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.