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What Employees Need to Know About the Affordable Care Act- Enroll! Enroll! Enroll!

On behalf of Morris E. Fischer, LLC posted in Articles on January 16, 2014

While I cannot provide a complete or comprehensive analysis of the Affordable Care Act (“ACA”), I can provide some basic knowledge that every employee needs to possess. In short, this revolutionary law may have far reaching and long lasting effects, so it’s imperative that employees know the basic facts and how to plan for their health care coverage.

The ACA was designed among other things, to eliminate the problem of pre-existing conditions. Until the ACA, insurance companies could turn down an employee who lost his or her job, ran out of COBRA, couldn’t afford health insurance, then got a condition like breast cancer and couldn’t get health insurance. The ACA now protects that person by forcing all health insurance companies to accept that person into one of their plans.

How will insurance companies survive if they have to now cover anyone with pre-existing conditions? To understand the answer, let’s review how insurance companies make a profit. Insurance companies collect premiums from anyone who wants to buy insurance. These are their revenues. When one of their customers gets sick, the company has to pay the costs of the medical treatment for that person. Those are basically their expenses, aside of overhead. The difference between their revenues and expenses is the insurance companies’ profit or loss. Hence, to cover the medical costs for all customers with pre-existing conditions, they need a new source of revenue, which is more people who otherwise wouldn’t have bought insurance are now buying it.


These new customers are also purchasing items for coverage although they may not need those items, like healthy twenty seven year olds buy coverage for drug treatment, even though that person has no drug addiction issue.  Now, why in the world would twenty seven year olds purchase coverage they don’t need? Simple, they are forced to by the ACA or pay a fine which the U.S. Supreme Court has held to be constitutional, similar to a tax. In short the revenues of all of these new customers paying for coverage they don’t need or want will enable the insurance companies to pay for really sick people who otherwise wouldn’t have received coverage.

Every employer had the obligation by October 1, 2013, to inform their employees of the coverage the employer was providing if any. Once employees had that information, they either kept their coverage through their employer or didn’t have to do anything or if they lost their coverage or never chose to have any coverage, they had to register at the federal, non-functional website. Upon doing so, the website may have directed them to a state, health care exchange assuming their state opted for one. Maryland has a state health care exchange, while Virginia doesn’t.

Here’s the bottom line: everybody under law must register to have a federally approved health insurance policy. Once enrolled, the insurance company must take anyone, even those people with pre-existing conditions. However, the individual must enroll to obtain coverage for pre-existing conditions. If they don’t enroll by the end of the enrollment period, they aren’t covered for pre-existing or any medical condition.

 One of the dumbest things an employee who’s lost his or her job can do is fail to enroll at the federal or state website. Even if the person believes that he or she can’t afford any insurance plan, the federal and state websites will ask for the person’s income level and if it falls below a certain dollar amount, will direct that individual to the Medicaid website and that person’s insurance will be covered by Medicaid.

There will be an enrollment period every single year for a few months and everyone, no matter how negligent, stupid, etc., these people were for not enrolling the first time around, can enroll with their pre-existing conditions. However, they still wouldn’t be covered for any medical bills they incurred when they didn’t have medical insurance and they still have to pay the fine.

Finally, a word about the politics of the ACA: We now know that the President’s statement, “if you like your insurance, you can keep it,” is not entirely accurate. Proponents of the ACA make a big mistake in trying to deflect questions about people losing their insurance that they liked or denying that absolutely no one is paying more for the same or less coverage.

The whole system works because younger people are forced to pay for insurance plans they don’t really need. Therefore, the ACA proponent talking point should be that while true, some people, particularly younger, healthy people are being gouged, they are getting a lot for their money in the sense that the day will come when they’re older or sicker. They are paying their dues now so that when they are in that position, they will have access to more affordable care.