By Trudy Lieberman, Rural Health News Service
The enrollment period for choosing an Obamacare policy ends on Jan. 31.  That means if you haven’t already signed up and think you want coverage from your state’s insurance marketplace, now’s the time to check your options and make a decision. But what decision will be best?
Over the last several months I have received many emails from readers of this column telling me about their experience with Affordable Care Act policies – some good, some bad. Their comments, plus the close of open enrollment, offer a chance to review a few of the basics for choosing a plan and to examine a critical question that’s been plaguing the law since the beginning:  Are policies affordable?
A 61-year-old woman in South Dakota wanted me to tell readers to look carefully at the so-called silver plans because they provide what are called cost-sharing subsidies – extra help paying those sky-high deductibles and out-of-pocket costs Obamacare policies require. Silver plans cover 70 percent of someone’s medical expenses. The woman explained the subsidies had made it possible for her to switch from a platinum policy with a high premium (and lower deductible) to the silver variety, which lowered her premium and required what she called “minimal” copays for doctor visits and medications.
She had discovered silver plans are indeed the key to affordability for most people buying policies in the state exchanges. But there’s a catch. Even though savings on out-of-pocket costs can be substantial, only certain people who buy silver plans are eligible for those subsidies. Congress concluded there wasn’t enough money in the federal budget to help all Obamacare policyholders.
Only those with incomes between 100 and 250 percent of the federal poverty level are eligible for extra help. In dollars and cents that means individuals with incomes between $11,770 and $29,425 and families of four, for example, with incomes between $24,250 and $60,625.
What about people with incomes above those thresholds, say, someone with income of $35,000 or a family with $65,000? Considering the average annual deductible for silver plans last year was about $3,000 and out-of-pocket maximums averaged close to $6,000, uncovered medical expenses can add up.
Subsidies protect those with the lowest incomes the most, says Sara Collins, a vice president of The Commonwealth Fund, which studies health insurance trends and is a funder of the Rural Health News Service. “They substantially reduce out-of-pocket costs for people with incomes under 200 percent of poverty,” but “there’s a significant cost exposure to people in the middle income range.” If deductibles continue to rise, there’s a risk they’ll be underinsured, she adds.
Families will struggle to pay their medical bills even with Obamacare insurance and find themselves mired in medical debt, which the Affordable Care Act was supposed to eliminate. The federal Consumer Financial Protection Bureau says medical debt is still responsible for more than half of all debt collection actions. The Kaiser Family Foundation reports one-third of Americans have trouble paying medical bills even though 70 percent of them have insurance.
Even with subsidies offered on silver plans insurance is not affordable for many families. A woman who lives in the middle of Wyoming wrote that she and her husband were uninsured last year. “We studied the premiums a lot and have found our best price option would cost us about $800-$900 each a month (about $400 to $500 with a subsidy,)” she said, adding, “I don’t know many people who have an extra $400-$500 in their household budget to spend on insurance. It is certainly not available in our monthly budget.”
At first, she said, “I thought maybe I’m not managing our money properly,” but the more she studied the ACA and premium requirements, she became convinced that was not the case. “We just don’t have it (the money),” she told me.
For those who think they can swing a premium for 2016, silver plans are worth considering. Collins says not everyone who is eligible for cost-sharing subsidies is taking advantage of that help.
One-quarter of Obamacare policyholders with incomes between 200 and 250 percent of the poverty level bought bronze plans last year that cover only 60 percent of your medical costs and generally have the cheapest premiums.
As a trade-off, though, out-of-pocket limits are higher, averaging about $6,400. When you consider the extra subsidies available only with silver plans, a silver plan may be cheaper after all. As helpful as the silver plan subsidies may be, they mask the underlying problem. The cost of health care for both the insured and the uninsured is still too high and likely to get higher.
How do you pay out-of-pocket medical expenses and fit them into your budget? Write to Trudy at trudy.lieberman@gmail.com.