What’s Next for Health Insurance in 2017?

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The 2016 presidential election illustrated how deeply divided Americans are on many economic, environmental, and social issues. Some of the most intense debates during the election season centered around health care in the United States, with presidential party nominees arguing over what, if anything, should be done about Obamacare.

Short Term Health Insurance – An Affordable Choice

With growing uncertainty in the health care and insurance markets, many Americans are checking into different forms of health insurance plans, including short term health insurance coverage.

Short term health insurance provides you with choices. You select:

  • Coverage duration – how long do you want insurance protection? Choose anywhere from one month up to nearly a full year.
  • Networks – you see the providers you want with no restrictions. Most insurance plans sold through the Obamacare exchange limit provider networks and reduce benefits if you receive treatment from providers outside those networks.
  • Plan features – why be locked into the “10 essential benefits” required for all Obamacare plans? Choose the features that fit your circumstances.
  • Options – receive a medical coverage solution while the country awaits the promised repeal/replacement/modification of Obamacare.

Who are the people looking for short term medical insurance? Those who:

  • Are unemployed and looking for an option other than COBRA
  • Recently graduated or adult children who aren’t covered under their parents plan
  • Don’t have group coverage through their employer
  • Missed the annual enrollment period to buy insurance on or off Obamacare exchange, and don’t qualify for a Special Enrollment period to purchase coverage
  • Are waiting for employer health benefits to start

If any of these circumstances apply to you, then short term health insurance coverage might be a good fit for you.

Obamacare, more formally called the Patient Protection and Affordable Care Act (ACA), was signed into U.S. law in 2010. Supporters of the plan assured Americans that the law would transform health care delivery and health insurance plans in the U.S. by increasing access to care for the uninsured, keeping rates affordable and allowing those happy with their existing coverage to continue to enjoy their benefits and keep their providers. Now several years into the implementation of Obamacare, some Americans have greatly benefited from the plan, while others have been impacted negatively.

The Upside of Obamacare

The good news is that millions of previously uninsured Americans now have health care coverage. Many qualified for coverage under Medicaid due to ACA’s greatly expanded Medicaid funding and qualification provisions as well. Those Americans who didn’t qualify under the expanded Medicaid program, and who did not have employer-sponsored health insurance coverage, found themselves able to purchase health insurance plans through either the federal or their state-run healthcare exchange.

In addition, health care industry analysts report that the national health care spending rate is slower now than it was before Obamacare became law.

What’s the Bad News?

  • Although the rate at which health care costs are rising has slowed, it is still escalating at a pace greater than the median American income.
  • Millions of Americans found themselves losing the health insurance coverage they had for years because those plans were not in compliance with new ACA regulations.
  • Many of those insureds then found themselves paying significantly more for their replacement plans, which did not necessarily provide the features they wanted.
  • Insurance companies have found themselves losing billions of dollars through plans they offer on the exchanges, and many are now exiting the market, leaving Americans who purchase coverage through the exchange with fewer plan choices. In 2017, several state exchanges will now have only one insurer offering plans on the exchange.
  • With millions of consumers needing assistance to purchase health insurance plans through the exchange due to annual premium hikes, taxpayers are footing an ever-increasing bill for Obamacare subsidies–estimated to be nearly $10 billion in 2017 alone.

How Will Obamacare Be Affected Starting in 2017?

With Republicans holding the majority in both houses of Congress as well as the White House, the prospect of Obamacare being repealed, or at least significant portions being replaced, is a very real possibility. However, elected officials in Washington have acknowledged that some of the more popular provisions of the ACA, such as requiring insurers to cover people with pre-existing health conditions, and allowing adult children to remain on parent insurance coverage to age 26, would probably be included in any Republican-designed health insurance program replacement to Obamacare.

Talks of potential program features include increasing availability and increasing allowed contribution amounts to Health Savings Accounts (HSAs), limiting how much employer-sponsored health care can be offered as tax-free income, and removing limitations that currently prohibit buying and selling insurance across state lines. There’s also been discussion around enabling states to tailor their own Medicaid programs, rather than following set federal regulations for Medicaid. In addition, there has been talk about potentially privatizing Medicare to help seniors fund their own health plans–as a nod to the significant financing challenges facing Medicare as baby boomers continue to retire.

However, it is important to note that for 2017, Obamacare and its provisions will remain untouched. And for any changes to be made to Obamacare beginning in 2018, Congress must propose and pass legislation by early spring of 2017. That’s because insurance companies are required to submit their plans for the following year to state-based health regulators by April or May of each year. This results in a short window of time for Congress to develop a program and have it ready for implementation in 2018.

What If I Decide to Buy an Exchange Plan Now?

If you’ve made the decision to purchase a health insurance plan through the exchange this year, there are several things you need to know.

Enrollment Period Ends January 31, 2017

Act quickly. You have limited time remaining to purchase health insurance coverage through the exchange for 2017. The annual open enrollment period began November 1, 2016 and ends January 31, 2017. (The deadline for enrolling in coverage that would be effective on January 1, 2017, was December 19, 2016, or December 23 in Massachusetts, Rhode Island, and Washington State. If you enroll in an Obamacare plan by the end of January 2017, your coverage will be effective no later than March 1, 2017.)

The only way to purchase an Obamacare 2017 health insurance plan through the exchange after January 31, 2017, will be if you qualify for a Special Enrollment period, due to experiencing a qualifying life event such as birth/adoption of a child, job gain or loss, marriage, divorce, etc.

