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With many industries decimated by the pandemic, scores of people have been left scrambling to find health insurance coverage.
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Healthcare inflation has outpaced the overall rate of price increases over the past twenty years. While costs have slowed, they are still projected to rise by 4.2 percent over the coming 20 years, according to research from HealthView Services. Please feel free to sigh, complain or yell right now. Now let’s move on to what you can actually control in this process: the choices you make for health insurance coverage.
By now you have seen the headlines, but to understand the full impact of the Senate Health Care bill (Better Care Reconciliation Act), here is a Q&A that dives into some of the numbers of the current version of the plan. What is Medicaid? Medicaid is the country’s largest government health care program, covering about 20 percent (74 million) of all Americans, including:
After suffering a stinging defeat on healthcare, what’s next for the Trump economic agenda? The first lesson for the new President is that despite holding a majority in both the House and the Senate, lawmaking is complicated and difficult. That said, because they failed to clear their first legislative hurdle, will Trump and Speaker Ryan be able to enact the next item on their to do list, tax reform, not to mention infrastructure spending?
Open enrollment has started for individual health care coverage under the Affordable Care Act, aka “Obamacare,” making now a good time to check in on the program. As a reminder, most Americans are insured through their employers (150 million), Medicare (57 million), Medicaid/CHIP (nearly 73 million) or through Veterans Affairs (6.7 million). However, if you are one of the 11 million people who are covered by ACA or plan to purchase coverage, here are some important dates:
By now you have probably heard that the average premium for a mid-level Obamacare plan is set to spike by an eye-popping 22 percent in 2017. The increase should not significantly affect the more than 80 percent of enrollees who qualify for premium tax credits to make coverage more affordable. (To qualify, income must be between 100 percent ($24,300 for a family of four) and 400 percent ($97,200 for a family of four) of the Federal Poverty Level. These are the 2016 amounts-2017 will not be available until January).
Even if you did not qualify for a premium credit last year, you should check again this year. According to HHS, “of the nearly 1.3 million HealthCare.gov consumers who did not receive tax credits in 2016, 22 percent have benchmark premiums and incomes in the range that may make them eligible for tax credits in 2017. In addition, an estimated 2.5 million consumers currently paying full price for individual market coverage off-Marketplace have incomes indicating they could be eligible for tax credits.”
Why are premiums rising by so much?
(1) Not enough young, healthy people have enrolled. When conceiving the plan, the government aimed to enroll a large portion of 18-to-35 year olds to help keep premiums lower. The goal was to have over a third of participants in the ACA plans in this cohort, but currently, they represent just over a quarter of the marketplace. Part of the issue may be that the penalty for not carrying insurance (the “individual mandate”) is too low. Yes, you read that correctly – too low! For 2016, the annual fee for not having insurance is $695 per adult, up from $295 in 2015 and $95 in 2014. For many young people, paying the fee may still be cheaper than the cost of health care insurance and deductibles.
(2) Those who did enroll, regardless of age, needed more care than anticipated. This is known as “adverse selection”, which occurs when buyers have better information (i.e. “I know that I am unhealthy and need lots of medical services”) than sellers, which results in the highest cost consumers purchasing more insurance.
(3) Insurers likely underpriced the plans initially. That may have been an actuarial error based on expectations of who would enroll (see 1 and 2), but regardless, it has led to some insurers exiting the program all together, especially in low-population areas.
The combination of the three issues has led to a smaller overall plan with rising costs. In these early years of Obamacare, what is clear is that more Americans have health coverage – the uninsured rate has fallen to the lowest rate on record. What remains unanswered is whether the government can rejigger incentives (increase the mandate, keep more insurers in the plan) to keep a lid on costs.
On November 15 (and through February 15, 2015), the second open-enrollment period will begin for individual health care coverage under the Affordable Care Act. Despite a dreadful rollout, during the first Open Enrollment period, 8 million individuals signed up for non-group coverage through federal and state Marketplaces. If you didn’t sign up for coverage in the first go-round, you will be able to enroll for 2015 at HealthCare.Gov, which has been revamped for the new season. Note: If you want coverage starting January 1, you must enroll by December 15. If you signed up last year, use this time to renew or change policies and to ensure your current plan is still the best choice for you, especially if you are one of the approximately 85 percent of Marketplace enrollees who is receiving premium tax credits to make coverage more affordable. (Remember that you claim the credit by filing a federal income tax return.)
While it may seem easy to renew coverage without updating, unless you update your income data, you won't have accurate information about how much you are eligible for in tax credits and what your out-of-pocket premium contribution for a plan actually is. Additionally, if your income has increased, you may no longer be entitled to the credit, a fact that you don’t want to discover when you file taxes and have the nasty surprise of owning the government money!
Even if your personal circumstances have not changed, the cost of your plan may rise next year. PriceWaterhouseCooper’s Healthcare Institute found that on average, premiums for individual insurance plans are expected to increase by 6 percent in 2015, though actual changes and premium prices vary significantly across states.
Your cost of healthcare is not just measured in premiums, but in out of pocket expenses like deductibles, co-pays and coinsurance. All Marketplace plans are required to set a cap on total out of pocket spending for in-network services in a year. The maximum out of pocket cap for 2015 will increase to $6,600 for an individual ($13,200 for a family policy), compared to $6,350/$12,700 in 2014.
Another change for 2015 is the penalty for not having health care coverage. The fee is the higher of: two percent of your income or $325 per adult/$162.50 per child, with a maximum penalty per family of $975. You’ll pay the fee on the federal income tax return you file for the year you don’t have coverage. If you don't pay the fee, the IRS will hold back the amount of the fee from any future tax refunds, but there are no liens, levies, or criminal penalties for failing to pay it.
According to the Kaiser Family Foundation, you may be exempt from the requirement to maintain qualified healthcare coverage if you:
Kaiser also notes some exemptions must be obtained by applying directly to the Marketplace and those who may be eligible for exemptions and who have not yet applied for one can still do so before the end of the year. Some exemptions can be claimed on the income tax return with IRS Form 8965, though the exemption for people who don’t earn enough to file taxes is automatic.
Finally, if you need help, you can call the health insurance marketplace for assistance, at 1-800-318-2596, where one of 14,000 customer service representatives (an increase of 1,000 from last year), can answer questions.
