Editor’s Note: This article reflects the January 2018 federal government shutdown.
Now that the federal government has officially shut down due to an impasse in Congress to pass a budget, many federal services are not being offered and many more federal employees have been instructed not to come to work. Analysts predict 20%-65% of the government will halt operations. So what does that mean for your federally-funded health insurance plan? Federal offices that are closed or have limited access include departments within the Department of Health and Human Services (HHS) which manages HealthCare.gov and the Centers for Medicare & Medicaid Services. Approximately 50% of its employees will be furloughed without pay. Does that mean HealthCare.gov will be shut down? Will your monthly subsidies be paid? Will your insurance costs go up?
Products like short term health insurance and no deductible health plans that are sold by Pivot Health are not part of the federal mandate and thus, are not affected by the government shutdown. You can still enroll in these types of plans outside of the open enrollment period and receive coverage right away. In recent years, many individuals and families have opted for budget-friendly health insurance coverage like short term medical plans.
For individuals who enrolled on the federal or state exchanges and received a financial subsidy to supplement the cost of their health insurance, the shutdown at HHS should not affect federal subsidies from being paid. Centers for Medicare & Medicaid Services have stated they will “continue key Federal Exchange activities, such as open enrollment eligibility verification using Federal Exchange user fee carryover.” Other programs like Medicaid are not affected in the short term, as payments have already been made through the second quarter of 2018. Medicare will be unaffected if the shutdown is brief. Seniors will continue to receive benefits and providers should get reimbursement payments for the time being. A long term shutdown could change this, however, if the shutdown is prolonged by Washington.
Health Insurance for Children
Currently, funding for the Children’s Health Insurance Program (CHIP) has ended and its bank account will be entirely depleted by March 2018. Funding CHIP for 1.7 million low-income children is a non-negotiable item Democrats want in the final budget, but Republicans say there isn’t money for the $8 billion program. Senate Republican and Finance Committee Chair Orrin Hatch (R-Utah) has said CHIP will be addressed, but he wants it “done the right way”.
CMS has stated they will “maintain the staff necessary to make payments to eligible states from remaining Children’s Health Insurance Program (CHIP) carryover balances” during the shutdown. Yet, an extended government shutdown could grossly affect children who rely on the program for medical and dental care.
Child-only short term health insurance plans have become an affordable option for middle-income families who make too much to qualify for the Children’s Health Insurance Program (CHIP). If the program is not reinstated with a new budget deal, low-income families may need alternatives for insuring their children against catastrophic accidents or illnesses.
Other Health Care Services Affected by Shutdown
Centers for Disease Control and Prevention
It is the height of flu season, with near-epidemic levels of illness and death spreading across the nation. According to HHS, the flu-tracking program managed by the Centers for Disease Control and Prevention (CHC) will be suspended with the government shutdown. This means if an update occurs regarding symptoms or breakthroughs that could help doctors better treat patients, the information will not be released because the program is on hiatus. The shutdown also affects the CDC’s key decisions that need to be made for next year’s flu vaccine.
Community Health Centers
There are more than 1,400 community health centers across the U.S. that are managed by the Health Resources and Services Administration that service approximately 27 million low-income individuals and families. These centers provide dentistry, preventive care and other basic health care services. At this time the health centers will no be affected by the shutdown. However, the community health center program is already underfunded, as the program was not renewed last fall due to Congress’ disagreement over CHIP funding. Today the centers are operating solely on any remaining funds they may have.
After the 2013 government shutdown that led to a suspension of death benefits and compensation claims for millions of military veterans and beneficiaries, the 2018 government shutdown will see far fewer restrictions to the Department of Veterans Affairs. More than 99 percent of workers will stay on the job. The Veterans Benefits Administration will see the largest setback, with about one-third of its workforce going on furlough.
Food and Drug Administration
The Food and Drug Administration will remain largely intact, with federal inspections and laboratory research being the primary functions that will stop due to the government shutdown.
The New Route to Health Insurance
Last fall the Congress repealed the Affordable Care Act (ACA) individual mandate that requires Americans to carry health insurance or suffer paying a tax penalty. The law did not go into effect immediately – you still have to prove your insurance coverage on your 2017 and 2018 income taxes. But come 2019, that requirement is gone.
This repeal allows individuals who purchase their own health insurance, yet don’t qualify for a government subsidy to lower the cost of their insurance, a greater opportunity to shop for new alternative health insurance plans that do not qualify for the ACA’s essential benefits and services. For many, this means they could save more than 50% on their health insurance and not be required to pay a penalty.
How Short Term Health Plans Are Similar to Individual Health Insurance
When compared to major medical health plans, short term health plans feel familiar. Every plan has a deductible, coinsurance and on some plans, doctor office copays. Richer plans may also include prescription drug coverage. Individuals are responsible for their out-of-pocket responsibility up to the deductible amount, subject to any copays they might be entitled to because of the plan’s coverage terms. Then, once the deductible is met, the individual shares the responsibility of a portion of medical costs with the insurance company, known as “coinsurance”. Like major medical insurance, there is a maximum out of pocket expense cap on expenditures. However, on short term plans, “out of pocket maximums” are based on the coinsurance amount, which does not include the deductible amount.
How Short Term Health Plans Are NOT Like Individual Health Insurance
Short term medical coverage does not qualify as “minimum essential coverage” as mandated by the ACA. That means short term plans are not required to cover pre-existing conditions or preventive care.
Due to federal regulations, short term health plans have a 364-day limit per policy in many states. In states that have shorter coverage duration restrictions, insurance marketers like Pivot Health offer four consecutive back-to-back policies that allow an individual to have health insurance coverage seamlessly throughout the year. Like an auto insurance policy, a new ID card is required every 90 days to reflect the new policy coverage period.
However, Pivot Health short term health plans have added benefits:
- No network – all doctors and medical facilities are accepted
- Discount prescription drug coverage on all plans, prescription insurance coverage on select plans
- $30 copays on physician office visits, and $60 copays for Urgent Care and specialist visits
- No monthly fees
- No hidden surgical waiting periods on inpatient benefits
- Carriers with the highest industry ratings
Today short term medical plans are subject to a tax penalty depending on the individual’s status at tax time. However, not everyone is immediately penalized. Certain groups and income restrictions waive the tax penalty in many cases. It’s important to speak with a tax professional before purchasing a short term health insurance plan if there are questions about the penalty.
Short term health insurance isn’t for everyone, but it provides those who purchase their own health insurance an affordable option compared to major medical health plans. Individuals who buy short term medical include:
- Early retirees
- Adults turning 26 and rolling off their parent’s health plan
- College students
- Recent graduates needing temporary insurance until an employer plan begins
- Those that experience job loss
- Veterans who don’t qualify for VA or military benefits
- Recently married or divorced
- Those that want an alternative health plan option to the ACA
- The uninsured looking for affordable rates
The good news – the government shutdown does not affect your health insurance – no matter what type of insurance you carry. But long-term, it’s smart to compare the benefit details and pricing between major medical insurance and short term health plans to see what is the best fit for your budget and lifestyle. As the market continues to change, knowing all of your options will become more and more important.