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Need Health Insurance? Time’s Running Out for 2018 Coverage

Open enrollment for the Affordable Care Act (ACA) ends Friday, December 15. This is the only time during the year that you can purchase or change your major medical insurance unless you experience a qualifying life event, like a significant death in the family or the birth of a child. The purpose of open enrollment is to prevent you from buying health insurance only when you get sick, which can drive up the cost of care. Here are some things to keep in mind as enrollment wraps up for the year.

Shorter Enrollment Period

The enrollment period for 2018 coverage is shorter than it has been in previous years. Last year, open enrollment lasted for three months, but this year, the Trump administration reduced the length of time you had to enroll to just 45 days, from November 1 through December 15. In an effort to assist residents, nine states have extended the open enrollment period for their state-operated exchanges. The states and their enrollment deadlines include:

  • California (January 31)
  • Colorado (January 12)
  • Connecticut (December 22)
  • District of Columbia (January 31)
  • Massachusetts (January 23)
  • Minnesota (January 14)
  • New York (January 31)
  • Rhode Island (December 31)
  • Washington (January 15)

This means that if you are resident of these states, you have longer to change or sign up for health insurance under the ACA. Residents of hurricane-affected states, such as Florida and Texas, will also have extra time to sign up for health insurance this year. If you live in an area that was devastated by hurricanes earlier this fall, then you’ll need to call the marketplace call center for information on the extended deadline of December 31.

Penalties Still in Force

Many people are under the mistaken belief that the individual mandate that requires you to have health insurance or face an income tax penalty has been eliminated. Although President Trump signed an executive order that allows government agencies to relax regulations related to collecting the penalty, including leniency when taxpayers claim hardship related to the ACA, the law is still in place, and so is the fine.

In December 2017, the Senate passed a tax reform bill that would eliminate the individual mandate, but that will not take effect until 2019 if it’s adopted as is. This means that you are still required to have health insurance or face a tax penalty of $695 per adult or 2.5 percent of your income, whichever is higher. Congress hopes to have the bill ready for President Trump’s signature by Christmas.

ACA Uncertainty

Another reason to sign up for health insurance under the ACA before the deadline is that there could be significant changes to the law for 2019. During the presidential campaign last year, many Republicans were elected on a platform that promised to either completely repeal the law and replace it with a better version or to fix problems with the ACA that were causing premiums, deductibles and co-payments to rise. Several bills have been proposed in Congress, but none have been successful. For this reason, Republicans have suggested using the new tax reform bill to end certain portions of the ACA under the Senate’s reconciliation rules. Experts believe that eliminating the individual mandate will drive up premiums that will keep healthy people, whose premiums help offset the cost of care for people with pre-existing conditions – and who don’t want to purchase health insurance in the first place – from buying policies.

Elimination of Cost-Sharing Payments

In October, President Trump suspended federal cost-sharing payments for insurers. These payments reimburse insurance companies so that they can lower co-payments and deductibles for lower-income families. Anyone earning up to 250 percent of the federal poverty level qualifies for additional cost-sharing reductions, which are still in effect. The problem is that now insurers can’t be reimbursed for lowering out-of-pocket costs, like copayments and deductibles. In other words, insurers stand to lose money.

As a result, premiums for silver-level plans in particular have skyrocketed this year, leaving plenty of Americans with a tough choice to make on buying health insurance. But there are still affordable options in other metal tiers, specifically gold plans, which provide better coverage. Premiums will likely continue to rise next year since insurers can’t count on those cost-sharing reduction payments from the government, so now’s the time to check out your options.

Changes to 2019 Marketplace Rules

In November 2017, the Trump administration issued its proposed “Notice of Benefits and Payment Parameters,” rules that are issued each year to set standards for insurance policies sold under the ACA. The new rules loosen restrictions regarding the essential health benefits included under the ACA and gives states latitude in what essential health benefits must be included. The rule also eliminates a requirement that each state have two “Navigator” entities, people who are available to assist any individual who may not understand the ACA.

The proposed rule also reduces accountability requirements for insurers and makes it less likely that insurers will prominently display “simple plans,” plans that offer flat copayments for doctor visits and generic drugs, but charge higher fees for other types of services. These new rules could mean that basic benefits available under the ACA in 2018 may not be as readily available in 2019, another reason to sign up for healthcare during the open enrollment period for next year.

