Navigating Health Insurance in 2018
By BEAU MILLER
The Affordable Care Act (ACA) is a law that has essentially transformed the American healthcare system. ACA impacts every US citizen and legal resident in some form or fashion. As someone who is on the front lines of health insurance in America, I’ll offer some tips and information that may shed light on some of the finer details of the ACA.
Health insurance is supposed to work through a relatively simple model: Companies attract a large enough pool of people to pay more into the system than they get back in benefits. This practice offsets the cost of unhealthy customers who require more than the average payout in claims. The issue with the ACA is that the young healthy adults can stay on their parent’s plan until their 26th birthday. Leaving the young, healthy adults on parent’s group plans is one of the many reasons the ACA is not meeting enrollment expectations. These young, healthy adults are not in the ACA market to balance the cost of the older and/or unhealthy ACA customers.
The reality is that the individual markets are not working because this model is not sustainable. Just under 50% of US counties only have one health insurance carrier available to them because insurance companies are leaving the ACA due to poor profitability. Phoenix, Arizona was almost without an insurer this year. The promise of “you can keep your doctors” is false. Limited networks with limited options of doctors and hospitals is the only way the insurance carriers are able to earn a profit and stay in the market.
What can you do to protect yourself? That depends on your unique situation. Here are a few of the most common situations:
If you are on Medicare or nearing Medicare eligibility age, we don’t expect too much change coming your way. The Baby Boomers are turning 65, to the tune of ten thousand people a day, and have been paying Medicare taxes their whole working lives. Promises have been made and we expect those promises will be kept in some form or another. Modifications may be necessary, but the assurance of Medicare will be there for anyone over the age of 60; however, you have to reach age 65 to begin Medicare.
If you are under the age of 60, things get a little more precarious. The individual market is volatile and the outlook does not look positive long term. If you are currently on a group plan through you or your spouse’s employer, you are in in good shape. The group market is relatively stable and will provide you access to the best and most expensive healthcare system in the world. If you are planning on retiring prior to age 65, you may have access to a short-term Cobra plan for 18 months. When you decide to leave your group health plan, a little bit of planning can make a big difference in options and cost.
If you’re self employed, it is highly recommended to hire a full-time employee. Hire an assistant, a salesperson, or a loved one and structure a corporation or LLC. Once you have a bona fide company with at least one additional employee, you have access to group health insurance and many other benefits to which individuals do not have access. Most states require a minimum of two people to be employed to be eligible for a company sponsored plan, and a company LLC, S corp, or C corp is a very powerful force in this market.
If you are not able to obtain a group plan through a company or employer, you will have access to care in the individual market. There are a few types of coverage in the individual market:
Minimum essential coverage (MEC). This type of insurance is bought directly from a carrier, through an exchange like healthcare.gov , or through a home state exchange if applicable.
The coverage is comprehensive—no pre-existing condition clauses, no lifetime maximums, prescription coverage, maternity coverage, “free” preventative care, etc. The problem is that the benefits are so rich, the only way carriers can control cost is through very small HMO networks. You most likely will not be able to keep your doctors and preferred hospitals, but some of the cost might be mitigated through tax credits.
Short term medical insurance. These policies do not have all of the protections of MEC plans—they do not cover pre-existing conditions, preventive care, and prescription coverage is limited at best. These plans are only for the healthiest of individuals and have many pitfalls; however, if you understand the risk of the plans and are extremely healthy, they may be a good option.
Faith based Plans. A popular option is medical sharing ministries. I commonly refer to these plans as “hope and pray they pay”. These plans are not insurance, and there is no legal contract for the ministries to pay a claim. I have seen the plans pay large claims; however, these plans have no legal obligation. If it is found that a claimant was not following the faith that he or she attested to, the organization can deny that claim. This is not my recommended path, however it may make sense for certain people.
Self Pay. Some people may be able to “self-insure” or pay all medical costs, but our medical system is not designed for self-pay and this option risks an incredible amount of resources. First of all, there is no price transparency. A person could receive a $50,000 hospital bill for something like appendicitis. If this same individual had an insurance contract, this cost could be as low as $5000. Cancer treatments can cost a million or more—especially if you have assets to pay the bill.
With more than 20 million Americans still uninsured, many of these $5,000 surgeries are never paid for at all. Hospital billing departments, with all of the data available today, know who has assets, and they will squeeze as much as they can from the people that can afford to pay. In addition, some doctors will not accept cash payments, period. I know it sounds crazy, we live in America, right? There are situations in which a surgeon cannot accept cash payments due to contractual agreements.
The ACA is complicated and constantly changing. With healthcare reform being the political football that it is, expect constant volatility. Educate yourself, talk to a few people, and be wary of just logging into a website and buying something on price alone. If it sounds too good to be true, it probably is. These are confusing times in our healthcare system, and there are offerings that are technically “legal”, but if you knew all the facts you would not protect your family with these plans. Be careful, do your homework and find a professional to assist.
Beau Miller is the founder and CEO of Your Insurance Advocates, Inc.