Friday, November 01, 2013

Why "You Can't Keep Your Current Insurance"

I'm tired of the liberal media, democratic strategiests, and conservative talk show hosts spewing hot air about President Obama's lie that if you like your current insurance you can keep it. Jeffery Young at Huffington Post spins it as a positive. NBC news shares that Obama knew that "millions could not keep their health insurance." Both of them are correct and wrong but...

NONE of them even come close to mentioning the biggest reason why this will happen. It's not because the benefits weren't good enough. Nor is it because of big bad insurance companies cancelling people. The simple fact is that under the law small businesses (under 50 employees) and individuals in today's market either have better benefits or worse benefits than the law allows. Moreover, many of these policies offer excellent benefits but don't fall into the narrow parameters of what the government believes is a good enough, or for some bad enough, plan for you. It all comes down to something called Actuarial Value. AV are estimates of how much an insurance plan will pay for an average person's medical expenses.

Under Obamacare, starting in January, or renewal in 2014, any plan that has made a modest benefit modification since March of 2010 loses "grandfathered status". Simply put, if you increased your copay, your coinsurance percentage, your deductible, or made your employees pay more then they must now adhere by these new rules. This forces insurance companies in that they are only allowed to sell plans that have very strict limits on actuarial value. They must adhere to a variance of +/-2% actuarial value of 60%, 70%, 80%, or 90%. These narrow bands will eliminate insurance options for many people and small businesses.

So if your current plan has an actuarial value of 87% then NO SOUP FOR YOU! 95% NO SOUP FOR YOU EITHER! 88.4%, yes, you can have some soup. The chart below shows you when you can and can't "have soup." HAPPY FRIDAY!
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