The Affordable Care Act. ACA. Obamacare. Marketplace. This federal law goes by quite a few names. The Affordable Care Act was enacted to protect consumers, especially those with pre-existing conditions, from adverse selection from insurance companies. That means (for example) a single, 50 year old female undergoing breast cancer treatments who makes $30,000 annually will pay the same for her insurance as another single but healthy 50 year old female making $30,000 annually. Given these examples choose the same insurance plan, of course.
The ACA bases their monthly premiums on your household size and gross income (net income if self employed.) If you are married, you must file a joint income tax return and account for your spouse's income, even if they are not applying for coverage.
So when is the ACA actually "affordable?" Who should be opting for these plans, why is it a good decision, and when is it not the best option? I'll explain below.
"Affordable" Care Act?!?! These prices are outrageous!
I hear this every single day. "How is this affordable for an average American?" The answer is simple. Every person's situation is different. Everyone has a different household size and annual income. When your income is below a certain bracket for your household size, the federal government pays for a portion of your insurance in the form of a subsidy. This is also known as a "Premium Tax Credit" or "Advanced Tax Credit."
If your households income is at or below a percentage of the Federal Poverty Level, you qualify for additional subsidies. These are called "Cost Sharing Reductions." Ever wondered how your friend or family member has "free" health insurance that's not Medicaid? They likely qualify for a CSR, where all the benefits are maximized and the premiums are reduced. You can find a helpful chart of the Federal Poverty Level below.
Source; https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines
Now what happens if you don't qualify for subsidies? You will likely have to pay the full cost of insurance. Which, depending on your household size and age, can be anywhere between $200/mo - $4,000/mo. Given the increase of just about everything (thanks, inflation) that kind of additional monthly expense just isn't doable. Especially for healthy individuals. I've spoken with many people who can't justify spending thousands of dollars per year when they don't even go to the doctors. Nearly 1 in 3 Americans say they have delayed getting care because they were worried about the cost.
Don't get me wrong - that's a completely understandable and logical thought process. But insurance is there to protect us. For those "what if" scenarios. Think about car insurance. We're required to have it but aren't hoping or expecting we'll get into an auto accident. The unexpected also happens to the best drivers and physically healthy individuals.
How do I know if the ACA is best for me?
Did you know that approximately 69% of adults who have tried shopping around for insurance said the experience is somewhat difficult or very difficult? (Source; the Kaiser Family Foundation.) That number doesn't surprise me at all. As an agent licensed in 40 states, I've seen HUNDREDS of different plans in some zip codes. Nobody wants to look through hundreds of different options while reading phrases and numbers that just don't make sense. So how can you determine if the ACA is the best route for your needs?
If you have had major health conditions in the past 5 years, including cancer, stroke, heart attack, type 1 diabetes, etc the ACA will provide you the best coverage. Especially if you are still needing chronic care and/or maintenance. If you are eligible for state Medicaid or employer plans, those are also worth exploring as well.
If you're pregnant or plan on becoming pregnant in the near future. ACA plans can help keep your OB visits, ultrasounds, and labor & delivery costs contained. The average cost of giving birth is $18,865! Federally regulated plans through the Affordable Care Act have a "Maximum Out of Pocket Amount" that is standardized each year. For 2023, no ACA plan can bill you for more than $9,100 annually on covered medical services. Some states do allow pregnant women to be on Medicaid (especially in the South.)
If your income and household size makes you eligible for the maximized Cost Sharing Reductions. That income bracket is where you'll find quite a few Silver level plans with deductibles and monthly costs as low as $0. Less money on medical expenses means more money in your pocket!
When are ACA plans not the best choice?
Believe it or not, the Affordable Care Act isn't for everyone. If your income is too high and you therefore do not qualify for subsidies, the monthly premiums can be astronomical. This is usually the case for small business owners, self employed individuals, and those with a nice sum of assets and investments.
The same applies for some low income individuals. There are about a dozen states which currently do not have expanded Medicaid. That means you can only obtain state funded healthcare if you are pregnant, a child, or on disability. In these states, even if your annual income is just $10,000, you would not qualify for Medicaid. And at that point your income is too low to be eligible for subsidies on ACA plans. So how can you get peace of mind without breaking the bank?
Short Term Medical plans. The monthly cost is based on how many people you need covered, the primary insured's age, your zip code, and the level of coverage you choose. For example, a plan with a $5,000 deductible will be more affordable than a plan with a $1,000 deductible. Every state has different laws regarding their term durations, hence the "Short Term" label. You can obtain coverage for as little as 1 month, 3 months, or even 3 consecutive one year terms depending on where you live. The companies that offer these plans do have medical "underwriting" questions on their applications and have quite a few exclusions. This helps protect the insurer from excessive risk.
Fixed Benefit Medical plans. These are comparable to Short Term Medical plans but are structured a little differently. FBM's have a "fixed benefit" they will pay towards covered medical services. For example, say the plan you choose pays $100 towards an annual wellness exam. So you go to the doctors, get your checkup, and the bill is $200. The insurance will then pay $100 and you would be responsible for the remaining $100.
Health Shares. Most of these are non-profit, faith based organizations. There are a few without religious requirements, though. The overall concept of these plans is that you're helping your fellow members. Each monthly contribution amount goes into a large pool and when a medical claim or need requires payment, the administrator pulls money from the pool to pay for the services.
Partnership Plans. These are relatively new and offer quite robust coverage. The "partnership" model is based around enrolled members usage of a specific web browser system. This web browser is comparable to Chrome, Firefox, etc but it will ask you to rate websites. The beauty of these plans is standardized pricing. For example, a "premier" level plan is the same monthly cost for an 18 year old as it would be for a 60 year old!
Why can't insurance be...simple?
By now I'm sure you can see that insurance is not one size fits all. You can still doubt your decision no matter how much research you've done. It's a confusing thing to navigate and laws, regulations, and options are frequently changing. So that's where I come in!
As a licensed broker, I can assess your needs, make unbiased comparisons and recommendations, and also assist with the enrollment process. My goal is to ensure you have the best coverage for your situation. If that means an ACA plan, we'll go that route. If that means a Short Term Medical, we'll go that route. Even if Medicaid is the best option, I will provide you all the information and resources to apply. You get peace of mind knowing you spoke with an expert who has your best interest at heart.
Thanks for reading! I'm always just a call, text, or email away. If you have questions or would like some free quotes, please don't hesitate to reach out! - Shelly Taylor
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