Higher Premiums

There has been much talk of higher premiums for coverage under the ACA for 2018. In some cases, this is true due to the elimination of the cost-sharing reduction payments as described above. In some areas of the country, there may be fewer insurers, which can also drive up premium prices. Nationally, the lowest cost bronze plan is expected to increase by 17 percent, the lowest cost silver plan by 32 percent and the lowest cost gold plan by 18 percent. However, the subsidies that are still in place could lower premiums significantly. A 40-year old person making $35,000, which is 249 percent of the federal poverty level, will pay 36 percent less for the lowest cost bronze plan, 6 percent less for the lowest cost silver plan and 12 percent less than the lowest cost gold plan.

This indicates that although some premiums may increase, many will actually decrease in 2018. Plus, tax subsidies to reduce premiums rise along with the higher premiums, so if you qualify for cost assistance – anyone earning up to 400 percent of the federal poverty level qualifies – then check out your options for next year.

If you don’t sign up for coverage before December 15 or if you don’t make necessary changes by that date, you won’t be able to make the changes or sign up until the next enrollment period. The only exceptions are for life-changing events, like loss of job, a marriage, divorce or a big move. In addition, you will face an IRS penalty at the end of the year when you file your taxes if you can’t prove that you had coverage. Signing up for health insurance is the best way to avoid the IRS penalty and make sure your family is protected for next year.

When You Need Major Medical Insurance and When You Don’t

When You Need Major Medical Insurance – and When You Don’t

Buying health insurance is no simple task. Even armed with the right knowledge, understanding the options available to you can be tough, especially if you’re new to the process or you don’t see a doctor very often anyway. Do you even need health insurance? Plenty of people get stuck on that very question. If you’re young, healthy and have no dependents to take care of, then you may be able to forgo health insurance – or bundle some standalone products together to create a different kind of insurance package. But not everyone has the luxury of skipping out on health insurance. From chronic medical problems to taking care of a family, there are valid and important reasons to buy major medical coverage each year.

Should you buy health insurance? That depends.

Even if you can justify avoiding health insurance, you may not come out ahead, for a couple of reasons. First, you may face an unexpected medical crisis – a broken back, for instance, or a cancer diagnosis – and without medical insurance, you could be on the hook for hundreds of thousands of dollars. Worst-case scenario? You might bankrupt yourself trying to cover your medical bills and still not get the adequate treatment that you need. Second, there’s an individual mandate in place under the Affordable Care Act (ACA or Obamacare) requiring most people to have qualifying health insurance. If you don’t, then you’ll face a penalty fee for not complying with the law.

The mandate has been in effect since the start of Obamacare, but people still seem to be confused about what it means. We explore the individual mandate in more detail in another article. Here, we want to talk about the price tag of this key ACA provision and how it might factor in when you’re deciding whether to buy major medical insurance or not. For some, skipping health insurance and paying the fine can be more economical. For others, affordable – if somewhat basic – plans are available that cost just as much as the fine. Let’s crunch the numbers on the individual mandate.

Note: We’re using the individual mandate penalty calculator and the subsidy calculator developed by the Kaiser Family Foundation for our estimates. For consistency’s sake, our example customers live in Ringgold, Georgia, a small town at the top of that state. Georgia ranks third among the states with the highest spike in premiums for 2018. We’re also assuming that our example customers cannot get coverage through work.

Health insurance makes sense for some.

Example 1: Kevin, a single man with no dependents and a pre-existing condition

Kevin is in his mid-30s, lives alone and has no dependents. He earns about $45,000 a year. Kevin has diabetes and has to take several medications each month. He also visits his doctor regularly for screenings, checkups and lab work. Here’s how the individual mandate stacks up against the lowest-cost health insurance plan on the marketplace for Kevin:

