The Savvy Senior: How health insurance marketplaces will help early retirees

April 30, 2013 

Q: What can you tell me about the new Obamacare health insurance exchanges that begin next year? I am interested in retiring early at age 61, but need to find some affordable health until my Medicare benefits begin at 65.

A: The new health insurance exchanges -- also known as Health Insurance Marketplaces -- that begin in 2014 will be a welcome benefit to millions of Americans who need health insurance, especially uninsured baby boomers and pre-Medicare retirees who often have a difficult time finding affordable coverage.

How it will work

As part of the Affordable Care Act, starting Oct. 1 you will be able to shop and compare health insurance policies in your area, and enroll in one directly through your state's Health Insurance Marketplace website. The policies will go into effect Jan. 1, 2014.

You'll also be happy to know that federal law dictates that Marketplace insurers cannot deny you coverage or charge you higher rates based on pre-existing health conditions, and they can't charge women more than men. But, they can charge older customers more than younger ones -- up to three times more.

Every state will have a Marketplace, but each state can choose how it will operate. Seventeen states and the District of Columbia will run their own state-based Marketplace, seven states will partner with the federal government, and 26 states will offer federal Marketplaces. The differences between federal and state programs will be subtle. You will be able to access your state's Health Insurance Marketplace at healthcare.gov.

The policies available through these Marketplaces will be sold by insurance companies and will provide a package of 10 essential benefits, including emergency services, hospital care, lab services, prescription drugs, doctor visits, preventive care and rehab services.

To make shopping and comparing a little easier, the health plans will be divided into four different levels -- bronze, silver, gold and platinum -- each offering similar benefits but with a different cost structure.

The bronze plan will have the lowest monthly premiums but have the highest out-of-pocket costs, while the platinum plans will have the highest premiums but the lowest deductibles and co-payments.

The Marketplaces will also offer a toll-free hotline to help you choose a plan that meets your needs and budget. These helpers aren't associated with any particular plan, and they aren't on any type of commission, so the help they give you will be completely unbiased.

Costs and tax-credits

Prices will vary depending on where you live, your age and the health plan you choose. Exact cost structures for most Marketplaces will be released within the next few months.

To help make coverage affordable, sliding scale tax-credits will be available if you earn less than 400 percent of the poverty level -- that's $45,960 fora single person and $62,040 for couples.

These tax-credit subsidies will provide immediate savings off your monthly premiums.

To find out if you qualify, or see how much a tax-credit will reduce your monthly costs, you'll need to submit a Marketplace application in October, or when you decide to enroll.

In the meantime, you can calculate your potential tax-credit premium savings by using the Kaiser Family Foundation calculator at healthreform.kff.org -- click on "Interactive Features" and then scroll down to "Subsidy Calculator."

Jim Miller, a contributor to the NBC Today show, is the author of "The Savvy Senior" book. Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, or visit SavvySenior.org.

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