With all you’ve heard about problems with the Affordable Care Act, also known as Obamacare, you might think it’s not a good option for 2018 health insurance. Despite all the efforts by opponents to kill it, the ACA remains alive and is offering health insurance for 2018 under essentially the same rules that applied in 2017.
In fact, this year you might even be able to get a health insurance policy for free.
I’ve been using the ACA since it started. It’s complicated, but learning how to use it can provide many people with a low-cost health insurance plan that meets their needs. We’ll walk you through it to help you find the best ACA/Obamacare plan for you. (If you’re enrolling in employer-provided health care plans, you can find our best open enrollment advice here.)
If you qualify for a subsidy (84 percent of ACA users do), you might discover that you can get a policy for less money this year, maybe even for nothing. If you don’t qualify for a subsidy, the news is not so good, but you may have some options you didn’t have last year off the exchange. (More on alternatives later.)
Americans have until Dec. 15, 2017, to choose a health care plan for 2018. That’s a much shorter period than we have had in previous years. If you don’t sign up by Dec. 15, you won’t have an opportunity to get insurance until 2019, unless you lose your job or experience another life change.
I’ve been using the ACA to buy my health insurance since it went into effect in 2014. As a self-employed person of a certain age, my options were few and expensive before the ACA, even though I’m healthy and had no pre-existing conditions.
While the program known as Obamacare is not perfect, it is a good way for many people to get health insurance. For now, we’ll stay out of the politics and just explain how it works.
Who should sign up for Affordable Care Act insurance?
The ACA was designed for people who don’t receive health insurance from employers. That includes part-time workers, the self-employed, artists such as musicians and writers, professionals such as real estate agents, lawyers and doctors, the unemployed, gig workers such as Uber drivers and construction workers, early retirees who are too young to qualify for Medicare and anyone else who doesn’t have employer-provided health insurance.
Anyone who is a U.S. citizen or a legal immigrant can buy insurance from the exchange, but in the 19 states that did not expand Medicaid, only those who earn at least $12,060 a year are eligible for subsidies, even if they aren’t eligible for Medicaid. The Medicaid expansion states created options for low-income residents who don’t qualify for Medicaid, which is the government-funded program for the poorest Americans.
The states that expanded Medicaid are Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, Vermont, Washington and West Virginia, plus the District of Columbia.
Eleven states plus the District of Columbia operate their own health-care exchanges.
- District of Columbia
- New York
- Rhode Island
Residents of all other states use HealthCare.gov.
Who can’t use the Accordable Care Act exchange or get a subsidy?
- Those who have employer-provided health care (though there is an exception if the cost to the employee is more than 9.56% of the employee’s income or the plan doesn’t provide a minimum level of coverage).
- Those who receive Medicaid, Medicare, use the Children’s Health Insurance Program (CHIP) or military insurance.
Several other groups can use the exchange, but are not eligible for subsidies. Those include:
- People who do not earn at least a poverty level income in states that did not expand Medicaid.
- Spouses and family members who are offered insurance through an employer, no matter what the cost. This is called the “family glitch,” because some of those plans are far from affordable.
How much does insurance cost from the ACA?
You may be hearing cries of horror about how much premiums are rising this year, but those who qualify for subsidies may actually find premiums are lower. Check out these New York Times maps about where prices are lower and where people can get insurance with a $0 monthly premium.
If you’re wondering whether to shop the exchange, here are two key facts:
- If your family makes below 400 percent of the poverty level (you can make up to $48,240 for a single person, $64,960 for a couple and $98,400 for a family of four), you can receive a subsidy that will help you pay for your health insurance.
- If your income after deductions is below 250 percent of the poverty level ($30,150 for a single person, $40,600 for a couple and $61,500 for a family of four), you have access to plans with lower co-payments and deductibles. These are called cost-sharing reductions.
Young, healthy people are often tempted not to buy insurance, but that is not smart. You may be healthy now, but one broken leg could easily leave you on the hook for tens of thousands of dollars, and medical creditors can be relentless.
You WILL still have to pay a penalty — $695 per adult or 2.5 percent of your income — if you do not have health insurance in 2018.
Free options for some, bad news for others
The president’s withdrawal of the payments to insurance companies to compensate them for the cost-sharing reductions has created some changes that will affect people at the higher and lower end of the income scale:
- If you do not qualify for a subsidy, you are likely to find that the cost of your health insurance plan has increased substantially, especially if you have a Silver Plan. But you may find cheaper options outside the exchange, which was not the case in previous years.
- If you do qualify for a subsidy, you may find that the cost of your health care plan has decreased — it may even be free — because the subsidies grew to cover the increased costs of the Silver plans. The companies increased the cost of those plans because they are still required to offer the cost-sharing reductions.
