Self-employed or a freelancer in the United States? Responsible for buying your own health insurance? Odds are you’re very confused about what’s going on with your health insurance and healthcare.gov for 2018.
You’ve heard news reports that make you wonder: Are there still tax credits (aka subsidies) to lower my health insurance premiums? Is healthcare.gov still a thing? Will there be health plans available where I live, and will I be fined if I don’t enroll?
As an independent worker, some of these questions can be scary, because the ACA (aka Affordable Care Act, aka “Obamacare”) for the first time ever attempted to protect your access to health insurance outside of a traditional employer plan. You were finally able to quit your job and strike out on your own knowing nobody could deny you health coverage because you’re diabetic or a woman in her mid-30’s who might get pregnant. If you were grappling with your own start-up costs, you had tax credits that were “advanced” to lower your health insurance premiums while you were getting up-and-running.
The good news is that not much has *actually* changed this year. Below is my attempt to help you cut through the massive amount of noise around Open Enrollment (which FYI starts November 1st) and understand what changes will actually affect you this year.
The straight news
It’s true that Congress and the White House have been trying to kill, or at least seriously maim, the ACA for most of the last nine months.
The ACA remains intact. But the Administration has made two regulatory changes that will impact how the ACA works:
You may have heard that CSR (Cost Sharing Reduction) subsidies have been cut. That’s true, but it’s important to remember these are not the same thing as premium tax credits. Advanced Premium Tax Credits are tax credits that government “advances” to you every month and are netted out of your insurance premiums, so you actually pay a lower insurance premium to your insurer of choice. CSR subsidies instead give individuals who make less than 250% of the Federal Poverty Level a better plan for their money. They essentially pay to “super-charge” policies by lowering their copays and coinsurance rates.
The net impact of cutting CSR subsidies is that the cost of these “super-charged” plans is borne by the insurers. Rescue efforts are underway on the Hill and in some states (California sued), but insurers have raised premiums across all of their plans in certain regions by 12-14% to cover the loss of funding.
The second regulatory change that will impact the ACA was an executive order that President Trump issued. Pardon the rose-colored lenses, but the order provides only broad guidance to his Administration and has no immediate effect on 2018 health insurance plans. Here are the three things it does:
- The executive order asks for the administration to look at association health plans, which would let small businesses pool into bigger, ideally risk-lowering, groups. Association plans allow groups of individuals or a bunch of similar businesses to band together to create a new “risk pool,” usually with the goal of lowering premiums or improving benefits—these were made illegal under the ACA so that the entire country could be a single pool, de-risking the market.
- In addition to looking at association health plans, the executive order recommends extending short-term coverage options, which are limited in coverage and typically don’t include preventive or sick care, from 3 months to 12 months. In 2016, the Obama Administration restricted short-term coverage to 3 months, so this is basically just a reversal of that rule.
- Lastly, the executive order asks to expand the use of Health Reimbursement Accounts, potentially opening up the opportunity for employers to give employees tax-free money to spend on individual coverage. On the sunny side, this could mean a bigger individual market, which would lower risk for insurers and hopefully lower premiums. But we’ll see. Nothing here affects your coverage for this year.
Okay, so what the hell is changing?
TLDR 1 = Open enrollment will be half as long, with a lot less government support.
The Administration shortened the open enrollment period back in March, but almost nobody noticed. In 80% of the country, you will only have six weeks to enroll. Last year, everybody had 12 weeks. This means just as many Americans will be rushing into brokers and insurers in half the time. Expect to wait longer and risk missing the deadline if you don’t get it done early.
Government “navigators” were de-funded too. Don’t rely on the unrelenting reminders healthcare.gov used to send you — its ad budget was slashed by 90%.
TLDR 2 = Premiums are going up, but so are subsidies.
If you will make more than $40,000 as an individual in 2018, you’re going to pay more than in previous years. If you will make less than $40,000 in 2018, you’re probably going to spend the same amount or, in some cases, spend less. Here’s the funky thing — because Trump some premiums went up in response to de-funded CSRs, the premiums on some other plans will actually be lower. CSRs can only be used on “Silver Plans” which are considered an industry-standard plan (Bronze plans have higher deductibles and coinsurance rates, while Gold & Platinum are intended for people who are going to use a lot of care and need low deductibles). The government uses Silver plans’ premiums as a “benchmark” to peg the rate at which the government provides premium subsidies across all of their plans. When the price of Silver plans goes up, so do the premium subsidies for all plans.
What does that mean? If you’re buying the lower-cost Bronze plans, they’ll be more heavily subsidized and, for some people, that means free. Traditionally higher-priced Gold plans might now be affordable for some folks using subsidies. Shop smart and you might save thousands. Wild, right?
TLDR 3 = Some insurers quit Obamacare, but some doubled-down.
The market isn’t perfect, but it is resilient. While several large insurance companies including Humana and Aetna will no longer serve the individual market, others have stepped in and expanded their footprints: Anthem expanded in Virginia to fill 63 counties that would’ve been left without an insurer. And Oscar continues to expand, dropping into the Midwest with a new plan built around the Cleveland Clinic. Every single county in the United States will have at least one insurance carrier.
TLDR 4 = You’re going to be penalized if you go uninsured.
No more “maybe” on getting fined for going uninsured, no matter what the headlines say. The IRS issued official guidance that says you won’t be allowed to submit a tax return without acknowledging whether you have ACA-compliant health insurance. If you don’t, you’ll be fined. Short-term or skimpy plans don’t count.
So, what next?
Go get that coverage while it’s hot! And then take a moment to help your fellow and future self-employed workers by putting a call or email into your Senator. Tell them your story. How has having health insurance empowered your career? What would you like to see stick around for 2019 and beyond? Every voice counts.
Noah Lang is the CEO and cofounder of Stride Health, a platform that helps power health coverage, tax guidance and benefits for self-employeds.