Individual plans are more expensive than those that come under employer insurance cover benefits. Individual plans are costlier with higher premiums, deductibles and out of pocket costs as their market shares are smaller.
The Affordable Care Act set out to make the individual market similar to the employer market so that it is easier for everyone to afford insurance. Though, when consumers survey their options on the health care exchange they find the plans are pricier than their old individual plans.
"Insurers devised the new policies on the assumption that consumers would pick a plan based mainly on price, as reflected in the premium," writes NYT. But as Hollywood insurance agent Lois Feinberg advises, the value of a plan is in the doctors and formulary (prescription drugs) it covers for your individual needs.
Feinberg, who has been in the insurance business for 35 years, advises people to buy plans with co-pays which they can afford and these are affordable on the individual health exchange. In case of a medical emergency an individual would have to pay $6,400 after which the total amount would be covered by the individual.
The premiums increase with age but the Affordable Care Act limits the amount of hike. The issue with achieving parity between the employers sponsored insurance and an individual insurance is the pool. The employer pool is more balanced and only when both young and old people enroll under the Affordable Care Act this pool can also be balanced.
When equality between both the pools is achieved only then will the individual covers cost less. When a person's income is 250% below the federal poverty level, he can get a subsidy for both the out of pocket expenses as well as the premium.
The individual plans may be less expensive on the new health exchange but the question is whether they will be more affordable.
Hannah Punitha (IRDA Licence Number: 2710062)
Patricia Borns, December 2013