Trying to be brief but informative here is not easy for me. But the Affordable Care Act or Obamacare as many still call it is the law of the land we live under for the under age 65 major medical and small group plans up to 50. Right off my belief that will remain the law of the land for of course 2018 but also at least 2019. Any changes will need months from time of passage to time to be effective. But there are some options out there within this law and those plans and outside of those plans you may not know.
To buy a true major medical plan for an individual or a family the only option is an ACA plan but the cost is high IF you are not eligible for a tax subsidy to help pay the premium. Many people or eligible for those subsidy but are missing it for either not understanding what they must do or missing tips to qualify. The subsidy is based upon your household income and size of family and does vary with the income. The only time you can enroll or buy one of these plans is from Nov 1st to Dec 15th or you must have a Qualifying Event. These are firm definitions by the ACA law. Those have only a 60 day window to use and they are: loss of coverage no fault of your own, marriage, birth of a child, released from jail, legal immigration or moving to a different service area. To see a full list here is a link: https://www.healthcare.gov/glossary/qualifying-life-event/
Now the insurance industry hates these and many companies will not pay an agent to help a person obtain coverage outside of Open Enrollment and some never pay an agent so it makes it hard to find an agent I some areas who will. We do a lot of "charity work" here. If you find you need coverage and do not qualify for a Qualifying Life Event or QLE consider moving so you are eligible. Proof of the move is often rental contract or contract of purchase, utilities there such as cell phone, have seen address with bank changed serving to prove this.
The Tax Subsidy amount is very much affected by the number of people in the household and the person or persons income. If you are a legal couple they count the joint income and you must file joint tax return, however if you have a child who if filing their own tax return do not count them nor their income UNLESS it benefits you and you must then file tax return that way. Using Federal Poverty Levels for South Carolina which does vary from state to state below are some idea of incomes used, now SC did not enlarge the Medicaid rules so if a person is below the minimum income there is often no help.
Single person, must have income of at least $12,060 but not over $48,240 per year.
Family of two, must have income of at least $16,240 but not over $64,960 per year.
Family of four, must have income of at least $24,600 but not over $98,680 per year.
It increases as you are seeing there depending on the size of the family. Now the subsidy is not a straight line amount but it takes is larger on an older person than a younger person with the same size family and income for it also takes into consideration the premium price which does increase with age.
So you look at your income and it is say $75,000 and you say honey you and I do not qualify for any tax subsidy help on this. Not so fast! First it is your personal income, not a business income. If your hay income say was $150,000 but your farming or business expenses are $100,000 then you are down to $50,000 income. But lest look past that, if you have self employed income of at least the amount you pay for your (be sure the self employed person is whose name the coverage is in so this works) health insurance it is tax deductible as business expense. So lets say that is a $1,000 per month so another $12,000 of drop in income. Now just say you do this math and you miss the subsidy cut off by $100 dollars and it is a hard number, what can you do? Fund a tax deductible IRA or such qualified retirement plan, it cuts or lowers your taxable income also. This is one option I really like, select a "HIGH DEDUCTIBLE" plan and this is a term that really means something important. The dollar amount of the deductible has nothing to do with the term, you can buy a plan with a deductible that is larger. But the qualified High Deductible Plan qualifies you for a HEALTH SAVINGS ACCOUNT and you are allowed to deposit again income deferred money there that also reduces your taxable income. Below is Bank of America's chart showing the contributions limits.
2017 2018 Single coverage $3,400 $3,450 Family coverage $6,750 $6,850
Catch-up contribution for those who are age 55 or older
$1,000 $1,000
The money you deposit into a Health Savings Account or HSA is your money and is not considered income if you use it to pay qualified medical bills. If you are paying a medical provider or for services ordered by one it most likely is a qualified service even if your insurance does not cover it. What does that mean, you put say $5,000 into this account, you lowered your taxable income by $5,000 and you go the dentist but your insurance does not cover that you can still use money from that account and it is not counted as income for you used the account to qualify the money for medical expense. Might not be the wording the IRS uses but my wording. If at the end of the year you have $4,000 of the $5,000 left it is your money and remains in the account. You are still legal to contribute the next year and the next year even if your fund has grown to say $15,000.
I had a self employed person who was able to fund his Health Savings Account and I think max fund his IRA by doing just this with the amount of tax subsidy this make him qualified for. His subsidy amount was about $12,000 for the year.
Go to this web site KFF.org and search for 2018 tax credit calculator. It is very simple to use, just read the input fields given and do select your state to make it the most accurate and while this is not a government site it is very accurate. You are not imputing any info that goes anywhere so just play with the income numbers to see where you are in relationship to the break point on the subsidy. If it says you do not qualify then lower the income till you are and then by small adjustments move up till you loss the subsidy.
My suggestion here, you have your accountant to do this math for you after you have tested it yourself to be sure there is nothing that prevents this working for you. A big miss by those who wrote the ACA rules will hurt some of you on this for if your spouse works for a company who offers a qualified group plan it often prevents the family from being eligible for any subsidy but these still lower your taxable income.
Important notes on tax subsidy on the Market Place: if your income for the year ends up being higher than you used (some degree of fortune telling required) you may have to pay some or all of the subsidy back. Also depending on the amount of subsidy you should consider a "SILVER" plan first for there is something called "Cost Sharing" that can improved those plans coverage but not any other ACA plan.