  • Individual mandate: The penalty fee for not having health insurance in 2017 is the greater of 2.5 percent of a person’s taxable household income, or a flat $695 fee per adult. Kevin’s taxable income ($45,000 – $10,400 [tax threshold for individuals]) is about $34,600. If you multiply that figure by 2.5 percent, you get $865. Since $865 is higher than the flat fee amount, Kevin would owe $865 when he files his taxes if he didn’t buy health insurance. That’s about $72 a month (if it were paid monthly), and he doesn’t benefit from that payment. He would have to cover all of his medical costs on his own.
  • Health insurance: Kevin’s income puts him at about 373 percent of the federal poverty level. He earns too much for cost-sharing reductions, but he’s still within the limits for regular tax credits to bring down his premiums. The lowest-priced plan in Kevin’s area would cost him $194 a month after his tax credit. But because Kevin needs more medical care than a bronze plan would cover, he’s more likely to get a silver or even gold plan. In that case, his cost would jump to about $359 a month after subsidies for silver-level coverage.

Even though it seems like Kevin could save money during the year by not having major medical coverage, he should still buy a plan. He’s got a chronic health problem (a pre-existing condition), and he’ll need more care as he gets older. Five years ago, people with diabetes required nearly $14,000 a year in medical care. Costs rarely go down in the medical world. Obamacare places a cap on how much people with health insurance have to spend out of pocket on medical costs. In 2018, that’s $7,350 a year for an individual with a silver plan.

Between monthly premiums (which don’t count toward the annual cap on expenses) and various out-of-pocket costs up to that maximum, Kevin might end up paying over $11,000 for the year for healthcare. But in that same year, he would have gotten the care that he needed and actually saved money over what a person with diabetes typically costs. If he didn’t have health insurance, he might forgo doctor’s visits, skip prescriptions and develop more problems in the future.

The example of Kevin isn’t even an extreme one, since he’s a single guy without any kids and just one health problem. Imagine if he had kids, a spouse, less income or more than one medical issue – as is the case for millions of Americans. Many low-income individuals, too, should invest in health insurance. In some cases, the lowest-priced bronze plan on the exchange could cost substantially less than paying the penalty fee for the year, and you’d have coverage if you needed it. Health insurance makes sense from practical and economic standpoints in these scenarios.

Paying the fine might work out better for some.

Example 2: Kevin’s twin sister, Stacy, who also has no dependents but doesn’t have a pre-existing condition.

Stacy, like Kevin, is in her 30s and lives alone. She works in a similar field but earns substantially less than her brother – about $35,000 a year compared to his $45,000 salary. Men earn a great deal more than women, on average, in the counties that surround Ringgold, Georgia. Unlike her twin brother, Stacy does not have any health problems, and she rarely sees a doctor. Here’s what the cost of the mandate vs. health insurance might look like for Stacy:

  • Individual mandate: Using the same information that we used for Kevin, we can calculate Stacy’s taxable income ($35,000 – $10,400 [tax threshold for individuals]) to be about $24,600. If you multiply that by 2.5 percent, you get $615. Since that’s less than the flat fee of $695, Stacy would pay the flat fee rate for not having health insurance. That divides out to about $58 a month.
  • Health insurance: Stacy’s income puts her at about 290 percent of the federal poverty level. The cutoff for cost-sharing subsidies is 250 percent, but she does still qualify for regular tax credits, like her brother. In Stacy’s case, tax credits would reduce her premiums for the lowest-priced plan in her area to about $106 a month. That’s nearly twice what she would pay for the individual mandate penalty. And unlike Kevin, Stacy has no medical problems and doesn’t need extensive coverage. If she wanted to join a silver plan, she’d have to pay about $270 a month after subsidies.

Premiums aren’t the only cost that Stacy would have to cover during the year. Until she met her deductible – which averages to over $5,700 for a bronze plan in 2018 – she would have to cover most medical expenses herself. Once she met the deductible, she’d still be responsible for out-of-pocket costs. Unlike her brother, Stacy probably won’t meet her out-of-pocket cap for the year because she hardly sees a doctor for anything other than preventive care.

She would be paying high monthly premiums (as a portion of her income) and have to meet an absurdly high deductible to benefit from major medical insurance. In Stacy’s case, paying the fine and getting a bundle of ancillary products or a short-term policy instead would make more economical and practical sense.

