Health Care MarketplaceNews & Research

5 Things to Know About Open Enrollment 2019

This year marks the sixth enrollment season for the Affordable Care Act, which set aside a period each year during which people could buy health insurance or change their existing plans. While job-based health plans have their own signup period, everyone else must adhere to the official time frame laid out by the government, whether you buy a plan from a government exchange site or off the exchanges. Enrollment can be a tricky time of year, especially since it falls amid major holidays in the U.S., but it’s important to keep track of big changes so you can prepare. Here are five things to know about open enrollment in 2019.

1 – You’ll Have Six Weeks

In most markets, the 2019 open enrollment period will be last just over six weeks long, which is the same length as last year’s sign up period. This year’s federal open enrollment will begin on November 1 and close on December 15. Any major medical plan bought during this period will go into effect on January 1, 2019.

Some states have different regulations about open enrollment, so residents of those states may have a little more time to sign up. These states host their own Obamacare exchange sites, which gives them more freedom in setting enrollment periods at the end of the year. Last year, some states, like California, allowed people to sign up for health plans all the way through January 31, which was the original deadline at the federal level. State-based exchanges exist in:

  • California
  • Colorado
  • Connecticut
  • District of Columbia
  • Idaho
  • Maryland
  • Massachusetts
  • Minnesota
  • New York
  • Rhode Island
  • Vermont
  • Washington

Not every state with a state-run marketplace offers an extended deadline, so check with your state’s exchange site to make sure you understand the signup timeframe. And while some states have extended deadlines, all open enrollment periods for private, non-job-based coverage start on November 1 nationwide.

2 – Premium Changes Will Depend on Your State

Details on premium costs for health insurance in 2019 haven’t yet been finalized. However, rate information that has been filed so far suggests that prices in some markets may stay fairly similar to their 2018 levels. In other markets, however, consumers could see large jumps in their premiums while others will see nominal increases or even decreases.

In Nebraska, for example, the average proposed rate is up just 2.2 percent from the average rate of a 2018 health insurance plan while Pennsylvania residents might see plans increase 0.7 percent higher than 2018’s average premiums. But in Iowa, Oklahoma and Wyoming, the average proposed rates actually show a decrease compared to this year’s premiums.

On the other end of the spectrum, Missouri, California, Indiana and District of Columbia shoppers may see increases in the double digits. California, for example, is averaging a 17 percent increase in premiums for unsubsidized bronze plans on their exchange for next year.

Washington residents might not experience quite as much sticker shock, but many policyholders will still feel the pinch. Statewide premiums across all metal levels may jump just under 14 percent. The least expensive plan on Washington’s exchange could be 21 percent higher than last year’s cheapest bronze plan. The bottom line here is that you need to shop around in 2019. Take open enrollment as an opportunity to explore your health insurance options on and off the exchange.

3 – You May Have New Options for Insurers

As of July 2018, no insurance companies had announced intentions to stop offering major medical insurance on the Obamacare exchange. This is a noticeable change from the past few years, during which insurer exits were commonplace, and there were fears about whether some counties would end up with no on-exchange plans.

Instead, several insurers are planning to come back to the marketplace in 2019 or are joining the exchange for the first time. This may be because insurers are feeling more confident about participation in the Obamacare system, and those who have been offering healthcare coverage through the marketplace are starting to turn profits from their participation.

After a few years away, Presbyterian is once again going to participate in the New Mexico marketplace in 2019. Some areas of Michigan, Florida and Arizona will now have access to plans from Oscar Health. Wellmark is coming to Iowa, Medica is joining the marketplace in Oklahoma, and Bright will serve customers in Tennessee. These are just a few of the states that will have new options on the ACA marketplace during the upcoming open enrollment period.

4 – You May Have a Hard Time Finding Help

The Affordable Care Act allows organizations to help people sign up for major medical coverage. These people or groups are called navigators. In states that use the federal health insurance exchange, the government provides funding to support navigators.

During the enrollment period for a 2017 health insurance plan, the federal government allotted $62.5 million to the navigator program. For 2018 sign up, the Trump administration reduced this amount to $36 million. Now, for this year’s open enrollment, the maximum amount of funding that the federal government will grant to navigators is $10 million. The $10 million must stretch across all 34 of the states that rely on the federal exchange. A shortage of funds means that there may be significantly fewer unbiased groups and individuals offering help with Obamacare signup this year. Navigators aren’t licensed agents, giving them an edge in that they don’t represent specific insurance companies. Their job is simply to help consumers understand the process of enrollment.

Furthermore, there are new federal regulations regarding navigators. Previously, each state had to have two local entities that acted as navigators, and at least one of them had to be a nonprofit organization. The federal government has changed that rule for 2019. In fact, the new regulations don’t even require a navigator to have a physical presence in the area that it serves. Instead, the navigator can provide help from a distance, such as through an online interface.

Although you can sign up for major medical coverage without relying on a navigator, this assistance often proves invaluable for those who could use an extra hand with filling out applications and evaluating plan options. If you’ve relied on a navigator in the past, you may find that the nonprofit group you’ve used previously is no longer available.

5 – Simple Choice Plans Are No More

Another challenge facing plan selection in 2019 is that most exchanges will no longer highlight Simple Choice plans. In 2017 and 2018, the federal marketplace featured plans with this designation as a way to help simplify the decision-making process for consumers. All Simple Choice plans followed set guidelines for their deductible, coinsurance and out-of-pocket maximum levels. In most markets, these plans also provided some services for a copay instead of requiring that they be subject to the deductible.

However, the Trump administration has decided to remove the Simple Choice designation for Obamacare 2019. When shopping the healthcare marketplace, you’ll have to compare each plan to find the one with the best rates and benefits for your needs. You may find that insurers are offering more plans than ever before and that the plans seem to overlap each other in many ways. Sorting through the various options could prove rather challenging.

Some people may notice positive Obamacare changes in the coming enrollment season, such as lower premiums and more insurers in their market. On the other hand, many people will face higher premiums, and some may have a more difficult time with the application process. Positive changes or not, it’s important that you shop for and choose a plan before the end of open enrollment. Your 2019 health coverage depends on it.

Overview of Major Medical Insurance

When it comes to health insurance, you may be confused by the many different terms used by insurance companies that describe your coverage. You have probably heard terms like “major medical insurance,” “minimum essential benefits,” or other terms that may not make sense to you. One of the most important terms to understand, however, is major medical coverage.

What is Major Medical?

