Obamacare survived the political process. The big question is whether middle-income Americans can afford to buy a policy. And millions are saying they can’t.
There’s a great irony in the health care system. Many Americans who qualify for a subsidy — individuals earning less than 400 percent of the poverty level (about $49,000) — get massive discounts on their insurance. In fact, individuals earning less than $25,000 could actually get coverage at zero premium cost if they use their subsidy to buy the lowest-cost bronze plan.
(They would still have to pay deductibles and other out-of-pocket costs, which can add up because bronze plans pay only 60 cents of every dollar in costs covered until you meet your deductible, which averages $6,000 per person.)
But middle-income Americans who do not get coverage through an employer could find themselves paying a small fortune for an exchange-based health insurance policy.
In 2018, premiums have soared by an average of 28 percent, with premiums in some areas increasing as much as 78 percent. Even worse, many of these exchange-based policies are highly restrictive as to health care networks and physicians. In many areas, only one plan is available.
So, while they do cover pre-existing conditions and meet other Affordable Care Act requirements, this coverage is not attractive to those who want to keep using their existing health care providers.
Affordability Gap
As many as 10 million Americans who have purchased exchange-based insurance without a subsidy in the past now may not be able to afford a policy at all.
Earning too much to qualify for a subsidy results in a huge leap in premiums. If an individual’s annual income jumps $300 above the threshold of 400 percent of the federal poverty level, they may have to pay an additional $3,263 per year in health insurance premiums, according to a new study by eHealth.com.
The same survey shows that the lowest priced health insurance plan for the average person who is not receiving a subsidy will cost $5,591 per year if they earn less than $69,357 in household income in 2018.
Imagine having to spend nearly $5,600 for health insurance on an income of less than $70,000. Health insurance mandated by the Affordable Care Act has become unaffordable to middle-class Americans!
What Can You Do?
What are the alternatives to paying huge premiums for unattractive coverage? Those who don’t buy health insurance may be subject to a fine, up to a maximum of $2,085. However, an “affordability exemption” absolves you of the penalty if you fall into that income gap between $49,000 when subsidies end and $70,000 when insurance becomes affordable.
Going without any health insurance could put all your financial assets at risk if you have an expensive medical emergency. So here are some other potential solutions to protect your health at lower cost.
—You could purchase a “short-term” health plan, currently available for 90 days in about 28 states. In 22 states, there are 12-month short-term options available at www.eHealthInsurance.com. For the 90-day plans, you’ll automatically roll over the policy every quarter. But since the insurer can consider your health in pricing its plans, an illness could trigger higher premiums at the rollover.
—You could buy individual insurance with a high deductible, combined with a health savings account. You can search for these plans online at Healthcare.gov, eHealth.com and elsewhere. But they are not required to comply with ACA mandates, so if you have a pre-existing condition they may be prohibitively expensive. Still, it’s worth a search.
—Finally, if you act quickly, you can form a small business with at least two employees (only one needs to purchase insurance) and qualify for the special enrollment period ending December 15, in which small businesses can buy the best coverage available in the area to any business. (I discussed this option in more detail in a recent column.) But there are requirements about submitting payroll records, so you must start now.
We are a long way from making health care affordable in America. Price is not the only consideration in your search. It’s important to consider uncovered costs and access to the best providers. That’s an almost insurmountable task without guidance — but the importance of this search is priceless. And that’s The Savage Truth.