Health insurance plans offered through the ACA can range in cost from nothing (because of the subsidies) to more than $3,500 per month for the most generous plan offered to a 64-year-old tobacco user in Fort Lauderdale, Florida. (Non-smokers would pay up to $3,000.)
Costs vary by insurance, type of plan and age of user, plus a significant surcharge is added for smokers. Younger people pay about a third what older people do in premiums.
The plans cost the same for everyone regardless of pre-existing conditions, except for tobacco use. You cannot be denied insurance because of your health.
The plans are ranked from Bronze (lowest premium), to Silver, Gold and Platinum (highest premium). In most areas, there are a number of plans offered within each tier at different prices.
The same insurance company is likely to offer multiple plans, with different deductibles and co-pays and sometimes with different sets of providers. Don’t assume that because your doctor takes Blue Cross, for example, that she takes ALL Blue Cross plans. She may take some but not others.
To see your options, go to HealthCare.gov. The site wants you to register before you shop, but you can go to See Plans and enter the age of everyone in the household and your ZIP code and see your options without registering.
How much are the deductibles and co-pays?
If you’re used to employer-provided health insurance, you may be disappointed in the ACA plans. The cheaper plans tend to have smaller networks of providers and higher deductibles. That doesn’t mean they won’t meet your needs.
Deductibles and co-pays vary by plan, and the right choice depends on how much medical care you use. A healthy person can save money by choosing a plan with a high deductible and lower premiums, while someone with an expensive chronic condition might do better financially with higher premiums and a lower deductible.
The maximum deductible for 2018 is $7,350 for an individual and $14,700 for a family. How does a deductible work? Basically, you pay cash for all your medical care (except covered preventive care) until you have paid that amount. Then the insurance starts paying.
Another important number is the maximum out-of-pocket cost. The maximum out-of-pocket cost for plans offered on the exchange is $7,350 for an individual and $14,700 for a family (the same amount as the maximum deductible), but some plans offer a lower option. One you’ve paid this amount toward medical care, the insurer pays the rest of your bills.
With some plans, if your deductible is lower than your maximum out of pocket, you pay a percentage of each medical bill from the time you hit your deductible until you hit your maximum out-of-pocket limit. Other plans charge a set co-pay instead.
Let’s say you get bronchitis, and it is your only illness next year. Here are some scenarios, depending on the plan you choose and assuming you use network providers.
- You can visit a primary care doctor for a co-pay (usually $5 to $50, depending on your plan) before you reach your deductible.
- Your policy has no deductible, so you can see your doctor for a co-pay.
- Your policy has a high deductible, so you pay cash for your visit (but at the rate negotiated by the insurance company).
Perhaps you break your leg and require hospitalization.
- You will pay the amount of your deductible. If your deductible is the same as your maximum out-of-pocket, the insurance will pay the rest.
- You will pay the amount of your deductible, which is lower than your maximum out-of-pocket. You will pay co-pays or co-insurance until you reach the maximum out-of-pocket for your plan.
Who gets a subsidy?
If your family makes below 400 percent of the poverty level, you can receive a subsidy that will help you pay for your health insurance. That means you can make up to $48,240 for a single person, $64,960 for a couple and $98,400 for a family of four — and that is your income AFTER deductions, not your total income.
If your income after deductions is below 250 percent of the poverty level (that’s $30,150 for a single person, $40,600 for a couple and $61,500 for a family of four), you have access to plans with lower co-payments and deductibles. These plans include what is called “cost-sharing reductions.” You can get this benefit on Silver plans only.
(These are the payments President Trump took away from insurance companies, but the insurance are still required to give you the discounts. Insurers raised the cost of Silver plans to compensate for the loss of revenue, requiring the government to offer higher subsidies.)
The “income” number is not your gross income, but your Modified Adjusted Gross Income, which for most taxpayers is the AGI on your tax return, after deductions are calculated.
How do I know what next year’s income will be?
If you don’t have a regular income, you need to guess when you sign up. You can change your income level throughout the year if needed, which can make your subsidy bigger or smaller.
At the end of the year, when you fill out form 8962 with your tax return, you essentially settle up: If you made more than you thought you would, you will have to pay the government when you file your tax return. If you made less, the government will pay you the subsidy you did not receive in advance.
If you guess wrong and stay below 400 percent of the poverty line, you can either get a tax credit or pay more at tax time. But if your income goes above that limit, you have to pay back your entire subsidy. Self-employed people and small business people have a number of tactics they can use to stay below the threshold, including contributing to a solo 401(k) or IRA and structuring their businesses to pay themselves a salary.
However, if you take the cost-sharing reduction plan with lower co-pays and deductibles and then earn more, you only have to pay back the excess subsidy and not anything else.
If your income changes during the year, you can go in and make adjustments.
If you estimate your income high enough to qualify for a subsidy, then lose your job and don’t make the minimum $12,060, you do not have to repay your subsidy.
