What to do when you need health insurance and don't get a subsidy
Nov 29, 2017
Pam Yurk backs the Affordable Care Care, but she wasn't happy to hear about yet another price hike for her health insurance plan.
A 59-year-old Galesburg resident, Yurk has a retired spouse on Medicare and gets her coverage from healthcare.gov. Because of her age and the fact Yurk doesn't qualify for a subsidy, she pays top dollar.
Since 2014, Yurk has had a Blue Cross Network low-deductible silver plan that originally cost her $400 a month and is currently $726. She recently was notified that's increasing to more than $950 a month.
"It was a quite a shock," she said.
Open enrollment is under way for people who buy insurance on their own, and it ends Dec. 15 -- six weeks earlier than last year -- which means people need to make a decision fast.
To complicate matters, Michigan premiums on the federal marketplace spiked 28 percent for 2018, and the increase is even bigger for silver plans, the most popular option.
In 2017, 83 percent of Michigan residents who purchased insurance on healthcare.gov qualified for subsidies. That group is largely insulated from the price increases because their subsidies are increasing, too.
It's a different story for people who don't qualify for subsidies. That includes a single person with an income over $48,240; a couple with an income over $64,960, or a family of four with an income exceeding $98,400.
The issue is especially pressing for early retirees who don't qualify for Medicare and need to get insurance on their own. Premiums cost up to three times more for people in their early 60s compared to young adults.
For those who don't qualify for subsidies, experts do have some tips.
Changes in premiums and subsidies for 2018 mean it's more important even than for consumers on the individual market to explore their options vs. automatically enrolling in their current plan, experts say.
"Shop around. I can't emphasize that enough," said Megan Foster Friedman, an analyst for the Center for Healthcare Reform and Transformation, an Ann Arbor think tank.
For instance, because the silver plans are seeing the biggest price hikes, she said there are some regions where gold plans are less expensive than silver plans.
Friedman said that Michigan consumers benefit from plenty of competition -- every county has at least two companies offering plans, and the number of plans available in each county ranges from 12 to 52.
Dizzy Warren of Enroll Michigan said consumers "shouldn't make any assumptions" before going to the healthcare.gov website and looking at what's available for people in their age and income bracket.
Qualify for a subsidy if possible
Since the cap is based on the federal poverty line and increases a little each year, someone who was just over the cap last year may qualify this year, Friedman said.
Moreover, people with control over their income may want to keep below the subsidy level, especially if they are in their late 50s or early 60s.
Consider: A couple both age 60 with an income of $64,900 qualifies for a monthly subsidy of $893. A couple with an income of $65,000 -- just $100 more -- qualifies for zero.
Robert Williams, a spokesman for the Southwest Michigan Association of Health Underwriters and an independent insurance agent himself, said the financial implications of qualifying vs. not qualifying for an ACA subsidy can be substantial for older people.
He recalled working with a couple a few years ago who planned to pull $70,000 from their retirement accounts for the year, in part to have enough to pay for health insurance. But keeping their income just under the subsidy cap actually saved them thousands of dollars, he said.
The subsidy is less critical for younger people because premium costs and subsidies are much lower.
While the cheapest unsubsidized silver plan on healthcare.gov is $934 a month for a 60-year-old, that cost drops to $439 for a 40-year-old and $352 for a 25-year-old.
Look at off-market plans
For people who don't qualify for subsidy, Williams and others recommend looking at "off-market" plans - i.e., plans not marketed on healthcare.gov.
While those plans don't qualify for subsidies, they also are less expensive.
"Off-marketplace silver plans have more lower deductibles and can be hundreds of dollars per month less expensive than silver plans on healthcare.gov," Williams said.
"If you want to get a silver plan and you don't qualify for a subsidy," he said, "an off-market plan is going to be a much better deal."
For instance, for a 60-year-old living in Kalamazoo County, Priority Health's MyPriority Silver Plan costs $1,124 a month when purchased on healthgov.care and $923 as an off-market plan.
The Blue Cross Select Silver HMO costs $976 on healthcare.gov and $874 as an off-market plan for a 60-year-old -- and the off-market plan has a $1,800 deductible, compared to the $2,000 deductible for the marketplace plan.
To find off-market plans, individuals need to work with a health insurance agent or contact individual insurance companies.
"Those off-market plans aren't going to show up on healthcare.gov," William said.
He added that Blue Cross Blue Shield of Michigan and Priority Health will not automatically move an enrolled individual to the off-market plans upon renewal, even if the individual enrolled off-marketplace last year. Moving to an of-marketplace plan requires an active re-enrollment with the carrier.
His organization "would encourage individuals who think they are interested in an off-marketplace silver plan to contact a marketplace-certified agent to make the change," Williams said.
People can find a list of marketplace (healthcare.gov) certified agents at http://nahu.org/looking-for-an-agent/find-an-agent
Don't buy more network than you need
People should realize that HMOs are considerably less expensive than a PPO or preferred provider plan, said Olga Semenova, health and wellness coordinator for Jewish Family Services of Metropolitan Detroit.
"The PPO plans are really expensive" and in some regions, such as Kalamazoo, there are HMO plans with a robust provider network, Williams agreed.
And in looking at HMOs, "don't buy too much network," since the least expensive HMO may have providers you want, Williams said.
He pointed out that the Blue Cross HMO with the broadest network is $307 more a month for a 60-year-old than the plan with the narrowest network.
Consider a bronze plan
People who don't have expensive, ongoing health issues should seriously consider a bronze plan paired with an Health Savings Account, Semenova said.
"I always make a recommendation of going with a bronze plan and an HSA if you can," Williams said.
While the high deductibles of the bronze plans - up to $7,150 for an individual and $14,300 for a family - can seem daunting, Williams points out that ACA requires plans to include a list of preventive services such as annual physical, contraceptive coverage, mammograms and colonoscopies without a co-pay or deductible.
Any insurance also provides an "instant discount" for other services due to the rates negotiated by the insurance companies, Williams said. Even for services paid out of pocket, "you're going to pay less than someone who is uninsured."
Moreover, "the bronze plans cover a lot more than they used to," Semenova said.
She's has been encouraging people to look at a Molina Healthcare bronze plan available in metro Detroit that has a high deductible for hospitalizations, but allows people to see their primary doctor or fill a prescription for a generic drug for $20 co-pays or see a specialist for $80, even before the deductible is met.
That bronze plan is about $500 a month for a 60-year-old who doesn't qualify for a subsidy.
Get an exemption from the ACA
For now, the individual mandate remains in place, which means people still need to certify they were insured for at least nine months of the year when filing their tax return.
This fall, the Internal Revenue Service issued a notification that 2017 tax returns must indicate whether the filers met the ACA requirements.
The current tax penalty for lacking insurance is 2.5 percent of adjusted gross household income or $695 per adult and $347.50 per child under age 18, whichever is highest.
However, the individual mandate doesn't apply to households that would have to pay more than 8 percent of their modified adjusted gross income for the lowest priced marketplace plan in their area.
People who plan to take an exemption should fill out a form during the open enrollment period.
Incidentally, people who get an exemption can still get a bare-bones catastrophic plan through a insurance agent. Those plans don't meet ACA requirements, but for people with exemptions, it may be the most affordable option.
Yurk says she's decided to switch to a bronze plan.
"I'm pretty healthy," she said. "I have a low-deductible plan now and I didn't even meet that this year."
Despite the price hikes, she said supports the Affordable Care Act.
"I'm one of those people who thinks you should fix it rather than get rid of it," she said. "I think everybody needs insurance, and many people can't afford it on their own."