may be able to keep it at current rates until the year-long policy term is over. Rules vary by state and insurer.