Major medical insurance is coverage that pays for medical treatments ranging from routine preventive care, like vaccines, to serious illnesses and injuries, like a broken leg. Historically, the term was used to describe comprehensive health plans that paid for necessary care. When the Affordable Care Act (ACA or Obamacare) was passed, the term “minimum essential coverage” was used to describe necessary care. There is a difference between minimum essential coverage and major medical, though. Under Obamacare, your healthcare plan must cover the 10 essential health benefits to count as a qualifying major medical plan. It must also offer all the consumer protections guaranteed under the law.

All new private plans – that is, the coverage people get outside of work – sold on and off the health insurance exchanges after March 23, 2010, must adhere to the ACA’s standards, which include covering a host of essential benefits. In short, major medical health insurance is “standard” or “regular” health insurance. It’s likely what you think about already when you think about health insurance.

Deductibles, Co-Payments and Co-Insurance

Like all forms of insurance, health insurance comes with a set of cost-sharing requirements. Major medical coverage includes a monthly premium – what you pay each month for the coverage – as well as copayments, coinsurance and an annual deductible. These costs vary by plan. For instance, you might have a $6,000 deductible for your coverage. That means that you must meet this amount before your health plan pays its portion of your bills.

Once you’ve paid your deductible, the insurance company starts to pay its share depending on the structure of your plan. Coinsurance is a percentage of a medical bill. Co-payments are a predetermined amount you pay for various services. For instance, if your major medical insurance requires you to pay 20 percent coinsurance each time you visit a doctor, and the bill for a visit is $100, you’ll pay $20 (assuming you’ve already met the deductible). Many plans don’t count regular office visits against your deductible, though. You might have a plan that allows you to just pay the coinsurance rate or copay when you see your doctor for something routine, like a sore throat.

Out-of-Pocket Maximums

One of the protections included in the Affordable Care Act was that all qualified healthcare plans must have an out-of-pocket maximum. This means that your insurance will have a limit of what you must spend out of your own pocket for medical costs for the year. Once you’ve reached the out-of-pocket maximum, the insurance company will pay 100 percent of your covered medical costs for the year. Note that this requirement only refers to the essential health benefits. A covered benefit like acupuncture may not be subject to this requirement, so it wouldn’t count toward your maximum spending out of pocket. For the most part, though, this cap comes in handy.

The out-of-pocket cap is set by the government each year. The limit in 2019 is $7,900 for individuals and $15,800 for families. Some plans may have lower caps, but no plan can have a higher cap than these.

Essential Health Benefits

Major medical coverage includes 10 essential health benefits. These benefits are required to be included in all major medical policies, but that doesn’t mean that every plan covers every benefit the same way. Some plans may have more generous coverage for physical therapy, for example, or some plans might have tighter restrictions on prescription drug coverage. Every plan must cover these benefits, but the degree of coverage will vary. You’ll find the following benefits in major medical plans:

  • Emergency room visits
  • Inpatient hospital care
  • Laboratory tests, including X-rays, blood-work and other diagnostic testing
  • Maternity and prenatal care during and after delivery
  • Medical devices and rehabilitative care, including physical and occupational therapy as well as speech-language pathology, psychiatric rehabilitation, walkers, canes and other devices
  • Mental health and substance abuse treatment
  • Outpatient care (also called ambulatory care)
  • Pediatric services, which includes dental and vision coverage for children under 18
  • Prescription drugs
  • Preventive services

Except for preventive care, these services will be subject to the cost-sharing structure of your health plan. A trip to the ER might cost $100, for example, or you might have to pay 30 percent coinsurance when you visit your therapist.

Major medical plans must cover preventive care for free. It’s not “free” in the sense that you pay nothing – since you’ll still pay your monthly premium for the coverage – but it’s free in the sense that you won’t be charged additional cost-sharing (like a copay). Flu vaccines, annual wellness checkups, cancer screenings and child well visits are examples of preventive care that won’t cost anything extra out of pocket with a major medical plan.

Employer Coverage

If you obtain health insurance from your employer, it is more than likely major medical coverage. In fact, large employers must offer coverage that meets the requirements of the ACA under the Obamacare employer mandate. If you do not receive health insurance as a benefit from an employer, you do have other options. You can purchase your insurance from the exchange in your state, where all policies will be considered major medical insurance. There are also major medical plans sold as off-exchange plans, but it’s important to confirm that a plan offered off the exchange includes the essential benefits required under the ACA. Plans that don’t meet this requirement are required to tell you in clear language.

Medicare, Medicaid and Grandfathered Plans

Although most Medicaid plans are considered major medical, you may only qualify for a limited plan, such as one that covers pregnancy only. In that case, your Medicaid plan would not be considered major medical coverage. There are also health plans that were grandfathered or grandmothered as part of the ACA. Although you can no longer purchase these plans, you can keep a grandfathered plan for as long as they are not changed significantly. Grand-mothered plans may remain in place until December 31, 2019, although states and insurers can cancel them at any time. Grandfathered plans had to be in place as of March 23, 2010 and met special requirements when the Affordable Care Act was put in place. Grand-mothered plans were those that were subject to federal transition policies, which means they were required to transition into compliant policies by certain deadlines. This deadline has been extended several times by the federal government.

Medicare Part A counts as minimum essential health coverage under the Affordable Care Act. If you have Part A, you’ve met the requirements of the law. Part B alone doesn’t count. Since you need both Parts A and B to hold a Medicare Advantage plan, you’ve also met the law’s requirements if you have an Advantage plan. These plans can be considered major medical health insurance because they cover your healthcare in a comprehensive way, though original Medicare (Parts A and B) is less comprehensive than ACA-approved major medical policies.

Tax Penalty

One of the most controversial aspects of the Affordable Care Act is a mandated tax penalty that’s assessed if you don’t have major medical coverage. The Obamacare 2019 penalty has been eliminated with other legislation, but the tax penalty is still in place for 2018. This means that if you do not have qualified health insurance, whether through the healthcare marketplace, your employer or off-market, you will be required to pay the tax penalty when you file your income taxes next spring.

The penalty for not having health insurance is $695 per uninsured adult and $347.50 per uninsured child, or 2.5 percent of your taxable household income, whichever is greater. Starting January 1, 2019, this penalty will be zeroed out, though the mandate itself remains in effect.

What You Need to Know About Obamacare in 2019

Despite numerous declarations from the Trump administration about repealing the Affordable Care Act, widely known as Obamacare, the ACA will still be in effect for next year. Whether this is your first time to the private health insurance market or you’re a seasoned customer looking to make a change for the upcoming year, here’s what you need to know about Obamacare in 2019.