Now another option is what is called a "FATH BASED" plan. These are not considered Insurance. There are a couple of points here, if they were insurance they could not do what they do due to the ACA but they work a lot like an insurance plan. Some of these have been out there for years. They do vary and there is about five of them. What they do not cover or do cover will vary from plan to plan so this is sort of broad base here. Some will not cover tobacco users period. Some will accept them and maybe keep them covered for a year to allow them time to stop using tobacco. Even if you are a tobacco user these can get you to an open enrollment for an ACA plan if need be. Why would you use one of these plans: you missed open enrollment and do not have a Qualifying Event, you do not want anything to do with Obamacare, you are paying full price for the ACA plans as some of these plans really are about 50% of the ACA plans. You can enroll in these plans any time of the year and they do satisfy the requirement of credible coverage by the ACA rules. I am not aware of any of these that allow you to have a tax deductible HSA plan. There two I know fairly well, Medi-A-Share and Aliera/Unity. These plans operate much like a true insurance policy and some do not. Some require you to have the charge, submit it to them to be then reimbursed maybe over a couple of months. THESE are not for everyone and no other coverage is. If you use tobacco, you drink heavy, you are living with someone but not married or you have serious preexisting conditions they may not be a good choice. They also are limited on their coverage on prescriptions. In those negatives they do a good job at reasonable pricing.
Now some of you will not fit in either of those. However small group plans can be an option. You normally need at least two employees who can be owners or owner and employee and might be owner and spouse but spouse must show up in tax papers as partner or employee. If you are not eligible for a tax subsidy but can do a group plan probably offering you better coverage or better network or both than today's individual plans. You should be able to find help on these plans rather easy for there are more companies in the small group business than individual plans. If you are larger size company and this number will vary with the market but about ten is the lowest size in SC but think takes twenty five employees in North Carolina for what is called a self insured plan which you do not want a "TRUE" self funded plan but you may like what is a limited self funded or a level funded is the name most companies call them. Small group is rather straight forward but if you go with any plan you be sure you ask if I want to terminate this say in six months what happens. That is where the level funded plans can be dangerous. You do not want to go with one of Level Funded if you have ANY doubt you may not keep it for the full term of the contract, you can be liable for any claims that have occurred and not been paid if you do. These can be very good plans but they have moving parts and some of that movement can bite you if you stop the plan early.
This is already long but want to cover those on Medicare quickly.
Depending on the state you are in you may have a guaranteed issue of Medicare Supplements if under 65 and on Medicare. Many states you do not. There is no Federal Law on this for under age 65. However you probably are eligible for a Prescription Drug Plan and or a Medicare Advantage Plan. If you are aging into Medicare at age 65 normally and have part A and B of Medicare you have full guaranteed on all of those plans. Any Medicare Supplement by any company in your state with no health questions asked and some will not even ask on tobacco usage. You have a 6 month window on this beginning the month your Part B begins. You have a 7 month window on a Drug Plan or a Medicare Advantage Plan but time table is different. You have 3 months before your Part B begins, the month it takes effect and 3 months after. My suggestion is make application for what ever you will be doing 6 to 8 weeks before your part B begins. Then all is in place for your effective date. If you work for a company who provides group insurance and has at least 20 employees and plan to keep working and will be keeping the group insurance....you probably should not enroll in Part B just because you are able to. It will most likely provide no benefit on top of the group and you will be paying somewhere at least $130 or more per month for the Part B and your guarantee enrollment period is lost.
I am not a big fan of the Medicare Advantage Plans. But many like them. They do offer some little trinkets of dental, vision and maybe hearing that is not under traditional Medicare and lower premium. However they have a network and if you travel you best look at their rules on out of network. If HMO you for certain best be pleased with the rules and the network. You also have copays and out of pockets on it that in our state can be as high as $6,700 per month. But they do have lower premium and are better than nothing for they do cap you limit of liability and Medicare itself does not with Part B, there is no cap to the 20% you are liable for.
As to Medicare Supplement plans (there are three states this does not apply to, Massachusetts, Minnesota and Wisconsin, they have their own plan designs) I prefer Plan G for the pricing and coverage. Also check on nontobacco rates and household discounts. Household discounts may not be in your state but in some states a company will give you a lower price if your spouse or such has coverage with them or if you live with another adult of a certain age. There is reason for this as a person living with another responsible adult normally lives a healthier life style.
Medicare Supplement plans travel very very very well. Nothin travels any better. You are not in a network, you do not have to get a referral and you have no limit on number of visits and you may wonder why Medicare is in financial trouble. You could get on the road and stop at every hospital and see ER doc and with a Plan F probably have nothing to pay period. Plan G would have to pay the Part B deductible which for 2018 is $183 for the year.
there is lot more that could have been in here but have covered I hope the by far most common areas I see confusion. I do not mind trying to help any one but will tell right now will not be on computer next week, first week of April. In my office we work hard to know these laws and what can be done and who does what. Many agents do not and not finding fault. Health insurance has become a very changing and moving industry and it is not easy. Had BC rep in office today and I asked him to me a couple of simple questions and he said, I do not know. But will ask and get the answer to you. We hit that often.
KT
Health Care Options in the USA
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