The state-run health insurance market, Vermont Health Connect, is set to open Tuesday at healthconnect.vermont.gov. Vermonters will be able to compare plans and subscribe to them, but they won’t be able to pay for them until Nov. 1.
The new market will present Vermonters with a completely new way to buy health insurance. Rather than buying coverage directly from an insurer, Vermonters will buy it online through a government-managed market. The state and federal governments will have unprecedented power over how Vermonters can buy health insurance and what health insurance products are available.
Over the next few months, as this market and its many associated policies go into full effect, VTDigger will roll out a comprehensive guide to help Vermonters make sense of this new method for buying health care coverage.
Vermont Health Connect is not Gov. Peter Shumlin’s proposal for a single-payer, publicly financed health care system, which would be administered by one insurer. Vermont Health Connect is the state’s response to the federal Affordable Care Act, or Obamacare, which requires states to have online health insurance markets.
At its most basic level, Vermont Health Connect will be a Web-based marketplace, like Orbitz for buying plane tickets, where Vermonters can compare and buy health insurance plans. The cost of each plan (premium) and the total out-of-pocket expense that consumers must bear for each plan is clearly defined, giving individuals a choice of options for coverage and for payment.
Do you have to buy health insurance on Vermont Health Connect?
For the roughly 100,000 Vermonters buying insurance independently or through businesses with 50 or fewer full-time employees (that is, 30 hours plus), you will be legally required to buy health insurance on this market beginning in 2014. Both employers and employees of these small businesses will be required to use the market.
Businesses with more than 50 employees will be able to purchase plans outside of Vermont Health Connect. In 2016, all businesses with 100 or fewer employees will be required to buy health insurance on this market.
Vermonters who are eligible for Medicaid and the Dr. Dynasaur children’s plan can also use the market to enroll in these programs.
Which insurers will participate and what plans will be available?
Blue Cross Blue Shield of Vermont and MVP Health Care are the only two health insurers selling plans on the market. Each insurer will offer nine plans: six standard plans created by the state and three choice plans created by the insurers. The 18 plans range in benefit levels, from bronze plans, with low premiums and high out-of-pocket liability, to platinum plans, with high premiums and greater coverage.
When does Vermont Health Connect take effect?
Vermont Health Connect officially opens its doors for window-shopping and subscriptions Oct. 1, and the administration says Vermonters will be able to buy plans on Nov. 1.
The administration is encouraging residents to choose a plan in November and pay for it as early as possible to ensure that they have an insurance card on Jan. 1.
For plans to take effect by Jan. 1, Vermonters buying insurance independently must pay for that coverage by Dec. 15. Employees receiving all or part of their coverage from employers have until Dec. 31 to pay.
The open enrollment window for subscribing to plans begins Oct. 1 and ends March 31. Vermonters insured past Jan. 1 will be able to enroll in new plans when their current ones expire.
Are there penalties if I don’t buy health insurance?
In 2014, the federal government will penalize U.S. citizens for not having health insurance. The Internal Revenue Service will charge 1 percent of a household’s income or $95 for each adult and $47.50 for each child — whichever is greater. For families paying the $95 and $47.50 amounts, their household penalties are capped at $285. For a family of four penalized at 1 percent of household income, their penalties would be capped at about $12,000, which is the projected national average of premiums for lower coverage plans. For individuals, it the cap is around $4,500 to $5,000.
There is no penalty, however, for a single gap in coverage of less than three months. If a Vermonter forgoes coverage from Jan. 1 to March 1, he or she would not be penalized.
The state will also penalize businesses that do not provide health insurance coverage to their employees. The employer assessment, as it is often called, will charge employers about $480 a year for each full-time employee they do not cover who is not already under a spouse’s plan. A full-time employee is defined as an employee who works 30 hours or more a week.
Federal penalties have been delayed until at least 2015 for large businesses with more than 50 employees, who do not participate in the exchange.
What subsidies are available? What if I have Medicaid?
In 2014, Vermonters earning between 133 and 400 percent of the federal poverty level will be eligible for premium subsidies.
The state created its own subsidy program that provides additional premium subsidies and cost-sharing assistance to individuals earning between 133 percent and 300 percent of the federal poverty level. Cost-sharing subsidies help reduce the total out-of-pocket costs for Vermonters in that income bracket.
The state has created a subsidy calculator to help Vermonters determine if they are eligible for subsidies and how much. Click here to use the calculator.
More Vermonters will be eligible for Medicaid in 2014. The state is able to raise the eligibility from the federal poverty level to 133 percent of the federal poverty level.
The state’s Medicaid program for children, Dr. Dynasaur, will continue. What will not continue are the state’s subsidy programs Catamount and VHAP. Although more Vermonters are expected to receive subsidies in 2014, there will be fallout associated with the end of Catamount and VHAP.
Businesses with fewer than 25 employees earning less than $50,000 are eligible for a tax credit, if they pay for at least 50 percent of their employees’ health insurance. The state has created a “small employer estimator” to help businesses determine eligibility.
Medicare beneficiaries will continue to enroll in Medicare as they currently are. The new market should not affect them.
How do I enroll?
There are three main ways to enroll in new plans. The first is to use the state’s website for the market, which is healthconnect.vermont.gov.
The second option is to call one of two hotlines to ask questions and enroll. Individuals can call 855-899-9600, and employers and their employees can call the small business line at 855-499-9800.
In October, the state is planning to hold enrollment events. To see a calendar that lists enrollment sessions and other public outreach events, click here.
What resources are available to help me understand my options?
In addition to the hotlines, the state has spent $2 million on what are called “navigators.” More than 200 people working for a range of organizations across Vermont are charged with providing free one-on-one assistance to Vermonters and businesses that need help understanding the new market. For a list of those organizations and their contact information, click here.
Insurance brokers can also help residents and businesses choose plans. Brokers will charge a fixed-cost charge of $20 per person, per month for their services. On Jan. 1, a Vermont law will make it illegal for health insurance companies in Vermont to bake broker fees into their premiums.
How much does Vermont Health Connect cost?
The exact dollar amount is a moving target. The federal government has given the state roughly $170 million to get the market up and running.
In 2015, the administration estimates the market will cost the state $18.4 million a year to operate and maintain.
An independent review of the state’s upcoming health information technology projects estimates that they will cost the state $427.5 million over five years. The market portion alone is estimated to cost $224 million.
Why is the state creating its own market?
Vermont is one of 17 states, along with the District of Columbia, that are creating their own markets. It allows the state to maintain local control. The state is able to have its own subsidy programs, design the plans for the market and manage consumer assistance, among other controls. This level of control also comes with a heightened financial cost of building and maintaining a market unique to Vermont.
UPDATE: We included more detailed information about exchange penalties at 12:01 p.m. Oct. 1.