Enrollment Lasts about Six Weeks


Whether or not you plan on buying your insurance from one of the state exchanges, the open enrollment 2019 date is the same for everyone: November 1, 2018, through December 15, 2018, a period of about six weeks. Unless you qualify for a special enrollment period – due to a major life change, such as marriage, the birth of a child or job loss – you can only buy major medical insurance (on or off the exchange) from November 1 to December 15. Coverage bought during this period starts on January 1, 2019.

Premium Rates Are Down Across the U.S.

In a twist to the usual doom-and-gloom projections for premium rates on the Obamacare exchanges, the Centers for Medicare and Medicaid Services – which administers the federal marketplace – released a report on October 11 noting that premiums would be dropping across the country for next year. Nationwide, average premiums for the second-lowest cost silver plan (the benchmark for subsidies) will be dropping by about 1.5 percent. Last year, premiums for this health plan averaged an increase of nearly 37 percent.

According to the Kaiser Family Foundation, about 63 percent of healthcare marketplace customers have silver plans and 29 percent of marketplace customers chose bronze plans in 2018. Health insurance premiums will vary from state to state, but this year should see lower-priced options for many ACA exchange shoppers. Tennessee will see a decrease in premium rates of about 26 percent in 2019 – a far cry from the 56 percent increase Volunteer State residents experienced last year.

Several factors are driving these big swings in major medical insurance prices, including the repeal of the individual mandate penalty (which takes effect January 1, 2019) and competition from insurance providers who will offer short term, limited duration insurance plans, which are not ACA-compliant. Last year, insurers padded the cost of their silver policies (a practice known as “silver loading”) to account for the loss of cost-sharing reduction payments, which the Trump administration ended for good. Since insurers front-loaded their pricing last year, this year’s premiums will see negligible increases or outright decreases in many markets.  

You Can Still Get Cost-Sharing Subsidies

The law as it currently stands is charged with two conflicting mandates. One is to provide healthcare for low-income people who could not otherwise afford insurance. The other is a cap on premium prices for low-income individuals who qualify for subsidies, forcing the government to pay the difference.

In 2019, people who earn between 100 and 400 percent of the federal poverty level (up to $83,120 for a family of three) will continue to qualify for cost assistance on the marketplace known as advance premium tax credits, also called subsidies. People who earn between 100 and 250 percent of the federal poverty limit (up to $51,950 for a family of three) also qualify for additional savings known as cost-sharing reduction payments. You might have heard about these in the news over the last few months.

Cost-sharing reduction payments lower the amount you have to pay out of pocket for things like coinsurance and deductibles. The ACA requires insurers to offer this discount to people who qualify based on income. In 2018, Trump announced that the federal government would stop making cost-sharing reduction payments to insurers, which formerly funded the gap in healthcare premiums and the cap on prices for people receiving subsidized insurance. Insurers still have to cover the cost of these reductions but without government support.

As a result, carriers have hiked rates for all silver benchmark plans, which are used to calculate the subsidies, thus lowering the cost of insurance plans for low-income purchasers but effectively increasing the price for everyone else.

This has led to some extreme fluctuations in price for enrollees who qualify for subsidies. In some cases, 2019 insurance prices may be up to 96 percent cheaper for enrollees eligible for subsidies while non-subsidized insurance purchasers may see drastic increases in premium prices of $2,000 or more per year.

These forces are driving low-income people to increase their access to (and purchase of) health insurance plans while wealthier and/or healthier individuals are increasingly choosing to not purchase insurance at all or choose short-term, non-ACA compliant plans.

It’s a Good Year for Companies Selling Health Insurance in 2019

More insurance companies are joining the federal insurance exchange this year, which is good news compared to the mass exodus during the last couple years. Whereas some parts of the country were once declared “bare” or without any ACA-compliant insurance options, 2019 is expected to have very few bare areas as more insurance companies have announced that they will be selling their products on the market in 2019 than the year before.

According to University of South Carolina’s Leonard D. Schaeffer Center for Health Policy and Economics, the changes in the law for 2019 are expected to increase the price of individual health insurance premiums overall. Mark Fielder, who helped the center compile its report, calculated that insurance providers will be increasing their average profit margin for an individual plan by 10.5 percent as opposed to just a 1.2 percent increase in 2018.

The medical loss ratio (MLR) requirement of the Affordable Care Act for 2019, which the Centers for Medicare and Medicaid Services adjusted earlier this year in a final rule, is also expected to ease the burden on insurance providers. Before this year, all insurance providers on the exchange had to have an MLR score of at least 80 percent (85 percent for large group coverage plans), meaning that at least 80 (or 85) percent of income earned from premiums had to be spent on claims instead of overhead or administrative costs. That rule is now more flexible and encourages more insurers to enter the market.

Medicaid and CHIP are Still Available

The Medicaid and Children’s Health Insurance Program (CHIP) (known by different names in different states), which offer free or low-cost healthcare insurance for eligible people, will be available as usual this year. CHIP is a joint program funded and operated by federal and state governments.

Congress allowed CHIP’s funding to lapse in September 2017 for the first time in the program’s history, but funding was restored on January 22, 2018 and officially renewed via the Bipartisan Budget Act of 2018 for an additional four years. The current matching rate for CHIP, which provides federal financing for state programs, currently stands at 23 percentage points but will be decreased to just 11.5 percent in October 2019.

A change in the amount of federal funding is likely to result in big changes in the affected states’ major medical expenditure budgets, but people who currently qualify for Medicaid and CHIP are not likely to see any difference in healthcare coverage or pricing for 2019. If you or your children qualify for these programs, you can enroll at any time throughout the year. You don’t need to depend on the open enrollment period that runs from November 1 to December 15.

The Individual Mandate Penalty is Gone

One of the biggest changes for 2019 is that the individual mandate penalty fee will be zeroed out starting on January 1. The mandate itself remains in effect, but without a penalty fee enforcing it, the requirement to have ACA-compliant coverage has been rendered useless. That means you won’t have to worry about a tax penalty if you don’t buy major medical coverage for 2019.

We should point out that it’s still a good idea to buy health insurance. Obamacare plans – sold on and off the exchanges – give you the most robust coverage you can get, and if you qualify for premium tax credits, major medical can be an affordable way to protect yourself and your loved ones against the unexpected. Just remember to shop around during open enrollment. Whether it’s major medical, a short term health insurance plan or ancillary benefits, like accident and critical illness coverage, there’s a plan that will work for you.

