Health Care MarketplaceNews & Research

CBO Blames Loss of Individual Mandate for Higher Uninsured Rate by 2028

In May, the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) updated estimates for the number of non-institutionalized citizens under age 65 who will have health insurance between 2019 and 2028. The report indicated that, in several categories, health insurance enrollment would decline due to the elimination of the federal mandate requiring people to have health insurance. In addition, the report found that the elimination of the federal mandate could also lead to a rise in insurance premiums as healthier people choose not to have insurance, leaving fewer healthy people and more people with higher medical costs in the marketplace.

Projected Coverage

According to the report, 89 percent of those who are under the age of 65 and who aren’t institutionalized will have health insurance in 2018. The majority of those consumers will obtain coverage from employment-based plans and Medicaid. That number drops to 88 percent for 2019 and 2020, and to 87 percent for the remaining years up through 2028. Approximately 158 million people, or 58 percent, obtain health insurance through their employer. The report found that number would decline to 154 million, or about 55 percent, by 2028.

Nongroup coverage, which is a much smaller share of the marketplace and represents anyone not covered by a job-based plan, currently accounts for about 15 million consumers per month, with 9 million purchasing their healthcare from the ACA marketplace. The CBO estimates that this number will fall by 3 million in 2018 and 2019.

Individual Mandate Elimination

In January 2018, Congress passed the Tax Cuts and Jobs Act, which effectively ended the individual mandate that required everyone in the United States to have health insurance or face a tax penalty. Starting in 2019, there is no penalty for those who do not have health insurance coverage. The mandate was the most unpopular aspect of the ACA and it was a hot topic during the 2016 election, with Republicans vowing to not only repeal the mandate but to eliminate the ACA completely. Although lawmakers were unsuccessful in repealing the ACA, the tax bill was able to eliminate the mandate.

Impact on Health Insurance Numbers

According to the CBO and JCT report, a large percentage of those in the marketplace will lose coverage, either through voluntarily ditching their health plans due to the repeal of the individual mandate or because the resulting higher premiums from a sicker risk pool will force people with medical problems to drop their coverage.

By 2028, it’s expected that about 35 million Americans won’t have health insurance, compared to 29 million in 2018. This number is 3 million higher than predicted in September 2017, before the individual mandate was repealed.

Higher Premiums

The repeal of the individual mandate is also expected to cause a rise in healthcare premiums for benchmark marketplace plans by 15 percent. Overall, premiums are expected to increase by 7 percent each year between 2019 and 2028. The rise in premiums is expected due to healthier people leaving the marketplace, leaving a higher percentage of people with medical issues that require costlier medical care. Because insurance companies are required to cover individuals with pre-existing conditions, higher medical costs must be absorbed by increased premiums if healthier individuals aren’t there to offset these costs.

Lack of Options

Although the CBO report indicates that the marketplace will remain stable in 2019, there is some speculation that the elimination of the individual mandate could undermine the market. Currently, there are areas of the country where consumers in the marketplace have only one option for insurance. Should that insurer choose to leave the marketplace due to higher medical costs it can’t absorb, this could leave consumers with no options for health insurance. Some states may expand Medicaid eligibility under guidelines from the Affordable Care Act, which would help consumers obtain insurance. However, health experts also theorize that some states will push for short-term, non-ACA compliant policies, which could further undermine the major medical marketplace.

Although the individual mandate was unpopular regardless of political leaning, it was put in place to encourage healthier people to purchase health insurance so that their premiums could offset the costs of medical treatments for people with health problems. The CBO and JCT report indicates that elimination of the mandate may further reduce the number of people who have health insurance and could have a negative impact on premiums as well.

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.

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