A doctor deconstructs the Affordable Care Act

Fewer advisers have kept a closer eye on the Affordable Care Act than Dr. Carolyn McClanahan, a physician and director of financial planning at Life Planning Partners Inc. Indeed, health care reform has kept her busy: It's been a focal point for a regular column she writes for Forbes in which she answers readers' questions about the ACA. Advisers know that the insurance exchanges are open for business, but now what? InvestmentNews: What do advisers need to know about the exchanges? Ms. McClanahan: The important thing they need to know is which clients may need to buy insurance on the exchanges. There are two types: those who don't have insurance now because they're uninsurable, and those who have costly coverage through work. They need to shop on the exchanges and compare policies. There are three parts to comparing coverage on the exchanges versus what you have now. First, look at the premiums on the exchange policies. They vary depending on the state. [A report by the Office of the Assistant Secretary for Planning and Evaluation at the Department of Health and Human Services found wide variations in premiums on a state-by-state level, as well as regional differences within the states themselves.] Second, take a look at the coverage and compare that to what you had before. The coverage [on the exchanges] is better, as some existing policies don't cover mental health benefits or pregnancy. The last thing is to compare the copays and the deductibles. InvestmentNews: How do costs on the exchanges compare with what's currently available, now that insurance will be guaranteed regardless of pre-existing conditions? Ms. McClanahan: What people need to understand is that it doesn't matter how sick you are and what problems you have — you can't be turned down. Currently, in some states, insurers will turn you down for something like allergies. On the exchanges, the premiums aren't based on health. Rather, it depends on your age, where you live, the number of people in your family and whether you smoke. Older people won't pay more than three times what younger people are paying. People under 30 can get catastrophic policies, which are very inexpensive. These cover three doctor visits per year and preventive benefits. InvestmentNews: Thirty-six states are expected to participate in the federal insurance exchange. How might the government shutdown affect implementation? Ms. McClanahan: [The administration] is saying that the shutdown won't affect the exchanges, but we don't have the answer to whether the people running the exchanges are part of the essential group of federal employees who are being kept on staff. But the shutdown shouldn't affect the exchanges at all. Right now, millions of people are trying to access the exchange websites and get signed up. As of Wednesday morning, I was able to create an account on Florida's federally run insurance exchange, but I was unable to shop for policies. InvestmentNews: What should small-business owners know about the exchanges? Ms. McClanahan: There have been some delays with the Small Business Health Options Program, or SHOP, marketplace. For instance, a feature that would allow each worker to pick his or her own plan, using funds from the workplace, won't be in place until 2015, and small businesses won't be able to enroll online until November — they can still sign on to check their options. The nice thing about providing coverage as an employer is that it's paid for on a pretax basis. If you were to go buy your own coverage, that's paid after-tax. I'm telling my small-business clients now to wait a year for the SHOP exchanges. They're available now and you can take a look, but this year, let's stick with what you have. As the exchanges expand, you might want to change where you get your insurance. If small businesses aren't offering insurance now, then they should check out the exchanges. InvestmentNews: Are you considering using the SHOP exchanges for your practice's insurance coverage? Ms. McClanahan: We're going to look at it, but for now, we'll stick with what we have.