By Lisa Zamosky
In a country where employment is so intertwined with health insurance, it’s not surprising that many people delay retirement for fear of losing health benefits. Those interested in retiring before they are eligible for Medicare at age 65, often find their plans thwarted by a shortfall of affordable insurance options outside the workplace.
As I discussed in this previous post, a recent industry survey found that 53% of workers say they would continue working longer than they’d like to in order to hold on to health insurance.
In 2014, when the Affordable Care Act is fully implemented, the Census Bureau projects that there will be 39.1 million Americans between the ages of 55 and 64.
If you’re in this age group and plan to buy health insurance on your own, here are 4 things you should know about the Affordable Care Act and the changes likely in store for you.
1. Coverage is guaranteed: A central feature of the law is a guarantee of health insurance for everyone who applies. Insurers will no longer be able to turn people away because they have a pre-existing health condition. Even something minor in today’s market can lead an insurer to turn down an applicant – and how many people make it to their mid-fifties with absolutely no medical history to speak of? For health plans that take effect January 1, 2014, no matter your health condition, fear of going without coverage because insurers turn you down will become a thing of the past.
That’s expected to give many people previously afraid to leave their jobs and their health insurance plans the freedom to retire before they reach Medicare age.
2. The cost of insurance may go down: If you buy insurance on your own now, you’ve no doubt experienced rising costs for a host of reasons, including your advancing age. In today’s market, insurers frequently charge older members up to 10 times more than those in younger age brackets.
The health reform law puts a cap on that. While the law does allow insurers to charge older people more than younger folks, the difference can be no more than three times higher. That means starting in 2014, a 64-year-old person cannot be charged more than three times the amount that a 21-year-old person pays for the same coverage.
With insurers prohibited from varying prices based on age, many older consumers are expected to see a reduction in their rates.
3. You may get a break on price: Government subsidies available to people earning less than ,000 annually (roughly ,000 for a family of four), means people ages 55 to 64 may save even more on the cost of a health plan. In fact, a recent report by the health consumer organization Families USA found that more than 3.2 million people age 55 and older could be eligible for premium tax credits.
Let’s take the example of a 56 year-old adult making ,000 per year. For a health insurance policy that costs roughly ,041 per year (about 3 per month), this individual would qualify for an annual subsidy of more than ,200. That reduces the cost of the insurance policy from ,041 to ,800 (about 6 per month).
4. Benefits may look different: Whether you buy your own health insurance today or get it at work, you’re likely to see some differences in the plans available through the marketplaces.
For example, the law requires all new plans to include a core package of benefits within 10 categories of care. If you buy your own coverage now that may mean you’re benefits will be richer. Those leaving their jobs and buying health insurance on their own for the first time are likely to see a benefit package similar to what they’re familiar with.
However, you may find fewer choices of doctors and hospitals. Last week, California released information on the plans being sold through its marketplace starting this fall. To keep costs down, many high-priced and popular hospitals and medical groups were not included in the provider networks. That’s a trend expected around the country.
Have you continued working for fear of losing health insurance? Share your thoughts in the comments section below.