On the campaign trail President Donald Trump promised to repeal and replace the Affordable Care Act, also known as Obamacare, nearly the moment he took office. While the speed of Washington might not be on Trump-time, Republicans are taking steps to undo the current health care law and release a new version of what some are calling “TrumpCare.” However, the details on what the new health insurance structure will look like and how much it will cost remains to be seen.
The only fact we can be confident about is health insurance in America will get an overhaul and change as we know it today. Yet there is no guarantee health care or health insurance pricing will stabilize with the new administration. That’s why add-ons like supplemental health insurance will continue to be popular to stabilize individual and family finances.
Supplemental health insurance helps families pay for high health care costs and other monthly bills that can be affected if a family member is unable to work due to an accident or illness. The insurance is strictly a cash benefit, which means individuals and families can use the money to pay medical bills or other lifestyle expenses, like the mortgage, car payment or even child care. And unlike some insurance policies, supplemental insurance is guaranteed issue with no medical questions.
Supplemental health insurance can pay for incidents such as:
- Any qualified accident or injury, like a sprained ankle or broken arm
- The need to be hospitalized because of an accident
- Loss of hearing, speech or eyesight
- Heart attack
- Life-threatening cancer
- Severe burn
- Kidney failure
- Coronary artery bypass
- Major organ transplant
- Paralysis; and much more
Individuals who are active, families with children and early retirees who want a little extra protection for their savings are all great candidates for supplemental medical insurance.
The Benefits of Obamacare
It can be argued the Affordable Care Act (ACA), signed into law March 23, 2010, was the first major overhaul to health insurance in the United States since the establishment of Medicare and Medicaid in 1965. The law provided Americans protections from insurance carriers, and required insurance companies to meet specific financial guidelines. The end result was the biggest change to major medical health insurance in decades.
Some of the mandates the ACA law required:
- Individuals could no longer be denied health insurance due to a pre-existing condition
- Health insurance rates could not be weighted based on pre-existing conditions or gender
- States were given the opportunity to expand Medicaid programs
- Children were able to stay on their parents health insurance coverage until the age of 26
- Subsidies to help individuals and families between 100%-400% of the federal poverty level to make coverage more affordable
- Free preventive care and wellness checks
- Free preventive care of women, such as mammograms
- Access to free or low-cost preventive care
- Elimination of lifetime maximums while a policy is in-force
The Downside of Obamacare
The launch of the ACA had it’s bumps. There were technology glitches, inoperable websites and long waits to speak with a representative. There are also unpopular aspects to the law, such as:
- Tax penalty – If individuals fail to purchase a major medical health insurance plan during the year or are without coverage for nine months or more, they are subject to a tax penalty of $695 per individual or 2.5% of overall income, per household (2016 requirements).
- Lack of freedom to buy any plan – Health insurance companies that decided to place their insurance plans on the federal exchange or a state marketplace didn’t put all available plans online, limiting consumer choice overall. If an individual qualified for a financial subsidy to lower the price of a plan, they had to buy an exchange plan. Off-exchange health insurance was deemed off-limits for financial cost assistance.
- Reduction in networks – To keep costs down on marketplace plans, carriers had to reduce the size of provider networks, shrinking options. This was a result of the marketplace pool being sicker and more elderly than originally projections had estimated.
- Reduction in insurance carriers selling on the marketplace – With claims increasing and profits shrinking, many health insurance companies left the Obamacare marketplaces after a year or two on the exchange. By 2016, an estimated 605 counties in the United States only had one marketplace insurance carrier to choose from due to the exit, especially in rural areas.
What Changes to Look For
On February 16, 2017, Republicans released on an outline of how the new health law under the Trump administration might take shape. Details of the plan include tax credits and a restructuring of Medicaid to cap federal payments to states. Other provisions include:
Expanded health savings accounts
While no final details have emerged, health savings accounts (HSAs) could get a boost from Republicans. A cornerstone of Republican health care plans for many years, HSAs are to some a tax shelter for the wealthy. Yet, the concept of HSAs is simple – allow individuals and families with a high deductible health plan the ability to put money away tax-free in an interest-earning account which can be used for health care expenses. The accounts are currently capped at an annual maximum deposit of $3,400 for individuals and $6,750 for families, but there is no “use it or lose it” policy. HSAs can rollover year after year so account holders can build a medical rainy day fund. Individuals who are over the age of 55 get to make $1,000 “catch-up” contributions each year to help bolster their accounts.
Republicans have long argued that if citizens have to think about spending their own money on health care, they will become more economically responsible for overall health care expenditures and drive pricing down.
No requirement to purchase health insurance
In February 2017 the Internal Revenue Service announced it was eliminating the requirement of Form 1040 from submitted federal income taxes. The form was created under the ACA to require Americans to prove they carried health insurance for at least nine months of the year or face a tax penalty. By making the form only optional for submission, the IRS can no longer calculate and penalize individuals for not carrying health insurance.
A leaked House discussion draft of the ACA bill from February 10 also shows the tax penalty being struck from the individual mandate. While not final, it’s a signal from Washington that ACA tax penalties are on the chopping block.
Younger people will pay less, older people will pay more
In the same House discussion draft, the ratio of health insurance premium rates and tax subsidies would be adjusted from the current rate structure of “3 to 1” for adults and would increase to 5 to 1, meaning, younger individuals would pay less for health insurance than older citizens who are assumedly more financially secure. Democrats argue this puts lower income individuals at risk.
So, Buy Health Insurance Now or Wait?
Open enrollment for purchasing health insurance runs between November 1 – January 31 each year, but if you have a specific life circumstance, such as job loss, marriage, divorce, the birth of a baby and many other qualifying life events, you can enroll in a major medical health insurance plan right now. Supplemental health insurance plans discussed at the beginning of this article can be purchased at any time with no restrictions. The message – don’t be afraid to ask questions and check all of your options.
Major medical health insurance
Major medical plan options are broken out into plan tiers – Bronze, Silver, Gold and Platinum. As the colors represent, Bronze plans are the most inexpensive and offer the least amount of coverage, and Platinum plans are the most expensive but offer more comprehensive insurance coverage. Be sure to look at not only the monthly price but plan deductibles and out-of-pocket maximum. If you get sick or have a serious injury, you are responsible for those amounts. (Or buy a supplemental health insurance plan and save yourself the worry of paying down your deductible.)
Christian health sharing ministries
Health sharing ministries offer a legal way to skip the health insurance requirement and instead pay the medical bills of others. Each month your “share” goes into a pot that pays someone else’s health care. When you need financial assistance to pay for a medical bill, the same money is used to cover your debt. Typically more affordable than health insurance, especially for families, Christian sharing ministries are exempt from meeting ACA requirements since the organizations are religiously affiliated.
Short term medical insurance
For individuals who are concerned about committing to an expensive major medical plan, or believe they will have a life circumstance change in the near future, there is short term medical insurance. As the name suggests, short term health plans are designed as a temporary solution for the “right now.” Plans are very economical and still offer some limited benefits that are found in major medical insurance, like low deductibles and doctor office visit copays.
Summary: Make Sure You Are Covered
No matter what happens to the health care law in the future, the most important item to remember is to get covered – whichever tactic you take. And for extra protection, consider supplemental health insurance to cover the unexpected accident or illness that could cripple your monthly budget or even your retirement savings.
Contact HealthValues for more information.