California Residents Get an Early Start to Open Enrollment in 2019

Open enrollment for 2019 health insurance starts November 1 nationwide, but California residents will have a jumpstart on the rest of the country. That’s thanks to state legislation late last year that extended the open enrollment period in the Golden State to run from October 15 through January 15. Residents who buy private health insurance will have three full months to purchase a new plan or renew an existing one. The change affects shoppers on and off the state’s Affordable Care Act exchange site, Covered California.

Most other states follow the federal open enrollment period, which runs from November 1 through December 1 for coverage starting January 1, 2019. Some states, like California, run their own state-based health insurance exchange site and can elect different dates.

Under the Affordable Care Act (ACA or Obamacare), an annual open enrollment period allows Americans to shop for and purchase plans only once during the calendar year. This is to prevent people from buying health insurance after they’re sick or they’ve been diagnosed with a medical condition and dropping it once their problem has been addressed – a scenario that inflates premium rates and insurance costs.

Changes to the ACA and 2019 open enrollment implemented under the Trump administration have been met with mixed reactions from insurers, consumers and government officials across the country. These changes include a shorter signup period for health insurance – initiated with last year’s enrollment season – that cut enrollment in half, to just six weeks. And for the first time in 2019, the individual mandate, an unpopular but key component of Obamacare, will be rendered ineffective since the penalty fee for not having health insurance will be zeroed out starting January 1.

The mandate to have minimum essential coverage remains in effect, but without the penalty in place, health insurance experts assume that many current customers will drop their coverage to save money. Younger and healthier customers are more likely to drop their health plans.

On the other side of the debate, Trump administration supporters claim credit for stabilizing premium rates and lowering costs for the 2019 enrollment period. In a speech delivered in Nashville on September 27, Department of Health and Human Services Secretary Alexander Azar praised the current administration for lowering premium rates for next year. Azar and his department have been touting the benefits and flexibility of short term health plans, recently expanded under the Trump administration to last up to nearly a full year.

Opponents argue in turn that premium rates may have dropped even further without Trump’s interference. In a press release announcing anticipated rates for the 2019 enrollment season, Peter V. Lee, executive director for Covered California, insisted that premium rates for California might have dropped much lower if the individual mandate penalty hadn’t been eliminated.

As it stands, Californians on and off the exchange can expect an average increase of just under 9 percent for health insurance premiums in 2019, which is nearly 4 percent lower than the increase in 2018. The same 11 insurers from last year will also participate on the exchange this year, and 96 percent of California customers will have access to at least two carriers.

Bronze, Silver, Gold & Platinum: What the Metal Tiers Mean

Choosing a health insurance plan today can be confusing, with options that are as different as the people they’re meant to insure. Although the metal tier designation in the healthcare marketplace is supposed to make the decision easier, you might not understand what these categories mean or how they help you buy coverage.

In an effort to make it easier for consumers to compare plans in the healthcare marketplace, the Affordable Care Act introduced metal categories for major medical coverage: bronze, silver, gold and platinum. Each metal is designed to easily identify how generous the coverage is under that plan. Just as gold is more valuable than bronze, higher-tiered plans offer more generous coverage and better benefits – with a correspondingly higher price tag.

Each tier represents an estimate of what percentage of healthcare coverage will be provided to people who enroll in that particular level as a whole. It is not based on what you pay specifically but an estimate of what a population will use for healthcare services overall. The percentages are known as actuarial values.

Actuarial Values

Determining actuarial values isn’t easy, and it’s not something you really need to do to buy health insurance. But we wanted to summarize the idea here so you know what we mean when we say that a silver plan covers 70 percent of your healthcare costs. The ACA specifies actuarial percentages for each level of plan. The percentage that must be covered by the insurance company for each tier in the marketplace in 2019 is:

  • Bronze: 60 percent
  • Silver: 70 percent
  • Gold: 80 percent
  • Platinum: 90 percent

These percentages may change if you are considered low income, have a health savings account or are eligible for cost-sharing subsidies. In addition, because the tiers are based on how generous a plan is for a standard population, the cost-sharing structure may be different between plans. One plan may offer a higher deductible but lower coinsurance after the deductible is met in order to meet the same actuarial value. Another plan may cover the cost of all doctor visits prior to meeting the deductible but have a higher coinsurance percentage.

To reiterate, having a platinum plan doesn’t mean that your coinsurance rate – your share of the medical bill – will be 10 percent and the plan will pay 90 percent. That might be how the plan is structured, but it’s not a guarantee. Actuarial values mean that a plan will cover about that much in medical costs across the total population of people with that plan. The higher the percentage, the higher the value in covering medical costs.

Higher Tier Means Lower Out-of-Pocket

Platinum plans have the highest premiums, but you will pay much less out of your own pocket when you get medical care. As you move down the tiers, premiums are lower but out-of-pocket costs rise, with bronze plans having the lowest premiums but highest out-of-pocket costs.

For example, a bronze plan may have a monthly premium of $289 with a copay for a doctor’s visit of $60. The same plan at the platinum level may have a premium of $506 but a copay for a doctor’s visit of just $20. With lower-tiered plans, you’ll pay less upfront but more later. Higher-tiered plans require more in advance but less cost-sharing overall.

Choosing a Metal Tier

It might seem like a no-brainer to choose the plan with the least amount of cost-sharing. No one likes paying more for care. But platinum and gold plans can be expensive, sometimes prohibitively so. The best way to choose a metal tier is to look at the options in your area, assess what you can spend for insurance each month and choose the best plan you can afford.

Don’t forget to consider your medical needs, too. Choosing a cheaper plan just based on premium cost is a bad idea, especially if you have healthcare needs that demand regular or frequent care, such as diabetes.

If you’re rarely sick and need nothing more than an annual checkup, you’re healthy and you have no children at home, a bronze plan may be the best option for you. Platinum plans tend to be better if you’re older, need a lot of trips to the doctor to manage a condition or have an expensive condition to treat. Platinum plans tend to look more like the robust benefits that come with job-based coverage from large employers. Silver plans, though, tend to be the most popular choice on Obamacare marketplaces.

Affording the Plan

The best option is to choose a tier that best matches your needs, but if you cannot afford the premiums for that plan, choose the closest option that you can afford. If you choose a plan that you can’t really afford and don’t pay your premiums, your coverage can be cancelled. Losing health insurance during the year can put added strain on your finances, so don’t get stuck with a health plan that costs too much.

