ACA Open Enrollment Tips

Steve Dorfman, CEO of Health Benefits Center, a nationwide insurance provider based in Hollywood, Fla. says that, compared to last year his office has noticed a strong, steady gain in consumers seeking ACA plans. One reason is that second-year enrollees are noticing premium jumps in their renewals and are looking for a better deal.  He said that the ACA website has vastly improved since the 2013 rollout, but it still suffers glitches and shutdowns from time to time. He ansers these FAQs:

  • What happens if I don’t enroll? – You face a higher penalty this year. It’s 2% of your income or $325 per adult and $162.50 per child – whichever is more. That’s more than triple the penalty for 2014. There is a penalty of 1% of your income or $95. Translation, if you are an individual or family of four making $50,000 a year, your penalty is $1,000. If you are making $100,000, your penalty is $2,000.
  • Do I pay a penalty if I am insured through my employer or through a plan off the exchange? – Not if it is a regular PPO or HMO.
  • If I am unhappy with my insurance plan, can I change it over the next year? – Not unless you can prove a life-changing event – such as loss of a job, a drastic pay cut, or a move to another state. Then, you can go back on the exchange. Otherwise, you are locked into your policy. To change it, you must wait until the next open enrollment period begins in November 2015. Also, you will  be re-enrolled in your policy automatically when the next open enrollment period comes. The premium could well change, too. Therefore, it is important to stay on top of your insurer and the healthcare.gov website.
  • What happens if an automatic deduction bounces and I lose my policy? – You can seek another insurance policy in the open market, but not through the exchange.
  • Other than avoiding penalties, what are the advantages for signing onto Obamacare? — One big advantage is that any pre-existing conditions are included in your coverage. Even people with routine medical issues have been denied insurance, and Obamacare helps that. You will pay higher premiums as you get older, or if you smoke. Aside from that, a healthy 45-year-old nonsmoker pays the same premium as an ailing 45-year-old nonsmoker, but a smoker pays more, whether healthy or sick. Perhaps the great advantage is that an Obamacare plan covers your annual exam and such vital preventive procedures as pap smears, breast exams, and colonoscopies.
  • I am a single man. Does my insurance policy still need to cover maternity costs? — Yes, maternity has to be included under the Affordable Care Act even if you have no reason to pay maternity costs. Hence, your insurance rate is higher than it might be otherwise.
  • My employer is charging me a very high rate. Should I try Obamacare? — You should certainly consider it. With your insurance plan, you can qualify for a subsidy if your annual health care premium is more than 9.5% of your household income. So, if you make $50,000 a year, your insurance rate needs to exceed $4,750 a year or about $396 a month.
  • What is my income limit to qualify for a subsidy? – A family of four making $95,400 or less can get a tax subsidy under the program. The lower the income, the bigger the subsidy. A family making $50,000 can get a rate break approaching 70%. The uninsured in particular stand to benefit, especially if they qualify for Medicaid.
  • My child is on a university insurance plan. Can I keep that plan and still have Obamacare for the family? – Not if you want a subsidy. For your children, it must be one policy or the other, as many college parents are discovering to their surprise. One option is to keep your children on their individual plans through their colleges or universities while insuring the parents as an individual or couple. The rates are structured to encourage full family participation.
  • Are costs higher this year? – Generally, premiums are averaging about 7% to 9% more than last year. Catastrophic policies are as much as 18% higher. However, there is wide variation. Certain policies have remained static or even dropped slightly in price. Check your premium if you have an existing policy that rolled over automatically on January 1.
  • Where can I go for more information? – Before you connect with a well-informed agent, it’s best to be armed with information. Two good places to start are the federal government’s healthcare website at www.healthcare.gov. To calculate your subsidy, the Kaiser Family Foundation offers an excellent interactive website at: http://kff.org/interactive/subsidy-calculator/. If not, call a trusted insurance broker, who can tailor a plan to your budget and your needs.

The Future of Employer Based Coverage

employer-based health coverageEmployers are likely to continue providing health coverage as long as they get a federal tax incentive. They will also provide coverage as long as it remains a competitive advantage to do so, since workers want group health coverage, said Chris Jennings, president of Jennings Policy Strategies. He addressed a recent a May forum in Washington, D.C., sponsored by the Employee Benefits Research Institute.

Noam Levey, who covers national healthcare policy for The Los Angeles Times said, “It is interesting to hear what people in Washington think is going to happen with employer-provided coverage, and then you talk to people in the benefits world, and you get a very different picture. The simple fact of the matter is that employer-provided health coverage clearly has a value for employers.” Levey said that employers are working to tier their benefits, at different levels for different workers. He said that he real wild card with health benefits is the federal tax treatment of health coverage and how Congress may change it. “The Cadillac tax obviously is going to be something that’s going to get a lot of debate here, and when it actually goes into effect, I’ll guarantee you we’re going to have some fireworks in Washington,” he said.

A recent EBRI survey reveals how much employees value health benefits. Seventy percent of workers rate health coverage as the most important benefit and another 10% rate it as second most important. Of the 60% of workers who report rising health care costs, one-third reduced their retirement plan contributions, which means trading off retirement benefits to maintain health benefits.

When considering a specific job, 77% of workers say health benefits are the most important benefit while only 11% say retirement savings plans are most important.

