DeFreitas & Minsky Accounting Blog

The Health Insurance Marketplace is a Bit like Going to the Mall

Posted by admin on Dec 3, 2013 10:21:34 AM

insurance marketplace

Since the launch of state health insurance exchanges on October 1, it seems that the approach to acquiring healthcare is somewhat like going to buy something at the mall; after all, the exchanges are called “marketplaces.” In this health insurance shopping mall comparison, each state would have its own store, where their residents would be able to browse through their policy options before making a selection. Of course, every store today has an online counterpart—and that’s how the health insurance exchanges are operating.

How to Get to Your State's Insurance Marketplace

By simply typing “[your home state] health insurance marketplace” into Google (or whichever search engine you prefer), you’ll be directed to the official site for your state’s insurance marketplace. In New York, our exchange site is healthbenefitexchange.ny.gov. Once you’ve gotten to your state’s insurance marketplace website, you’ll have the opportunity to search through different policy options and benefits packages you can purchase. Some of these insurance policies will go into effect as early as January 1, 2014.

Is Buying Insurance like Buying Shoes?

Returning to our shopping mall analogy, the health insurance marketplaces are sorted similarly to how stores display merchandise: policies are assembled in a tier-system, from platinum, to gold, to silver, to bronze, and finally to catastrophic. As you make your way through the health insurance marketplace website, you’ll be able to easily identify the most and least expensive policies, allowing you to weigh the costs against the benefits. Just like shopping at the mall, high-ticket items will all be found together, as will reduced-price items.

Policies grouped into the platinum tier will cost the highest premiums and will offer the most covered care. Likewise, the bronze and catastrophic policies (catastrophic policies are only available to people under 30) will cost the lowest premiums, but will offer the least coverage. Although policies that cost the lowest premiums are less of a financial hit initially, these kinds of policies will leave you liable for much greater out-of-pocket expenses, including deductibles, copayments, and coinsurance. Those costs can definitely add up, so they’re important to consider when choosing a policy.

Making Sure Your Policy is Adequate

According to the Affordable Care Act, there is certain criteria that insurance policies need to meet in order to be considered sufficient. Insurance that’s deemed adequate and affordable cannot cost more than 8% of an individual’s household income, and must cover hospital care, including emergency room service, in addition to other types of treatment. Most people who will be using the health insurance marketplaces are those who don’t currently have any insurance at all, or those who have coverage from their employers that is deemed insufficient.

Are You Entitled to Discounted Insurance Premiums?

Families and individuals whose incomes range from low to moderate may qualify for discounted rates if they buy health insurance on their home state’s exchange site. However, if you choose to obtain health care coverage through the insurance marketplace, instead of accepting whatever insurance coverage your employer is offering, it’s likely that you’ll lose any contribution to your health insurance that your insurer would have made.

Investigate All of Your Options Before Making a Decision

Another provision of the Affordable Care Act is that most employers are going to have to start offering health care coverage, so it’s a good idea to check with your employer to see what they will be offering before purchasing an independent policy. If your employer contributes to your insurance coverage, and/or if you contribute to your employer-provided plan, that money is usually excluded from the sum of your income that is taxed. If you purchase an insurance plan through the state health insurance marketplace, those payments will be made with after-tax money. This means that opting for your own policy instead of one provided by your employer may require you to pay more taxes.

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Topics: Tax Laws

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