You may be asked to provide income information when you sign up, and the government will check your tax returns.
How do I choose a health insurance plan?
Choosing the right plan is actually the most complicated part of the process. You’re essentially gambling on how much medical care you’ll need.
If you’re healthy and rarely see a doctor, you can save a lot on premiums by picking a high-deductible plan. But if you do break your leg, you’re out the amount of your deductible.
The other drawback is that the cheaper plans usually have smaller networks of providers, so you may have to find new doctors if you choose those plans.
I have found affordable plans every year, but I have sometimes had to switch doctors to get those plans. Since I don’t use much medical care, I’d rather save the money. This year, I never even met my primary care doctor. In my case, it doesn’t make sense to pay an extra $300 a month for a larger network of providers I probably will not use. If I needed more medical care, I might make different choices, because the right choice for me may not be the right choice for you.
The same goes for the deductible. If I save $300 a month with a high deductible, I’m still ahead if I have to spend
$300 during the year for a doctor visit for a bladder infection. I’d only come out ahead paying $300 a month more for a lower deductible if I spent $3,600 on medical costs, which always never happens. (Basic preventive care is covered before you meet you deductible.)
Start with medical care you know you need:
- Is seeing a specific doctor important to you? See which plans your doctor participates in.
- Do you take any prescription drugs regularly? See how much those drugs cost on each plan you’re considering.
- Do you regularly use other services, such as mental health counseling, chiropractic services or physical therapy? What will those cost you on each plan?
- Do you have a chronic illness that requires regular lab tests and doctor visits? What will you pay for those services under the plans you’re considering?
Then do the math. In some cases, you might find that a higher monthly premium actually costs you less because of a lower deductible and lower co-pays or better medication coverage.
If seeing a particular doctor is important to you, don’t assume that the only directory is correct. Those lists are often out of date, so you should call any doctors you want to include to make sure they accept your new plan. You should also verify drug coverage with the insurance company you’re considering for drugs you take regularly.
You also have to evaluate whether to choose an HMO, a PPO, an EPO or other option. With an HMO, only in-network care is covered, and you usually need a referral before you can see a specialist. EPOs don’t require referrals to visit specialists but may not cover out-of-network care. PPOs usually cover some of the cost of out-of-network care and don’t require you to get referrals.
Your choice of plans and insurers varies, depending on where you live.
Residents of Miami, for example, have 56 plans from which to choose, offered by three insurance companies. They can choose an HMO (Health Maintenance Organization) or an EPO (Exclusive Provider Organization.) No PPOs (Preferred Provider Organizaton) have been offered for the last two years. This year’s three insurers – Blue Cross, Molina and Ambetter – are the same three insurers that participated last year.
Residents of Kansas City, Missouri, have 10 plans, offered by Cigna and Ambetter. Residents of Portland, Oregon, have a choice of 31 plans offered by five companies, including EPOs and PPOs, but no HMOs.
What is covered?
The Affordable Care Act sets out a minimum amount of coverage that all participating health plans must cover. That includes outpatient care, emergency care, mental health care and preventive care, including birth control.
Certain preventive care, including mammograms, physicals, some vaccinations and other screenings, is provided free of charge even before patients meet their deductibles.
Some plans offer doctor visits for a co-pay before you’ve reached your deductible, and others require you to pay the full cost of your medical care (actually, the amount negotiated by your insurance company) until you reach your full deductible
Most ACA plans do not include dental and vision coverage, but a few do, and some plans have a dental coverage add-on available.
Can I save with a Health Savings Account?
Some high-deductible plans provide you with the option of a Health Savings Account, which lets you put aside money tax-free for health care. This is a good option if you can afford it and the plan otherwise meets your needs.
The money you put into your HSA is not taxed, nor is it taxed when you tax it out for an approved purpose, which includes paying for medical care in retirement. You can invest the money, and the earnings are also tax-free. You can save the money in the plan indefinitely. Read more about Health Savings Accounts.
To qualify as HSA-eligible, the plan has to be a deductible of at least $6,000. Not all high-deductible plans are eligible, but you can search for plans that offer an HSA.
Alternatives to the ACA
There are alternatives to the ACA for health insurance, but whether there are any good alternatives depends on where you are. If you do not qualify for a subsidy, you should see if you can find a better deal.
This year, you may find Silver plans off the exchange that cost less than Silver exchange plans. The best way to find these individual policies is through an independent insurance broker. Check with the company that provided your insurance this year to see if it offers individual plans.
Insurance companies that offer individual policies may not provide that information online, so call and ask major insurance companies if they offer individual policies in your area. An insurance broker could assist, but with some health insurance companies no longer paying a commission, brokers may not sell all the policies available.
These plans are designed to cover sabbaticals or periods between jobs. But some healthy people are using them for longer periods, by signing up for one short-term plan after another.
