What it means for you: the administration’s “cost sharing reduction” funding cuts
We’re about two weeks away from the start of Open Enrollment when people can sign up for coverage through HealthCare.gov, Covered California or one of the other state exchanges. And even though November 1 is just around the corner, the administration just last week announced they would stop funding Cost Sharing Reductions. While President Trump’s decision will have bad effects, for most people who already have health insurance through HealthCare.gov or who are thinking about getting covered, this doesn’t change anything. But it’s no wonder people are confused, so here’s what the Trump administration did and what it means for you.
“Cost-sharing reductions” is just a fancy way of talking about the help many people get to lower their deductibles and out of pocket costs for things like prescription drugs or doctor visits. So if you qualify, which depends on how much you make each year, insurers are required to lower your out-of-pocket costs by making payments to the doctors, hospitals, pharmacies, or other providers you visit so you pay less. What do these savings mean for how much you pay? Well, your annual deductible can go from thousands of dollars to a few hundred — or even less.
This cost sharing help for consumers will continue: insurers are required to provide it under the Affordable Care Act. What President Trump announced last week is that the federal government will no longer reimburse insurers for the cost of providing this assistance, as it’s supposed to do. Of course, insurers won’t provide the assistance for free, so what they’ll do instead is raise premiums to cover the cost. But because President Trump has been threatening to cut off these payments for months, in most states, this has already happened. That is, the marketplace rates you’ve been hearing about for the past few months mostly already take into account this change.
If you qualify for tax credits that lower your monthly premiums — and 8 out of 10 people do — the amount of financial assistance you receive will increase dollar for dollar as much as your rates are increasing because of the change. That’s because the Affordable Care Act was designed to protect people from the unexpected — not just from accidents but from rate increases too. Because of the protections that are in place, if you qualify for financial help, you’re protected against any rate increase from your insurer due to the consequences of the president’s actions.
In fact, for some people, the rate increases related to cost sharing reductions will lead to bargain prices this year, after financial assistance. That’s because in most states, the administration’s decision not to pay cost sharing is only increasing premiums for Silver plans, the plans for which cost sharing help is available. Because ACA tax credits are calculated based on Silver plan prices, that means tax credits may increase more than Gold plan (or Bronze) plan prices.
Here’s what this means for you.
What if you qualify for financial help? If you qualify for extra savings with the Cost Sharing Reductions that lower your out of pocket costs, it’s probably still smart to pick the silver plan. But if you only qualify for tax credits to reduce your monthly premiums but not cost sharing reductions, you might be able to get a better deal by switching to a Gold plan. Gold plans have lower deductibles, so they normally have higher premiums. But this year, for people eligible for financial assistance, Gold plans will often be cheaper than Silver plans.
What if you don’t qualify for financial help? The answer’s the same: you should shop. If you already have coverage, go back to HealthCare.gov, make sure your income is right and look at your plan choices. In many states, Gold plan and Bronze plan premiums are increasing a lot less than for Silver plans. So even for people who don’t qualify for financial assistance, Silver plans could be more expensive than Gold plans even though Gold plans cover more for less money. For some who don’t qualify for financial help, the decisions made by the administration will mean you could end up paying more than last year — but make sure you shop, see what your options are.
This can all be confusing. But here’s the bottom line: no matter what your income is, it’s even more important than normal this year that you shop around for coverage. Because of all the disruption and changes caused by the administration’s action, plan prices are changing a lot more than usual, and you could miss a bargain — or get stuck paying too much — if you don’t check out all your options.
Here’s a quick cheat sheet to help you remember:
Note: Keep in mind that how much financial help you are eligible for could change based on your age, where you live and prices in your area. Use KFF calculator to check — it will be updated for 2018 coverage soon.
Don’t tackle this all by yourself. If you need expert help, it’s available. You can call the HealthCare.gov hotline at 1–800–318–2596 to speak to a trained professional or visit http://localhelp.healthcare.gov for in-person help or you can go ahead and make an appointment here.
And don’t forget — Open Enrollment starts on November 1 and you must take action by December 15 to have coverage in 2018.