A Non-Metal Option: Catastrophic Coverage

Catastrophic plans will continue to be available in 2019. This category of plans is designed for young and healthy people who can’t afford other plans and/or can’t get health insurance through work. The plans have limited eligibility and cannot be purchased using premium subsidies. To qualify for a catastrophic plan, you must be under age 30, or you must meet a hardship or affordability exemption. Hardship exemptions include:

  • Bankruptcy
  • Caring for ill, disabled or aging family members, which led to unexpected expenses
  • Caring for a child who’s ineligible for CHIP or Medicaid
  • The death of a family member

Evictions, health plans that have been canceled, domestic violence and a variety of other situations also fall under the hardship exemption clause, so if you have an extenuating circumstance, check with the marketplace for more information. Catastrophic plans are in a separate risk pool from metal plans. This means that catastrophic plans share the risk pool of other catastrophic plans, not with the metal plans, which is why they can keep prices lower than the standard bronze plan. You will have higher cost sharing with these plans.

10 Essential Health Benefits

All metal plans and catastrophic plans must include the 10 essential health benefits required under Obamacare. These are:

  • Emergency care
  • Hospitalization
  • Laboratory tests
  • Maternity and prenatal care
  • Rehabilitative care and equipment
  • Mental health and substance abuse
  • Outpatient (ambulatory) care
  • Pediatric services
  • Prescription drugs
  • Preventive services

When choosing among the four metal tiers and catastrophic plans, consider how often you visit a doctor, the health of you and your family as well as how much you can afford in monthly premiums. Choosing health insurance in 2019 for your family will be different than in previous years as the Trump administration continues to make changes to healthcare coverage requirements. By understanding the differences in major medical via the categories available, you can make sure that you have the health insurance you need at a price you can afford.

Minimum Essential Coverage

Current healthcare law requires major medical policies to meet “minimum essential coverage” requirements. Any plan you buy today that’s approved by the Affordable Care Act (ACA or Obamacare) will count as minimum essential coverage, but you might not know what this means or how it impacts your quest for the right health insurance plan. In short, you benefit as a consumer and a patient by buying a comprehensive health plan. But you should also know that thanks to a big change taking place in 2019, you won’t be required to hold this kind of coverage anymore, which could open up some options for you if you don’t want or can’t afford major medical insurance. Knowing what’s in store could help you make a better decision about your health insurance for next year.

Qualifying Insurance Plans

The ACA established standards for all health insurance plans, whether they are privately purchased, employer-sponsored or obtained by some other means. Those plans that meet the lowest acceptable standard are considered minimum essential coverage, and Americans are encouraged to carry a plan that, at the very least, meets the ACA’s minimum guidelines. Such coverage is known as a qualifying health plan.

Minimum essential coverage is available from a variety of sources. Some of the most common types of minimum essential coverage are:

  • Major medical insurance purchased through the healthcare marketplace
  • Individual or family plans purchased outside the healthcare marketplace, as long as they meet the standards of the ACA
  • Job-based insurance, including group plans and self-insured plans
  • Medicare Part A and Medicare Advantage
  • Student healthcare coverage
  • Catastrophic insurance plans
  • Full coverage through Medicaid or the Children’s Health Insurance Program (CHIP)
  • TRICARE for military members
  • Work-based retiree coverage
  • Health insurance via COBRA

Short term health plans aren’t considered minimum essential coverage. Discount plans and policies with limited benefits, such as those that cover only hospitalizations or dental care, don’t qualify either.

Minimum Essential Coverage and the Individual Mandate

Under Obamacare, most American citizens must carry minimum essential coverage. Those who don’t hold a qualifying health plan may be required to pay a fine. This fee is commonly known as the individual mandate penalty, but its official name is the individual shared responsibility payment.

The affordability of Obamacare depends on both healthy people and those with medical problems carrying health insurance. If the risk pool has too high a concentration of people with health issues, insurers must raise premiums in order to keep meeting their financial obligations. When a large number of healthy people are also contributing premium payments, the risk pool balances out so that costs can stabilize. The individual mandate was designed to encourage people of all ages and medical statuses to participate in Obamacare – in other words, to stabilize the private health insurance market.

For 2018, if you don’t carry minimum essential coverage, you’ll be required at tax time to pay the greater of two calculations: $695 per uninsured adult and $347.50 per uninsured child in your household, or 2.5 percent of your household’s taxable income. There are caps in place to limit this burden.

Expanded Exemptions

The ACA in its original form included provisions for limited exemptions from the individual mandate. For example, if the only qualifying health plans available to someone were deemed unaffordable, then that person wouldn’t be required to pay the fine. In 2018, the Trump administration expanded the list of exemptions that allow people to skip out on the minimum essential coverage requirement.

Anyone who lives in an area where there are no marketplace plans available can get out of purchasing minimum essential coverage, and so can those who live in a region with only one marketplace insurer. Since the inception of the ACA, no county has ever been without any coverage, so that exemption has been unnecessary. However, in 2018, about 26 percent of people with an Obamacare plan had only one insurer option on the exchange. Instead of purchasing minimum essential coverage in 2018, those people could choose to opt out.

Another new policy relates to abortion. Those morally opposed to abortion now have the right to claim an exemption if all of the marketplace plans available to them cover abortion services.

Finally, the Trump administration also instituted a broad exemption for personal hardships. This covers a variety of circumstances that might make it difficult or impossible for a person to purchase major medical coverage that meets his or her personal needs.

Changes for Obamacare 2019

Even greater changes are in store for health insurance in 2019. The fine for not having qualifying health insurance will drop from $695 or more down to $0. The Tax Cuts and Jobs Act of 2017 zeroed out the penalty.

The elimination of the fine applies only to 2019 and the years to follow, so you won’t notice a difference at tax time until 2020. If you didn’t have minimum essential coverage in 2018, unless you can claim an exemption, you’ll still owe the penalty when submitting your tax return in early 2019.

Note that the individual mandate itself has not been removed. Theoretically, it could be interpreted that Americans are still expected to purchase minimum essential coverage. In reality, however, since there is no penalty for not buying qualifying health insurance, there’s no real obligation to do so. Without the accompanying penalty, the mandate is meaningless.

Removing the individual shared responsibility payment could have significant effects on the number of people who purchase qualifying health insurance through the marketplace or another source. The Congressional Budget Office has suggested that approximately 3 million to 6 million fewer Americans may have minimum essential coverage by 2021. The department has also estimated that, as a result, health insurance premiums will go up about 10 percent in that time.

The removal of the penalty is a federal change. States have the option to enforce their own individual mandate penalties. Currently, both Massachusetts and New Jersey have such laws. Other states may choose to follow suit in an effort to keep more people covered by qualifying health plans.