Who else might be able to get away with not having health insurance? Generally, this approach only works for people with few or no medical problems who are young and don’t have dependents to take care of. But families might also forgo major medical coverage, at least for the adults, if their kids qualify for the Children’s Health Insurance Program (CHIP). All states have this program to some degree. In Georgia, for example, kids can qualify for the CHIP program if their families earn too much for Medicaid but fall within certain low income parameters.

On the opposite end of the spectrum, a person who earns too much for subsidies but can’t afford major medical insurance could afford to pay the fine, buy short-term policies or standalone ancillary products, and probably come out ahead barring any life-changing medical disasters.

So, do you need major medical or not?

The answer depends on a few things, namely your health, your income and your comfort level with assuming certain types of risk. It’s risky to go uninsured, especially if you’ve got family history of health problems or are getting older. Accidents, too, can happen to anyone at any age. In fact, they’re the fourth leading cause of death overall in the U.S. (number one for ages 1 to 44). Cancer is number two. You can’t predict what will happen from year to year with your health.

But if you’re reasonably sure that you don’t need coverage – or you simply can’t afford the premiums even with subsidies – then you may be able to forgo health insurance, buy cheaper non-major medical policies instead (for “what-if” scenarios) and pay the individual mandate penalty. If you want to see the numbers for your specific situation, check out the calculators linked above on the Kaiser Family Foundation website. And if you need help sorting through your options, talk to a licensed health insurance agent today for more information.

OEP State Deadlines

Each year, the federal government sets open enrollment dates to sign up for health insurance as required by the Affordable Care Act (ACA or Obamacare). This is the one time a year when people throughout the country can sign up for, change or renew their coverage for the following year. Open to anyone who needs health insurance, specifically those who can’t get insurance through work, the open enrollment period serves as a chance to review your coverage and make sure you’re getting the best deal for your healthcare needs. This year, the Trump administration shortened open enrollment 2018 to just 45 days, running from November 1 through December 15.

These dates apply nationwide, but some states have opted to expand enrollment. These states are ones that have created their own exchanges apart from the federal one at Eleven states plus the District of Columbia opted to create their own Obamacare marketplaces, and of those, nine have chosen to extend open enrollment deadlines for 2018. If you live in one of the following states, then you’ll follow your state’s guidelines for enrollment.

State Deadlines

Location Open Enrollment Deadline
California January 31
Connecticut December 22
Colorado January 12
District of Columbia January 31
Massachusetts January 23
Minnesota January 14
New York January 31
Rhode Island December 31
Washington January 15

Three additional states have state-based exchanges: Idaho, Maryland and Vermont. In Idaho, residents have until the federal deadline of December 15 to submit an application but an additional week (until December 22) to choose a health plan as long as they’ve met the federal deadline for application. Residents of Maryland and Vermont will follow the federal schedule. No matter where you live, open enrollment for 2018 health insurance starts on November 1.

Hurricane Victims to Get Additional Time During Open Enrollment 2018

The 2017 hurricane season has been one of the worst in history. Hurricanes Harvey, Irma and Maria caused significant damage in the southern United States as well as Puerto Rico and the U.S. Virgin Islands. This has led the Centers for Medicare and Medicaid Services (CMS) to extend open enrollment not only for Medicare but for the federal exchanges as well.

Open enrollment for Medicare started October 15. For all others, open enrollment to obtain health insurance in 2018 will start November 1. Victims of the hurricanes will have an additional two weeks to sign up for next year.

Extension Details

If you lived in areas affected by the hurricanes and were impacted by the storm yourself, whether it was damage, injury or forced relocation, you are eligible for the extension. Under the ACA, anyone with a life-changing event can make changes to their health insurance outside the enrollment period. CMS announced that anyone who experienced a qualifying life event 60 days prior to the hurricanes but were unable to complete the application, select a new plan or enroll in a plan due to the hurricane, now has until December 31 to complete the process.

It will also allow anyone impacted by the storms to sign up for or renew existing coverage from November 1 through December 31. Open enrollment for the rest of the country ends on December 15.

Specific States

If you live in one of the following areas affected by the 2017 hurricane season, you are eligible for the extended enrollment:

  • Florida
  • Georgia
  • Louisiana
  • Texas
  • South Carolina

Not all areas of each state are included in the extension. Only counties that were affected by the hurricanes qualify.

