Obamacare, also known as the “Affordable Care Act”, has been met with its fair share of controversy. Although the ACA helps mainly in providing affordable health insurance, its effects on life insurance coverage must also be considered. Obamacare’s requirements on individuals and employers, for example, may affect your ability to maintain life insurance coverage for you and your family. Because of this, it’s extremely important to prepare yourself and your family for Obamacare’s wide ranging effects so that your family isn’t left without vital financial protection.
Obamacare And Its Effect On Medical Costs
While the original plan was the have Obamacare decrease medical costs, it seems to actually have had the opposite effect. Not only are health insurance premiums going to be higher under the ACA than they were before, receiving medical care will also be more expensive. Because of Obamacare, many Americans will leave a lot of unpaid medical bills on the deathbed. Life insurance, therefore, will become a necessity. Not only can it be used to pay your medical bills after you pass, but it can also help limit the burden placed on your loved ones.
Life insurance, as you can see, will be growing increasingly important in the next few years as Obamacare goes into full effect. But what if Obamacare makes life insurance more difficult to obtain? Continue reading below to see how you can prepare drop in coverage you may experience.
Obamacare And Its Effect On Your Employer
Although Obamacare is designed to increase the availability of health insurance for working Americans, the law may actually have an adverse effect. The reason for this is that it may place an unwanted burden on employers to insure their employees. Although many Americans think this is a good thing, many small businesses may find it difficult to continue doing business under such circumstances.
Following the passage of the Affordable Care Act, around 9% of all employers said that they plan on cutting all insurance benefits, including life insurance, to their employees. 10% of employers said that they are not sure whether or not they will continue offering these benefits.
The companies that seem to be hit hardest by the Obamacare mandate are small businesses. Companies with fewer than 100 employees are the ones that are most likely to discontinue insurance coverage. By 2016, it is estimated that 13% of all employers will no longer offer health or life insurance benefits. On the other hand, only 2% of large corporations (employing more than 1,000 people) plan to drop insurance benefits.
Things To Look Out For With Your Life Insurance Coverage
If you have an employer sponsored life insurance plan and are worried about the future of your coverage, its vital that you find out whether or not your employer plans to discontinue offering coverage. Here are some important things to consider:
- If you work for a large corporation, you may have little to worry about. This is because large companies, as opposed to small companies, have the capital required to deal with the numerous “curveballs” Obamacare throws at them.
- Small business employees face the greatest risk of losing their life and health insurance coverage, as these companies might not be able to bear the additional administrative expenses that come with maintaining employee insurance coverage.
- Although Obamacare does not specifically talk about life insurance in the mandate, the expenses associated with offering insurance may cause future taxes on employees that continue to offer insurance coverage. Life insurance taxes could cause companies that offer employee group life insurance plans to discontinue offering them altogether in attempt to avoid additional taxes in the future.
- If employers stop offering life insurance coverage to their employees, life insurance demand on the open marketplace would go through the roof. This increased demand for life insurance coverage would allow life insurance companies the opportunity to increase premium rates. It would also give them the confidence to be more picky when it comes to who they want to insure, and even give them the option to adopt stricter underwriting policies.
Preparing For The Negative Effects Of Obamacare
The effect Obamacare has on life insurance will not be seen for a few years. With that being said, it’s still critical that you plan ahead and prepare for a possible drop in life insurance coverage down the road.
If you work for a large corporation and your spouse works for a small company, you might want to consider having your spouse sign up under your plan (especially if the corporation offers benefits to spouses). Taking advantage of this option can shield you from strife down the road should your employer flat out drop coverage. Additionally, large corporations tend to get better group rates for life insurance, so you might actually end up saving money on your spouse’s employer sponsored plan, anyways.
If your employer decides to drop life insurance benefits and you do not have a spouse’s plan to turn to, you could also consider buying individual life insurance coverage. Although buying life insurance outside of a group plan is usually more expensive, you can still find affordable rates by doing some simple research and price comparison. People who are both young and in good health will soon discover that life insurance can be quite cheap.
There are actually some positives that can come with leaving your employer and finding life insurance on your own:
- Individual life insurance rates, as you may know, are based on your health condition and your age. If you get a policy underwritten for you now before you develop health conditions and/or get too old, you can take advantage of very affordable rates. For example, if you are 35 years old now and you way until your employer discontinues coverage 5 years from now, you will be locked into life insurance rates for a 40 year old. Wouldn’t it be better to take advantage of cheap life insurance rates now while you still can?
- Purchasing life insurance outside of your employer now will also allow you to avoid the rush of buyer’s post-Obamacare. Like stated above, the ACA may cause an increase in demand and increase in life insurance prices. If you sign up for a life insurance policy now, you can avoid this hike in premiums.
Begin Looking For Post-Obamacare Life Insurance
To begin your hunt for life insurance, start by entering your zip code at the top of this page. Life Ant will help you search for competitive life insurance rates outside of your employers group plan. Start shielding yourself from the negative effects of Obamacare today.