Unpaid Premiums on Your Obamacare Coverage? Maybe It’s Time to Consider Short Term Medical
- By Deb Shields
Despite all the hype coming out of Washington about repealing and replacing Obamacare with the new Trumpcare plan, the federal government continues to operate as if the Affordable Care Act (ACA) will remain the law of the land in 2018. Case in point: the Centers for Medicare and Medicaid Services (CMS) recently updated rules for Obamacare enrollment and participation. If you’re covered under an exchange plan, or plan to enroll in one, you need to know how you might be affected by these changes, and discover what other types of health insurance – such as a short term medical plan – might be an alternative choice for you.
Short Term Medical – Affordable, Comprehensive Coverage
Talk to any group of exchange enrollees, and you’ll probably find several people who say they pay high premium and copay amounts, their deductibles run several thousand dollars each year, and their health care provider choices are limited. Add to those concerns the shrinking number of exchange insurer options in many states, and you start to understand why more and more insurance shoppers are turning to alternative coverage options, such as short term health insurance.
Coverage Duration May Be Longer Than You Think
Despite the name “short term”, depending on your needs and your state’s regulations, you may be able to keep Pivot Health’s short term health coverage for anywhere from one month up to nearly 12 months. You may even cancel at any time, with no penalty.
Short Term Health Insurance Benefits
Also known as short term health plans, Pivot Health’s plan for this type of individual health insurance policy provides you up to $1,000,000 in benefits per coverage period, and includes many benefits similar to what you’ll find with Obamacare plans, such as:
- Coverage for hospitalization, surgery and medical services
- Benefits for specialized care, such as physical therapy, mental health services, home health care and extended care facility stays
- Coverage for certain medical screenings
- Coinsurance – though some exchange plans have coinsurance rates as high as 40%, all Pivot Health plans have affordable 20% or 30% coinsurance rates
In addition, Pivot Health’s short term health plans provide you options to meet your budget needs. You may choose from a range of deductible amounts, and select from plans which offer varying maximum out-of-pocket amounts, prescription drug benefits and copays. Short term health insurance also provides you the flexibility to choose:
- Coverage start date – start your short term medical coverage as soon as within 24 hours of applying, or up to 60 days after your application. With an exchange plan, you must enroll during the Open Enrollment period or qualify for a Special Enrollment window, and even then, you’ll need to wait until the first of the following month for your coverage to take effect. Short term medical plans can be purchased at any time.
- Providers – visit the health care providers you want with no restrictions, a key advantage over exchange plans, which typically have limited provider networks
Pivot Health short term medical plans also include valuable non-insurance benefits:
- Savings on vision services – enjoy discounts of 15 to 30 percent on eye exams, frames, lenses and contacts
- Discounts on prescription drugs – save up to 70 percent on prescription medications at thousands of pharmacies across the country
- Telemedicine consultations – save time and skip the waiting room; speak with a doctor whenever and wherever it is convenient for you for less than a normal doctor office visit
Costing just a fraction of what you’ll pay for exchange plans, a short term medical plan may be a great choice if you’re in the market for individual insurance.
If You Didn’t Pay Your Obamacare Premiums You May Be Denied Coverage
When the Affordable Care Act – often called Obamacare – was signed into law, one of its key goals was to increase availability of health insurance in America. To support this objective, health insurers who participate in the exchanges have been prohibited from denying coverage, for any reason, to any eligible U.S. citizen. Even when exchange enrollees fall behind in paying their monthly premiums, they receive a “grace period” – typically 90 days – to catch up on past due premium payments before their health insurance coverage may be terminated.
Unpaid Premiums and Exchange Coverage: Old Rules
Up until now, exchange enrollees who lost their coverage due to non-payment of premiums during the year could re-enroll for coverage at a later point, either by qualifying for a Special Enrollment period, or waiting until the annual Open Enrollment period. Individuals could enroll in the same exchange plan they lost or with a different plan offered by the same insurer, and the health insurance company could not refuse coverage to the enrollee based on premiums they owed but didn’t pay. The insurance company also could not apply any payment for the new enrollment toward the outstanding debt from the terminated coverage. Once the enrollee sent in a premium payment for the new plan, the coverage took effect.
