The bare-bones health insurance policy that’s been the plan of choice for New Jerseyans who can’t afford something better is set to go away next year, thanks to the Affordable Care Act.
And what those policy holders will be left with may be a choice among pricey, pricier and priciest.
About 106,000 people in the Garden State are insured under what are known as “basic and essential,” or B&E, health care plans, according to state data. Since 2003, all health insurers that operate in New Jersey’s individual health market have been required to sell these plans which, as their name implies, offer only a thin layer of coverage for things such as doctor’s office visits and procedures that don’t involve a hospital stay.
But while B&E plans were meant to help young families get coverage and stanch the drop of enrollment in the individual health market, their relatively low price — as little as a couple hundred dollars a month for some people — made them the most popular option for those who don’t get insurance through an employer or a government program such as Medicare or Medicaid. About 71 percent of those covered by the individual health market have a B&E plan.
Soon no longer.
In addition to requiring most everyone to carry health insurance, the Affordable Care Act — better known as Obamacare — starting next year will force health care plans to cover certain essential services while capping the out-of-pocket fees people pay in addition to their premiums.
As a result, after Dec. 31, insurers won’t be able to sell or renew plans that don’t meet this litmus test. That includes B&E plans.
And these changes won’t come without a cost.
“In general, richer products translate into higher premiums,” said Larry Altman, vice president of the Office of Healthcare Reform at Horizon Blue Cross Blue Shield, New Jersey’s largest health insurer.
How much higher than the amounts people pay for B&E?
That can’t be said just yet, for a number of reasons.
First, federal authorities are still in the process of approving the rates for policies that insurers have proposed selling next year. These will be grouped into four broad categories whose names imply the level of coverage they provide: bronze, silver, gold and platinum. There also will be a no-frills “catastrophic” plan for those 30 and under.
Second, the federal health care law has changed the way in which New Jersey insurers set rates. As a result, people may see higher or lower rates for the same type of coverage they have now, depending on their age, gender and even the number of dependent children they have, according to Altman.
“It could go down for one person and go up for their neighbor,” he said.
Third, many people who live on low to moderate incomes will be eligible for subsidies in the form of federal tax credits. These are meant to help them buy health insurance through the federal insurance exchange set to go live in New Jersey come Oct. 1. More than 610,000 New Jerseyans should be eligible for a subsidy, according to a recent study by advocacy group Families USA, although the size of the credit will vary based on household income.
Subsidies will be available for those whose income is at or below four-times the federal poverty level, or around $46,000 for an individual or about $94,000 for a family of four.
But absent a subsidy?
“A lot of folks on the individual market will see price increases if they’re not eligible,” said Ward Sanders, president of the New Jersey Association of Health Plans, a group that represents health insurers.