Ninety percent of workers are confident that their benefits are less expensive than what they could purchase on their own, and 80% are confident that their employer had picked the best plan for them. Ninety percent are satisfied with their health coverage, and 75% are satisfied with the mix of health coverage and wages. Ninety percent want in more choice in their health plans, which may explain the interest in health care exchanges. EBRI found that 45% of employees prefer something along the lines of a defined contribution health offering. Fronstin added, “It’s going to be interesting to see what happens down the road as workers understand more about the benefits of public exchanges and as employers introduce private exchanges. We’ll see what kind of shift there is and whether it’s employer-driven or worker-driven.”

Jennings predicts that many employers will go into private exchanges. The most likely candidates are small businesses, retailers, and employers with part-time, low-income work forces. While many employers are considering private health exchanges, Americans who work for larger employers will probably not see that change immediately, he said.

Jennings said, “It’s going to take a few years for all that to shake out. Employers are slow to react…They want to see how the exchanges are operating. They want to see satisfaction rates.” However, Jennings said that employers will have more incentive to look at alternatives if there is a major resurgence in healthcare-cost inflation. Jennings doesn’t anticipate an abrupt reduction in benefits among employers since larger employers are already preparing for the Cadillac tax and high-cost plan assessment.

George Washington University professor Joe Antos cited an Aon Hewitt study of workers in its own private exchange, which found that 58% selected a different level of coverage from one year to the next. “What that says is that having somebody else decide what your coverage should be probably isn’t going to suit a lot of people. A private exchange gives people more choices. It’s an opportunity to find out what people really want and not pour more money into something that may not be of such great value.”

Antos said that the Affordable Care Act’s (ACA) coverage mandate primarily affects lower-wage workers. Higher-income workers generally work for companies that already offer coverage. Antos said, “If you’re a part-time worker and you’re working 32 hours a week, you might drop to 29 hours because your employer doesn’t want to get caught in all of this. Are you going to be able to make up those hours? Are you going to be able to get another job?” He cited a recent study by the Urban Institute that calls for eliminating the employer mandate since relatively few people will not have insurance. Antos said that it’s highly unlikely that the federal government will enforce the unpopular employer mandate. He also said that a shift to defined contribution health plans is inevitable. For more information, visit http://www.ebri.org/publications/ib/index.cfm?fa=ibDisp&content_id=5435

Employer Coverage to Remain Strong Post Reform

For businesses that employ 81% of workers with health insurance, offering health coverage will continue to make economic sense post health reform, according to a study from the National Institute for Health Care Reform. The study was conducted by University of Minnesota researchers working with the Center for Studying Health System Change (HSC).

Economic incentives to offer coverage will remain strong for many businesses under health reform, especially larger, higher-wage firms. However, incentives will weaken for small and low-wage employers – the very establishments that were most likely to drop coverage because of rising costs.

Post-reform, employer premium contributions remain tax-exempt. Also, beginning in 2014, there will be a penalty on larger employers that do not offer affordable health insurance. There will also be premium tax credits for lower-income people to purchase insurance in new state exchanges if they don’t have access to affordable employer coverage.

After 2014, the largest firms (500 or more workers) will have an average incentive of $2,503 per employee to offer coverage. The smallest firms (fewer than 50 workers) will face a lower average economic incentive of $990 per employee. This is mainly because these smaller employers will be exempt from the penalty for not offering coverage.

There will be economic incentives to offer insurance to workers in many industries. The exceptions are workers in accommodation, food services, entertainment and recreation, agriculture, forestry, fishing because of the greater eligibility of these workers for exchange subsidies. Employers with a union presence will have a large economic incentive to offer coverage after 2014. For more information, visithttp://www.nihcr.org.

The Recession’s Toll on Job-based Coverage

The number of Californians who had health insurance through their job or that of a family member fell below 50% for the first time in a decade in 2011, according to a study from the UCLA Center for Health Policy Research. When data for the first California Health Interview Survey was collected in 2001, 56% of non-elderly Californians had employment-based coverage. By 2011, that figure had declined to 49.7%.

At the same time, more  non-elderly adults and children enrolled in Medi-Cal and the state’s Healthy Families program, with one in five insured through these public health insurance programs for low-income Californians in 2011. Eligibility for public programs grew dramatically during the recent recession as many unemployed Californians’ household incomes dropped below the federal poverty level and qualified for Medi-Cal. (In 2011, the federal poverty level was $14,710 for a two-person household and $22,050 for a family of four.) In 2007, 15% of all non-elderly Californians had coverage through public insurance programs. Four years later, the proportion had surged to 19%. However, nearly 7 million state residents remained without health insurance in 2011.

“When the major insurance expansions occur in 2014, the ACA should finally provide relief to the millions of Californians,” said Shana Alex Lavarreda, director of the center’s Health Insurance Studies Program. Many more people should be able to get coverage in 2014 when provisions of ACA go into effect, such as expanding Medi-Cal eligibility to individuals whose incomes are below 138% of the federal poverty level and providing access to a new health insurance exchange, researchers noted. For more information, visit http://www.healthpolicy.ucla.edu/pubs/Publication.aspx?pubID=578

Last Updated 10/4/2017

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