Health Insurance Options

If you don’t live in a state with its own individual mandate, you may feel a newfound sense of freedom when it comes to health insurance in 2019. Without any obligation to buy an expensive, comprehensive health plan, you might choose not to. But evaluate your healthcare needs first.

Even without the fee in place, you might find that purchasing major medical insurance remains your best choice. When you buy an ACA-compliant plan, such as those available through the marketplace in 2019, you’ll have access to the 10 essential health benefits outlined in the ACA. These include emergency treatment, mental health services, prescription drugs and maternity care.

On the other hand, particularly if you don’t qualify for advance premium tax credits, the elimination of the penalty might pique your interest in considering other options. Short term health insurance is a common alternative. These plans are less comprehensive in scope than major medical insurance, but they also cost significantly less. New Trump administration rules that take effect in October will allow you to keep one of these plans for nearly a year at a time and renew it for a total coverage period of up to 36 months. Before choosing to forgo a major medical plan, it’s a good idea to carefully weigh your options.

HHS Head Praises Trump for Healthcare Improvements

According to Health and Human Services Secretary Alexander Azar, President Trump is doing a better job with Obamacare than President Obama did. Speaking to the Nashville Health Care Council on September 28, Azar cited a projected decrease in 2019 health insurance premiums as evidence of the current administration’s achievements.  

Lower Premiums for the First Time in Years

The Obamacare insurance market appears to be stabilizing. For several months, the consensus has been that premium rates aren’t going to skyrocket in 2019. Azar had even better news to share with those in attendance at the council’s event: Many Americans may see lower premiums in 2019 than they did in 2018.

Nationwide, the average cost of a benchmark plan – the second-lowest silver plan in a market – will drop by 2 percent. This will be the first time that this figure has gone down since the Affordable Care Act went into effect.

Consumers will also have more choices when purchasing marketplace health insurance for 2019. In many markets, new insurers will offer on-exchange plans for the first time while insurers that left the markets in some areas are planning to come back for next year.

Per Azar, these are signs that Trump is doing what is best for Obamacare. From loosening regulations on non-ACA plans to removing the individual mandate penalty, Trump’s approach has been to increase consumer choices. In his speech, Azar claimed that moves like these have been significantly better for the healthcare industry than anything that Obama did.

Some experts disagree with Azar’s assessment. They argue that premiums aren’t rising this year simply because they rose too steeply last year. Insurers sharply increased 2018 rates in response to the elimination of cost sharing subsidies. In many cases, these carriers may have overcorrected, so they don’t need to hike rates again this year.

Others assert that Trump, who has repeatedly attempted to dismantle the ACA, cannot take credit for improvements to the health insurance industry.

Azar on the Future of Healthcare

Such critics will likely continue to be frustrated with Trump’s approach. Azar made it clear that the administration doesn’t believe that the job of repairing the ACA is finished. Although premium reductions may show that the market is beginning to stabilize, it’s still not the sort of system that the Trump administration has in mind. In fact, the HHS secretary emphasized to council attendees that Obamacare will never be satisfactory to this administration.

Instead, the administration remains focused on repealing the ACA and replacing it with a different system. Azar’s remarks point toward a healthcare system focused on individual consumer choice rather than government mandates. Legislative power would lie primarily at the state level instead of belonging to the federal government.

Azar spoke strongly against the idea of expanding the federal government’s role in healthcare. He firmly denounced the viability of a so-called “Medicare for All” system. This type of proposal would create a single, government-run healthcare system for all Americans.

Trump and his administration argue that such a system would be economically disastrous. Azar explained to his Nashville audience that medical providers wouldn’t receive large enough payments to keep them in business, and the costs of establishing and maintaining the program would be excessively burdensome on the federal government.

The way the Trump administration sees it, federal involvement in healthcare has done nothing but create a nationwide mess. They believe that the president is doing the best he can with the lot he’s been handed, but the only responsible long-term solution is less government intervention, not more.

House-Passed Legislation Seeks to Address Opioid Crisis

The House passed bipartisan legislation on September 28 to provide resources for fighting the U.S. opioid crisis. President Trump will soon have a chance to sign legislation that increases access to addiction treatment, provides for less-addictive alternatives for pain treatment and cracks down on the ordering of opioid drugs through the mail. Medicaid restrictions on substance abuse treatment will also be eased, including access to inpatient treatment.

While the legislation has been hailed as an important step forward in combatting the opioid epidemic, Sen. Elizabeth Warren has proposed spending up to $100 billion over the next ten years. Funding for the current year is set at $3.8 billion, an improvement from the $1 billion allotted in last year’s budget. But Democrats like Rep. Frank Pallone have criticized the legislation as not going far enough despite the increase in funding.

The Senate is expected to make changes to the legislation based on committee work in progress, including the provision of adequate funding. It’s expected that both House and Senate will be able to agree on final legislation by the end of the year and send it to the president for approval. Senate work on the bill mirrors the House legislation in many areas, making it more plausible for the two chambers to agree on the measure.

A crucial component of the legislation is the loosening of restrictions on the prescription of buprenorphine, a drug used to treat addiction. Nurse practitioners and physician’s assistants will now be able to write prescriptions for buprenorphine, which could help patients avoid dangerous drugs like heroin and fentanyl.

One of the loopholes fueling the opioid crisis is the loose enforcement of laws against mail-order opioid purchases. The legislation package, which combines 58 separate bills, classifies fentanyl as a controlled substance, giving more teeth to efforts to prosecute illicit drug providers. Another issue is a lack of access to a patient’s drug treatment and addiction history by a treating physician. Until now, privacy concerns have left it up to patients to let physicians know about any drug abuse problems. The new legislation requires full access to this information.

Synthetic opioids like fentanyl and tramadol require minuscule amounts to take effect according to the Centers for Disease Control and Prevention. This makes it easier to accidentally overdose. The death rate from synthetic drug overdoses doubled in 2016. These drugs can be produced in illegal labs and are sold on the street to unsuspecting buyers. Strength can vary from one batch to another, and a dosage that was safe one time can be a death sentence the next.

Research and training are also included in the ambitious House proposal, including funding for research into non-addictive alternatives to commonly prescribed painkillers. This could make a dent in the need for opioids, but it’s a long-term solution that doesn’t address the immediate crisis. Critics point to the need for immediate intervention for opioid drug addiction.

The Helping to End Addiction Long-term (HEAL) initiative sponsored by the National Institutes of Health (NIH) has nearly doubled research funding to $1.1 billion for 2018. It appears that the current legislation being worked on by Congress is also a significant beginning in combating opioid addiction in the U.S. The multi-pronged approach includes research, education, treatment and enforcement. It’s just a start, however, and to make inroads on the scourge of opioid addiction, more funding will be needed in the future.