Most plans last six months to a year, and having one does not exempt you from paying the health care tax penalty, since they are not considered qualified plans – though you may be exempt for other reasons.
These plans are medically underwritten, meaning they may reject people with pre-existing conditions. Or, if you get sick while covered by one of these plans, you may not qualify to renew. And many have caps on how much the plan will pay in total.
Health Care Sharing Ministries
These plans are not technically insurance but are co-ops that started informally in churches, with everyone making a monthly contribution to pay members’ medical expenses. With a qualified health-sharing ministry, you won’t have to pay a tax penalty, but they aren’t required to meet the same ACA coverage standards.
Health care ministries can reject people with pre-existing conditions, limit coverage or charge some people more. Most require a statement of faith, and for some you must have a letter from a minister to qualify. The plans with the strictest religious qualifications require members to adhere to traditional evangelical Christian beliefs, including abstaining from sex outside marriage.
While there is no requirement that the ministry pay all covered health care expenses, members report that costs for serious illnesses have been covered. Some healthy families who can’t afford ACA policies have found these plans a good alternative. Holly and Greg at Club Thrifty, who have two young children, have found a health-care sharing ministry a better deal than the ACA.
Children’s Health Insurance Program
The Children’s Health Insurance Program (CHIP) covers children up to age 19 and is administered by the states, so eligibility varies. Costs are usually on a sliding scale. In some states, families at any income level can use the program, but higher-earning families pay more.
The same navigators that help people sign up for the ACA can enroll children in this program, or you can sign up through your state’s social service agency or marketplace. For some families, signing the children up for CHIP and buying separate policies for the parents is a good alternative.
Entrepreneurs and self-employed people have traditionally bought business policies rather than individual ones. The ACA offers small-business policies, as do some insurance companies. Exactly how many people it takes to constitute a business and whether they can live in the same household varies by state, as do the types of policies available.
Many small businesses have found that it’s more economical for each employee to use the ACA as an individual, but it’s worth checking with a business insurance broker for options.
Association and Organization Policies
Since the ACA, fewer organizations have offered group health insurance to members, but it’s worth checking. In some states, including Tennessee and Iowa, the Farm Bureau offers health insurance plans.
Signing up for the ACA
If you use the federal ACA exchange, the deadine to sign up is Dec. 15. Don’t wait until the last minute, because the site is periodically being taken down for maintenance during the enrollment period.
Eight states and the District of Columbia operate their own exchanges and set different deadlines:
- California: Jan. 31, 2018
- Colorado: Jan. 12, 2018
- Connecticut: Dec. 22, 2017
- District of Columbia: Jan. 31, 2018
- Massachusetts: Jan. 23, 2018
- Minnesota: Jan. 14, 2018
- New York: Jan. 31, 2018
- Rhode Island: Dec. 31, 2017
- Washington state: Jan. 15, 2018
Once you choose a plan, make sure you pay your first premium on time so you don’t risk losing your insurance.
What happens if I already have an ACA plan?
If you don’t change your plan, you will be re-enrolled in your current plan. If your plan has been discontinued, you will be enrolled in a similar plan. But your tax credit may not roll over, so it’s crucial that you don’t just allow re-enrollment without making sure you like the plan and your tax-credit information is correct.
Even if you like your current plan, it’s important to re-evaluate that plan and look at the options for next year. Your plan may have changed its providers or the drugs it covers. Or, new plans may have become available that would suit your situation better.
Plus, your health care subsidy amount may change even if your income doesn’t because the subsidy is based on the cost of plans in your area.
Will I have to pay a penalty if I don’t buy health insurance?
The short answer is yes.
The IRS announced in October that it would reject electronically filed tax returns that did not check the box reporting on whether the taxpayer had health insurance or was except from the requirement.
For 2018, the penalty for not having a qualifying health insurance policy will be $695 per adult and $347.50 per child or 2.5 percent of your income, whichever is greater.
The IRS Taxpayer Advocate provides this tool to estimate the penalty you would pay for not having insurance.
There are some people who can get a hardship exemption to the insurance requirement, including those who can’t afford the insurance that is available to them. Find out more about exemptions to the individual mandate.
Where can I get help enrolling in the ACA or finding a good alternatives?
The budget for in-person help signing up for the ACA has been slashed by 90 percent in states that use the federal exchange. To find help in your state, search “ACA navigator” and the name of the state. Local social service agencies may also have information.
HealthCare.gov offers referrals to local help here, though the options in my ZIP code were all insurance brokers — who can help you enroll in the ACA or find a policy outside the exchange.
A nonprofit organization called Get Covered America, created by former officials of the Obama administration, provides links to local information sign-up events plus other places to find local help signing up for the ACA.
If you have more questions about the ACA, the Kaiser Family Foundation has an FAQ with dozens of questions and answers about the health insurance marketplace.
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