Purchasing Through the Federal or State-Run Exchange

If you’re not sure whether you need to purchase through the federal exchange, or if your state has its own exchange, you’ll want to start by visiting healthcare.gov, which is the official site of the federal exchange. Once you click the link to start the application process, you’ll be asked for your zip code. If your state runs its own exchange, a link will direct you to continue the application process on your state’s exchange site.

How Much Will My Coverage Cost?

The cost of your health insurance plan purchased through the exchange will depend on several factors, such as how many members of your family you need to cover, the deductible amount you select, and the level of benefits coverage you prefer.

In accordance with ACA regulations, there are now four standard levels of “metal” coverage for all health insurance plans offered through the exchange (as well as for ACA-compliant plans sold off the exchange). The chart below illustrates the Actuarial Value (AV) of each type of plan (which is the percentage of covered costs the insurance company will pay on a plan). The chart also shows your corresponding cost-sharing (for deductibles, coinsurance, copayments, maximum out-of-pocket costs, etc.). The specific amounts you pay are based on the plan you select. However, a general rule is that the lower your monthly premium, the greater your cost-sharing responsibility.

Plan Level Insurance Company Pays Co-Insurance, You Pay Deductible Amount Monthly Premium
Bronze 60% 40% Highest Lowest
Silver 70% 30% Lower than Bronze Moderate
Gold 80% 20% Lower than Silver High
Platinum 90% 10% Lowest Highest

Another key consideration when pricing your Obamacare plan is determining whether you qualify for subsidies in paying for health care coverage. More than 9 million Americans–approximately 85% of exchange consumers–receive advanced tax credits to lower the monthly cost they pay for health insurance coverage. And many more receive cost-sharing reductions to reduce their out-of-pocket costs for covered services.

Do I Qualify for Subsidies?

There are two different types of subsidies available for qualified consumers who are buying Obamacare coverage: premium tax credits and cost-sharing reductions. It is important to note that these two types of assistance are only available if you purchase your health insurance plan through the exchange.

Premium Tax Credits

Tax credits can be used to reduce your monthly health insurance plan premium payment. Your estimated annual income and household information (such as number of dependents) determines the amount of your tax credit. In general, you must make between 100% and 400% of the Federal Poverty Level (FPL). In 2017, these FPL ranges are from $11,880 – $47,550 for an individual, to $24,300 – $97,200 for a family of four.

However, in those states which chose to expand Medicaid under the ACA, you may enroll in Medicaid with an income up to 138% of the FPL. Subsidies are not available for consumers with income below the 138% threshold in those states.

You may choose to have the premium tax credits paid directly to your insurer to lower your monthly bill, or you may file for the credit with your tax return each year. To have the premium tax credits paid to your insurer, you will need to estimate your annual income when you enroll for your coverage through the exchange.

If you use more advance payments of the tax credit than you qualify for based on your actual annual income, you will be responsible for repaying the difference when you file your federal income tax return. Otherwise, if you use less premium tax credit than you would qualify for, you will receive the difference as a refundable credit when you file your federal income taxes.

You may use premium tax credits for any metal coverage plan bought through the exchange.

Cost-Sharing Reductions (CSRs)

While tax credits lower your monthly premium amount, Cost-Sharing Reductions (CSRs) provide you a discount on your out of pocket costs for covered health care costs (in-network services covered under your plan) in two ways:

  • Lower out-of-pocket maximum amount
  • Lower deductible, coinsurance and copayments

This means that although you may purchase a Silver plan on the exchange, the benefits you receive will be closer to benefits paid under the Gold and Platinum plans. Take note: CSRs are only available for Silver plans bought on the exchange.

To be eligible for cost-sharing reductions, your income must be between 100% – 250% of the Federal Poverty Level (FPL). There are three levels of CSRs: CSR 73, CSR 87 and CSR 94. The numbers refer to the Actuarial Value (AV)—the amount that the insurance company pays on your covered services.

The following example shows how CSRs can affect cost-sharing responsibility, depending on what percentage your income is of the FPL. In this example, the individual enrolled has an annual income of $22,000 (187 percent of the federal poverty line in 2015).

Standard Silver – No CSR CSR Plan for 201-250% FPL CSR Plan for 151-200% FPL CSR Plan for up to 150% FPL
Actuarial Value 70% AV 73% AV 87% AV 94% AV
Deductible (Individual) $2,000 $1,750 $250 $0
Maximum Out of Pocket Limit (Individual) $5,500 $4,000 $2,000 $1,000
Inpatient Hospital (After Deductible) $1,500/admission $1,500/admission $250/admission $100/admission
Physician Visit Copay (After Deductible) $30 $30 $15 $10

Table courtesy of Health Reform Beyond the Basics

There is no accounting adjustment for you to make with CSRs when you file your federal taxes, unlike the reconciling required for premium tax credits. Insurance companies are directly reimbursed by the federal government for your CSRs.

Think that you might qualify for premium tax credits and/or cost-sharing reductions? Try this free calculator to determine exactly how much you might receive. These financial assistance programs created by the ACA can be very valuable in reducing your cost for insurance plans purchased through the exchange.

Whatever Choice You Make—Be Sure to Have Insurance Coverage

Although there is a lot of uncertainty as to how Obamacare will be impacted in future years, health insurance shoppers can be confident that there will be no changes implemented to the law in 2017. And whether you purchase an ACA-compliant plan on or off the exchange, or decide to opt for a short term medical insurance plan until changes are made to Obamacare, the most important thing is to protect your financial security with health insurance protection.

Contact us today for more information on your health insurance options.