What are my options if I can’t afford major medical insurance?

Although “affordable” is right in the name of the Affordable Care Act, many Americans find that the major medical coverage that Obamacare requires is too expensive for their budgets. As a result, some people choose to go without any insurance at all. But being uninsured is a scary prospect, especially if you have medical problems or a family to take care of. So if you don’t think you can afford major medical coverage, it’s time to start looking into alternatives. Here’s how to get health insurance in 2019 if you can’t pay the premiums for a major medical plan.

Cost Assistance

Before you write off the idea of getting an Obamacare major medical plan, make sure you understand the cost assistance that may be available to you. The ACA makes provisions for low- to middle-income Americans to help them afford traditional health insurance.

If your household income falls between 100 and 400 percent of the federal poverty level, you may be eligible receive premium subsidies to help cover the cost of your insurance premium. The subsidy amount for which you qualify is determined by your income level and the price of insurance plans in your geographic region. The federal government sends your subsidy directly to your health insurer, and you pay the outstanding portion of the premium each month. To take advantage of the premium tax credit, you can buy a plan through the health insurance marketplace or go through a broker as long as the plan you’re buying comes from an Obamacare exchange.

If your income is between 100 and 250 percent of the federal poverty level, you also have the option to choose a plan that offers cost sharing benefits. These are insurance plans that feature lower deductibles, lower coinsurance percentages and lower copays than those that are available to people with higher incomes. This extra cost sharing benefit is available only on silver plans, so you’ll need to pick a silver plan to take advantage of it. As a side note, silver plans tend to be the most popular option on the healthcare marketplace.

Medicaid

If you’ve never applied for Medicaid because you don’t think you qualify, consider it this year. Obamacare sought to expand Medicare eligibility so that more people could be covered through this joint federal and state healthcare program. The intent was that anyone whose household income was below 133 percent of the poverty level would be able to enroll in Medicaid.

But Medicaid regulations vary by state, and individual states have the right not to run expanded Medicaid programs. Rules about Medicaid eligibility also vary. Some states restrict access to pregnant women, children and the disabled, while others have opened up access to anyone who earns below the state’s earnings threshold. If you can’t afford major medical, look into your state’s Medicaid program to see if it’s an option for you.

Even if you don’t qualify for Medicaid, your children may qualify for the Children’s Health Insurance Program (CHIP), which is designed for people who earn too much for Medicaid but can’t afford coverage for their children. Look into CHIP for your kids even if you can’t apply for Medicaid.

Catastrophic Coverage

Catastrophic health plans are a low-cost form of coverage that you can buy through the healthcare marketplace, but only some people are eligible. To qualify for catastrophic healthcare coverage, you must be under 30 years old, or you must qualify for a hardship exemption because all other major medical insurance is deemed too expensive for you.

Catastrophic insurance covers the same services that other major medical insurance includes, but catastrophic plans have extremely high deductibles. Aside from preventive care and a few visits to your primary physician each year, you must pay the full cost of your medical treatment until you reach this level of spending. After you reach the deductible level, the insurance company will pay for any additional qualified healthcare spending that year.

Although catastrophic coverage can be purchased through the Obamacare 2019 marketplace, you can’t use a tax subsidy to help pay the premiums. If you qualify for subsidies, you may be better off buying a standard health insurance plan that requires lower out-of-pocket contributions toward your medical bills.

Short Term Health Insurance

Short term health insurance is available outside of the marketplace, and you don’t have to meet any income guidelines to qualify. These plans provide a limited set of benefits for a specific length of time. Also known as temporary health plans or limited duration plans, short term health insurance doesn’t count as minimum essential coverage, so it isn’t bound by ACA regulations to include any particular health benefits. Instead, short term insurers can select which types of services their plans will cover.

Limited duration plans typically focus on hospital visits, surgical procedures, trips to the emergency room and other major health needs, but they may exclude coverage for preventive care, prescription drugs or mental health services. Although this limited coverage can be a drawback if you have specific health needs, it can also be a positive thing. Covering only certain types of care allows insurers to keep short term insurance premiums low.

Insurers set specific health guidelines for their temporary health plans. Unlike with ACA major medical insurance, you can be turned down for a short term plan based on your medical history. Even if you are accepted for this type of health coverage, any preexisting conditions that you have will probably be excluded from your policy. Restricting coverage only to those who are relatively healthy is another way that short term insurers keep premiums in check.

In fact, short term health insurance plans often have monthly premiums that are hundreds of dollars less expensive than their major medical counterparts. If the idea of a low price tag appeals to you, you’ll be glad to know that beginning in October, you’ll be able to purchase a short term plan that lasts up to nearly a year in duration. You may be able to renew this plan for a total of 36 months of coverage, but the insurer has the right to reevaluate your medical history before issuing you another term of coverage.

Supplemental Products

Supplemental insurance products, also known as ancillary or voluntary benefits, are add-ons that can help round out your insurance coverage. If you buy short term health insurance in 2019, you might want to add some supplemental products. By grouping an assortment of insurance products, you can help create a reliable safety net that will help keep you out of financial trouble if a medical emergency arises. Voluntary benefits can also be used in conjunction with major medical insurance.

You might choose to use ancillary products on their own if you can’t afford health insurance. Just keep in mind that these benefits are not medical insurance and won’t contribute to your healthcare expenses in the same way that a comprehensive health plan will.

Some ancillary products are insurance plans that cover a specific type of care. Two of the most common are vision insurance and dental insurance. With plans like this, you may be able to receive routine exams and necessary care, such as oral cleanings, cavity fillings or eyeglasses. Plans may also contribute toward major eye or tooth procedures.

Other supplemental plans are designed to reimburse you a set amount of money when you require a particular type of care. These voluntary benefits can include accident, hospitalization and critical illness plans. The insurer does not send any payments to your healthcare provider, and you shouldn’t expect the money that you receive to cover the full cost of your care. However, you can use your reimbursement check to help pay your medical bills or deal with other expenses that arise in conjunction with your illness or injury.

If you’re not sure what to do about health insurance when you can’t afford it, talk to an insurance pro about your options. With open enrollment around the corner, now’s the time to browse plans and see what’s out there. And if you just can’t afford to spend a few hundred dollars a month on major medical, consider one of the above alternatives until you can. The bottom line is that you don’t need to forgo insurance altogether. There are options available to safeguard yourself and your family.

