just a few months, open enrolment begins for individual health insurance on the newly launching health insurance exchanges, and with it comes the onset of a new era in health insurance. While the general media focus has been on the penalties associated with the new individual insurance mandate, the reality from the planning perspective is that the new health insurance rules – including guaranteed access to coverage without any health underwriting – will drastically impact client financial planning decisions.
After all, separating health insurance from employment status by ensuring individual coverage is available directly from an exchange allows clients to be far more flexible with their job decisions. Deciding where to work will no longer need to be tied to the availability of health insurance, freeing clients to make job changes, start new businesses, or simply retire before age 65 Medicare eligibility, without worrying about how they’ll get access to health insurance. How many clients would still be working where they are today if health insurance availability was guaranteed regardless of where (or whether) they worked?
On the other hand, the new health insurance rules will require new knowledge and skills for planners, as the health insurance exchanges will ensure access and availability to health insurance, but introduce complex rules regarding affordability.
Health Insurance Under The Affordable Care Act
While a great deal of controversy has been made regarding the provisions under the Affordable Care Act that establish an individual “mandate” beginning in 2014 to purchase health insurance or pay a penalty tax assessment, the real planning impact of the coming new health insurance rules is not the requirement to purchase coverage, but the fact that insurers will be required to offer coverage to anyone and everyone, without any exclusions for pre-existing conditions and without any underwriting based on individual health issues. In fact, under the new health insurance rules, premiums can be adjusted based on four – and only these four – factors: age, number of people in the family, tobacco use, and rating area (essentially an adjustment for cost of living and health care in the geographic region). Notably, pre-existing conditions, getting sick, or other changes in health, are not factors on the list.