Exchange insurers have expressed concerns over the years about individuals with histories of non-payment taking advantage of the guaranteed availability of Obamacare, by not paying premiums for coverage at the end of the benefit year. This meant that enrollees could pay for as little as nine months of premiums, yet receive a full 12 months of coverage.
Unpaid Premiums and Exchange Coverage: New Rules
Responding to exchange insurers, which have called on the federal government to make changes to stabilize the exchange market, one of the new CMS regulations drastically changes the guarantee of coverage provision. Under the new rules, health insurers may legally require enrollees to pay all unpaid premiums for coverage provided within the previous 12 months, before providing new coverage to that person. Payment of past due premiums would be capped at three months, to compensate for the grace period before coverage was terminated.
Further, despite opposition from critics, the CMS has tightened the documentation requirements for enrollees to prove that they qualify for a Special Enrollment period. From the time of Obamacare’s implementation, enrollees could contact HealthCare.gov, say they qualified for Special Enrollment and enroll in coverage. The new regulations now require enrollees to provide documentation of the circumstances that qualify them for Special Enrollment. This rule change is designed to prevent enrollees from “gaming the system”, such as only enrolling in coverage after being diagnosed with an illness.
Not only do these new regulations make it much more costly for enrollees to continue their coverage after termination due to non-payment of premiums, but it makes it significantly more challenging to enroll in exchange coverage after Open Enrollment ends. Let’s look at an example of how these new rules affect exchange enrollment.
Molly: Losing Coverage Mid-Year
Molly works a couple of part-time jobs, and doesn’t receive employer-sponsored health insurance. She decides to purchase an individual insurance plan through the exchange. Things get busy for Molly over the summer, and before she knows it, three months have passed since she’s made a premium payment. Her coverage is canceled.
Unfortunately, Molly hasn’t experienced any life changes that would qualify her for a Special Enrollment period. This means that if she wants to re-enroll in exchange coverage, Molly will have to wait until the Open Enrollment period in the fall. Coverage would then commence at the beginning of the following year. Unless Molly purchases an alternative insurance option, such as short term medical, she will have no insurance coverage for the remainder of the year in which her coverage was terminated for non-payment of premiums.
In addition, if Molly decides to re-enroll with the same insurer who had previously provided her exchange coverage, she will be required to pay the overdue premiums for the grace period coverage she received the previous year. This is particularly concerning for Molly, because she knows that several major health insurers have withdrawn from the exchanges, and she may have no choice but to re-enroll with the same company to which she owes several months of unpaid premiums.
How the New Regulations Impact Premium Tax Credits
Many exchange enrollees rely on premium tax credits from the federal government to help reduce their exchange premium costs. When you enroll in exchange coverage, you estimate your expected income for the year. If you qualify for premium tax credits based on your estimate, you then choose how to use the credit:
- Have some or all the credit paid in advance (by the exchange on your behalf) to the insurer. Your insurance company then applies the credit to your premium each month, lowering your payments
- Wait to claim the amount of the premium tax credit when you file your tax return. This will increase your refund or lower the amount of tax you owe, but you will be responsible for paying the entire premium to your exchange insurer each month.
The chart below shows how enrollees are impacted when they pay overdue premiums before re-enrolling for coverage, based on the way they choose to use their tax credits:
|In Advance||When Filing Taxes|
|Advanced credits are paid directly to the insurer, so the enrollee is responsible for paying the net overdue premium amount (difference between the premium amount and tax credit paid to insurer)||Enrollee may not claim tax credits for those months in which they were not enrolled in coverage. This could leave those enrollees responsible for the entire premium amount (the tax credit plus the enrollee’s portion)|
Some enrollees who take advanced premium tax credits may decide not to re-enroll in exchange coverage, or enroll with a different insurer the following year for coverage, to avoid having to pay unpaid premiums. If you find yourself in that situation, it’s important for you to know that if you have taken more advanced premium tax credits than you used for exchange coverage, you will have the difference subtracted from your refund or added to your balance due, when filing your federal tax return. This could be a costly surprise at tax time.
Short Term Medical – Affordable, Comprehensive Coverage, Available When You Want It
The new CMS rules tighten enrollment and participation for health insurance plans purchased on the exchange; these changes will make exchange plan coverage more expensive for some enrollees. That’s why it’s more valuable than ever to have alternative insurance choices, such as short term medical. You receive comprehensive benefits coverage at affordable premium rates, with the flexibility to start coverage at any time during the year.