Displaced Consumers

If you were required to move from areas affected by hurricanes, you are also eligible for a special enrollment period through the end of the year. Those who want to take advantage of this extended enrollment offer need to contact the Marketplace Call Center at 1-800-318-2596 in order to sign up after December 15.

One of the reasons for this extension is that many who were displaced after the hurricanes cannot access financial records or other data necessary to qualify them for some of the subsidies available under the federal exchange program. Likewise, if you were required to relocate due to damage to your residence and have been unable to return, your policy may not cover services in another area of the state or country. This would require you to find another plan that will keep you covered in your new location.

State Exchanges Not Included

Because the states affected chose not to set up their own marketplaces and decided to use the federal marketplace for health insurance, all residents who qualify may use the extension program. The extension only applies to the federal marketplaces. If you are a resident of Puerto Rico or the U.S. Virgin Islands, you are not eligible to participate in the federal marketplace, but may be able to use the extension available to Medicare participants.

Earlier this year, the Trump administration reduced the enrollment period from the 12 weeks available under the Obama administration to six weeks, running from November 1 through December 15. This extension gives those affected by the hurricanes an additional two weeks to either renew or sign up for a new policy to avoid a lapse in coverage.

Price Resigns as HHS Secretary – What’s Next for the Department?

On Friday, September 29, Tom Price, Health and Human Services Secretary, resigned his position. Price had been under fire for his use of taxpayer-funded charter flights. Don J. Wright, who had been the acting assistant secretary for health and director of the Office of Disease Prevention and Health Promotion, was named acting secretary.

HHS Inspector General Probe

On September 22, it was announced that the Health and Human Services inspector general, Daniel R. Levinson, had initiated an investigation into Price’s use of chartered planes. The investigation involved more than 20 flights in recent months, all taken at taxpayer expense. Levinson, who was appointed by President George Bush, was contacted by House Democrats who believed the chartered flights violated federal law requiring officials in the executive branch to travel in the most economical way possible. It’s estimated that the flights cost taxpayers $400,000 while White House-approved travel on military planes cost more than $500,000.

Reimbursement Offer

The day before his resignation, Price announced he would reimburse the federal government $51,887.31 for his travel, only a fraction of what it cost the country. This was to cover his travel expenses but not those of his staff, who traveled with him. He also announced he would no longer take such flights due to the concerns raised about his use of taxpayer money. On Friday morning, President Trump told reporters he considered Price a “fine man” but that he didn’t care for the “optics” the scandal presented, stating that he would make a decision on what to do by the end of the day. It’s clear, however, that the president already had Price’s resignation when he made the statement.

Additional Concerns

This was not the first concern expressed by Democrats about Price. Earlier this year, there were concerns about private investments in healthcare companies that Price made while a member of the House. Those companies could have benefitted from bills he sponsored. At his confirmation hearing for secretary of HHS, Price was questioned about a stock purchase he made in 2016 in an Australian biomedical firm, which coincided with final negotiations on the 21st Century Cures bill. That bill helped accelerate clinical trials and drug approvals, some of which were manufactured by the company. Price has also come under fire from President Trump for the failure of Republicans to pass a healthcare replacement bill.

What it Means for HHS

Because Republicans failed to repeal and replace the Affordable Care Act (ACA) prior to September 30, they must now create a law that will appeal to enough Democrats for it to pass. Until that time, HHS will need to implement the law as it is. Local groups who must assist consumers in enrolling are expressing frustration with the current administration, and Democrats claim the White House is sabotaging the law. These are issues that will need to be addressed by the department as the country heads into another open enrollment period in November.

There are also questions about who may replace Price as secretary. One top contender is Seema Verma, current administrator of the Centers for Medicare and Medicaid Services (CMS), who has received bipartisan support in the past. Others include Scott Gottlieb, commissioner of the Food and Drug Administration, and David Shulkin, secretary for the Department of Veterans Affairs.

It is unclear whether Price will still reimburse the government the $52,000 he promised on Thursday as he did not mention it in his resignation letter. His letter stated that he decided to resign due to the distraction the travel scandal was having on the administration.

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