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Health Care Reform:

Health Insurance & Affordable Care Act

How Health Reform Affects Insurance Costs: FAQ

If you're unsure how the health reform law will affect your health care costs, you're not alone.

Some details of the Affordable Care Act, health reform's formal name, will vary state by state. It's hard to predict all the ways it will affect the insurance system once it's put into place.

Here's what we know so far.

I work for a large company. Will my premiums go up?

A premium is the amount you pay for your insurance coverage, usually each month. Some changes from health reform may drive up premiums a small amount, while other changes may lower them a small amount. This difference is caused by two things:

  • New people will be required to purchase insurance.
  • Health insurance companies are required to cover new medical services.

As a result, insurance companies need to come up with a new calculation to determine their premiums.

I'm self-employed and I've health insurance that I bought on my own. I've heard that my premiums will go up. Is that true?

That depends on a few details.

Under the health reform law, starting in 2014 you will be able to buy insurance in your state's insurance Marketplace, also known as an Exchange. You may find that the premium is somewhat higher.

In part, that's because the plan you buy in the Marketplace will likely cover more services than your current plan, such as mental health care and maternity care. Luckily, the costs may balance out, because having a health plan cover more services is likely to reduce how much you have to pay each time you get health care. Everything you pay for care added together is known as your out-of-pocket expenses.

If you're a young adult and you've been buying your own insurance, your premiums are more likely to go up. If you're a woman or an older adult, they're more likely to go down.

Keep in mind, though, that under the health reform law, depending on your income level, you may receive tax credits to help lower the cost of your premiums.  If you are only getting insurance for yourself, you can make up to about $46,000 a year and still qualify for a tax credit.

I buy my own insurance and I've been shocked by big jumps in the cost of my premiums. Do I have to keep worrying about this?

Under health reform, you may be less likely to see major jumps in your premiums. If your insurance company wants to raise premiums by 10% or more, it must be approved by outside experts in a rate review program. That's a new program in each state set up as part of the Affordable Care Act.

The increase in the premium will only be approved if the outside experts think it's reasonable.

If the rate review program doesn't consider the increase reasonable, the insurance company may not be allowed to go through with it.

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