Rates are rising, and choices are decreasing. Here’s how to find a plan you can afford.
Josh Elledge counted himself lucky. While others have seen their health insurance coverage change significantly since the implementation of the Patient Protection and Affordable Care Act – more commonly known as Obamacare – his old plan has been grandfathered in for the past three years.
“We pretty much pay out-of-pocket for everything, but that was fine because we were paying so little [in premiums],” says the 45-year-old Orlando resident. In 2016, Elledge paid around $650 a month for his family of five.
However, all that is changing for 2017. A few months ago, his insurer sent a letter that his health plan was being discontinued. As the owner of SavingsAngel.com, Elledge is self-employed and needs to provide his own coverage. So he turned to the health insurance marketplace for a new plan, only to discover the going rate for comparable coverage was $1,285 a month.
Only after selecting that plan, he received another letter from the insurance company stating that the plan was no longer available. The closest alternative was a plan with a $1,585 premium and a $7,000 deductible. That price sent Elledge and his wife into a panic, and Elledge joined the ranks of people who’ve decided to say goodbye to the government exchange.
Rising rates, reduced options and changing plans. Prices for marketplace plans have surged in some areas and options have dwindled. A Kaiser Family Foundation analysis of 2017 premiums for benchmark silver tier plans found rates are dropping 1 to 2 percent in a few markets such as Cleveland and Boston. But for those seeing rate increases, many of the numbers have been astounding. Unsubsidized prices in the Phoenix market are up 145 percent while those with benchmark plans in Birmingham, Alabama, will see their rates rise 71 percent. Those percentages are all based on a plan for a 40-year-old non-smoker buying the second least-expensive silver plan.
At the same time, some insurers are pulling out of the marketplace. During last year’s open enrollment, 85 percent of enrollees on the exchange had three or more plan options, according to the Kaiser Family Foundation. This year, only 57 percent of enrollees will have that many choices, and 21 percent will only have a single plan available.
Michael Lujan, co-founder of Limelight Health in San Francisco and past president of the California Association of Health Underwriters, says loosely monitored special enrollment rules may play a factor in insurers’ decisions to leave the marketplace. “A lot of the carriers say they are losing their shirt because [so many] people are enrolling late,” he explains. “So they are getting six months of premiums instead of 12.”
Some insurers aren’t leaving, but they are changing how they deliver coverage as a way to cut costs. “Aetna, for example, moved some people from a PPO to an EPO,” Lujan says. EPOs, or exclusive provider organizations, typically won’t pay for any care outside of the plan network. “If you had an agent, they should have called and told you,” Lujan says. “Otherwise, hopefully you read your mail.”
Coverage options off the exchange. Those who are disappointed with the insurance offered on the marketplace have several options. They could forego coverage and pay a fine with their taxes next year or purchase insurance on a private exchange or direct from a carrier.
Elledge decided to skip insurance entirely in favor of a health sharing plan. “It isn’t insurance, but it seems to meet the need that insurance fills for many people,” Elledge says. Health sharing plans require participants to sign a religious waiver and declaration of faith. Then members contribute money monthly and use those funds to pay for medical bills. If they don’t have enough money in their account to pay a bill, other plan members agree to pitch in to cover it.
Lujan cautions that the health sharing plans do not have any of the safeguards of insurance and are not actuarially sound. In other words, there is no guarantee the amount contributed by members will be enough to pay the bills of everyone, particularly if someone becomes chronically or seriously ill. However, that doesn’t deter Elledge, who says his family has a healthy history and minimal medical needs. The plan drops his monthly cost to $449, which he says makes it worth the risk.
The subsidy makes some plans more affordable. Steve Cordasco, a financial planner and owner of Cordasco Financial Network in Philadelphia, says health care is becoming a regular topic of discussion with clients. He says those receiving sizeable subsidies have the greatest incentive to stick with the marketplace. “It’s expensive, but [some people] are getting subsidies that fund about half the cost,” Cordasco says,
Subsidies are rising at a much faster rate than premiums in some markets. Birmingham, Alabama, for example, may be seeing a 71 percent increase in premiums for its benchmark plan, but the government subsidy for that plan is rising 256 percent, according to the Kaiser Family Foundation. That means the 2017 premium after the subsidy tax credit should be the same as it was in 2016. The health insurance marketplace is likely to be the best deal for those who are eligible for significant subsidies.
This article was written by Maryalene LaPonsie and originally published by the US News & World Report on November 11, 2016. View the original article here.