Pros and Cons of HSAs

There are lots of initials and acronyms in the health insurance industry, but one common set of initials used more frequently these days is HSA, which stands for health savings account. This increasingly popular choice among consumers (and employers that offer health benefits) allows you to set aside money in a tax-advantaged account to cover the cost of medical care each year. There are rules and regulations surrounding HSAs, and not everyone can or should use one. Wondering if an HSA is right for you? Let’s look at some of the pros and cons.

What is an HSA?

Health savings accounts allow you to set aside pre-tax dollars to pay for qualified medical expenses. Because you put the money into a savings account before taxes are deducted, you can lower your overall health costs, and withdrawals won’t get taxed as long as you use the funds to pay for medical care. You must have a high-deductible healthcare plan (HDHP) to qualify for a health savings account. The IRS sets limits on what counts as a high-deductible health plan and caps how much you can contribute to the plan per year.

In 2018, a health plan had to have an individual deductible of at least $1,350 for the year to qualify as an HDHP (double this amount for family plans). You can place up to $3,500 for an individual or $7,000 for a family into an HSA in 2019, up from 2018 limits of $3,450 for individuals and $6,900 for families.

How Does it Work?

A health savings account works similar to the way a 401(k) or other retirement account works. You make contributions each pay period or annually to pay for future major medical costs. What you don’t use that year remains in the account and is invested, growing tax-free money. If you must withdraw the money for anything other than medical costs and you’re not yet 65, there is a 20 percent penalty. Employers may offer this type of account as an employment benefit or you may contribute to one on your own, claiming the contribution as an “above the line” deduction when you file your taxes.

It’s important not to confuse a health savings account with a flexible spending account, which may be offered by your employer. With a flexible spending account, you do not own the account. Flexible spending accounts are owned by your employer, you can’t invest money in the account and funds do not rollover each year.

Highlights of HSAs

 

Tax Benefits


One of the biggest benefits to an HSA in 2019 is the tax benefits. If you make contributions through your employer, they’re taken from your check before taxes get withheld. This means that the amount on your paycheck lowers, which lowers the amount that gets taxed. If you add money to an account on your own, you can deduct them from your gross income when you file your income taxes at the end of the year. In addition, anything you earn on the investment of funds is also tax free.

Tax-Free Withdrawals

As long as withdrawals are used to pay for qualified medical expenses, there’s no penalty for withdrawal. You can withdraw funds for deductibles, copayments or other expenses that are not covered by your major medical insurance. If the funds are used to pay medical bills, there’s no penalty for withdrawal and you won’t be required to pay taxes on the funds you used.

Rollover and Portability

Another benefit to health savings accounts is that if you have money left in the account at the end of the year, it rolls over into the next year. This is different from a flexible spending account, which requires you to use all the funds placed in the account by the end of the year. Even if your coverage changes because you change jobs, as long as it’s a high-deductible plan and you change jobs or retire before you reach age 65, funds that are in your account continue to grow tax-free.

Access to Funds

Many health savings accounts provide you with a debit card that allows you to access the funds as you would any regular source of funds, like a bank account. If you need to pay for prescriptions or doctor visit, or meet a deductible, you can use the debit card to access your account. Healthcare providers may offer the option of paying a bill by phone with a debit card as well. You can even use the card at an ATM to access cash if your healthcare provider does not accept credit or debit cards. Unlike a 401(k) account or other type of investment account, HSAs give you easy access to your money so you can use it when you need (to cover medical bills).

The Downsides

High Deductible Requirement

There are disadvantages to HSAs, though. One of the biggest drawbacks is that you must have high-deductible major medical coverage. Although this type of coverage has lower premiums, it may be difficult to come up with the deductible even with money in an HSA if you’re facing a significant medical problem all at once. Paying a $5,000 deductible upfront can be difficult or even impossible for the average American family.

Since money for the HSA gets deducted from your salary each pay period, that’s also money you won’t have in your household budget each month. If the deductible is significant for your Obamacare plan, you may need to place a larger amount each pay period into your HSA in order to cover costs that might cause you some financial difficulty.

Not Enough Funds

Once the amount in your health account has been depleted, you can no longer use it to pay for healthcare costs. If you didn’t deduct enough from your salary, your medical costs could exceed the amount in your account. That means you’d be responsible for any excess costs for the rest of the year, directly out of your own pocket. With reports of increases in premiums and deductibles expected in the ACA 2019, the amount you need to add to your health savings account could be significant.

Failure to Seek Medical Treatment

If you have high-deductible health insurance in 2019, you may be reluctant to seek medical treatment, even if you have an HSA. You may feel as if you need to keep the funds in the account for retirement or that your medical condition is not serious enough to warrant a withdrawal. It’s important to understand that the account is there to offset the higher cost of your health insurance and you should use it to seek medical care no matter how minor you feel the injury or illness may be.

After Age 65

Once you reach age 65, you’re no longer eligible to put funds into a health savings account if you have Medicare. At age 65, you automatically become eligible for Medicare. If Medicare is the only health insurance you have, you can no longer contribute to the account as Medicare is not considered a high-deductible plan. If you’re nearing your 65th birthday and you still have an HSA account, you’ll need to stop contributing to your health savings account. Otherwise, the IRS can enforce penalties for excess contributions since you’re not legally allowed to contribute to the account once you have Medicare.

You can, however, continue to withdraw existing funds from the account to cover medical expenses, such as premiums for Medicare Part B. You can also withdraw funds for non-medical retirement expenses without the 20 percent penalty associated with early withdrawals for the under-65 crowd, but those withdrawals may be subject to federal and state income taxes.

One other important note about HSAs and Medicare: If you delay enrollment into Medicare, make sure you stop contributing to your HSA six months before you know you’ll have Medicare Part A. That’s because Medicare Part A has a retroactive effective date of six months, and once your Medicare takes effect, your HSA contributions become illegal. You will owe penalty fees for those contributions, even though you didn’t have Medicare at the time you made them. If you’re nearing age 65 and have an HSA, talk to a financial adviser about your options.

Recordkeeping

Keep all medical receipts for monies withdrawn from your HSA because you may be asked to prove that withdrawals were for medical services. You need to keep the receipts for as long as your tax return is considered open, which is three years after you file. In some cases, you may need to keep your receipts for as long as the HSA account is open.

If you have purchased an Affordable Care Act policy that has a high deductible, putting money in a savings account designed for healthcare costs may be a way to reduce your tax burden while also allowing you to meet those high deductibles. Although this type of account has many advantages, there are also disadvantages to consider before opening an HSA.

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