Why ACA Marketplace Plans May Cost Less Than You Think

Renewal notices in many cases overestimate what consumers would pay each month in 2018. Also, many people could get tax credits that cover the full cost of the premiums for certain plans.

People renewing health plans or shopping for new coverage from the Affordable Care Act marketplaces for 2018 may be pleasantly surprised if they do a little homework.

The political noise surrounding the ACA and a shorter open enrollment window are posing challenges for insurers, consumer advocates and brokers as they scramble to educate people about their options and help them enroll in coverage.

Here’s another wrinkle: The renewal notices insurance companies sent to marketplace members this year in many cases significantly overestimate what these consumers would pay each month in 2018. Also, millions of Americans could get tax credits that cover the full cost of the premiums for certain plans.

This is because of a few quirks about the way the law works and the way insurers and state officials responded to uncertainty about federal support for the ACA’s cost-sharing reductions.

As directed by the federal agency that regulates the marketplaces, the renewal notices assume that the tax credits available to offset the premiums will be the same as they were in the previous year.

In many areas, however, the tax credits for 2018 coverage are much more generous. Now insurers are working to get word to consumers that they should call their plan or go online to get updated information. Open enrollment ends Dec. 15.

“I want them to be able to plan for the actual amount they’re going to pay on a monthly basis,” says Kurt Kossen, president of the retail markets division of Blue Cross and Blue Shield Plans in Illinois, Montana, New Mexico, Oklahoma and Texas.

We’re trying to make sure people don’t pay more than they have to.

The Blue Cross and Blue Shield Plans are sending emails encouraging every member who received premium assistance in 2017 to call and have a  product specialist walk them through their options.

Why 2018 financial assistance is more generous

The background on this unusual situation is somewhat complicated.

The tax credits that help many Americans cover their premiums under the ACA are tied to the cost of certain silver-level plans. The premiums for those benchmark plans in many parts of the country are much higher for 2018.

That’s because the ACA requires insurers to provide lower out-of-pocket costs – such as deductibles, copays and coinsurance – for lower-income consumers. The law calls for the federal government to compensate insurers for these cost-sharing reductions but doesn’t explicitly provide funding. In October, the White House said the government would end the payments.

Insurers adjusted premiums to cover those costs, and that means the premium subsidies are higher, too.

Because of how this played out, about 54 percent of the 8.3 million uninsured Americans who are eligible for marketplace subsidies could get a bronze plan at no cost to them, according to an analysis by the Kaiser Family Foundation.

That is, the premiums would be completely offset by the tax credits. Another 16 percent of that group could get bronze plans for less than they would pay in penalties under the law’s insurance mandate, according to Kaiser.

Bronze-level plans have lower monthly premiums but also higher deductibles and other out-of-pocket costs. Each family’s health and financial circumstances will determine what kind of plan is right for them.

“We’re trying to make sure people don’t pay more than they have to and give them the information needed to make an informed decision concerning the plan that best meets the needs of themselves and their family,” Kossen says.

Note: The Blue Cross and Blue Shield Plans encourage members to call their Plan or independent broker to discuss their options, or visit their state Plan website

RELATED STORIES

A Concierge Approach to Health Insurance

Video: Supporting Health and Culture with the Crow Nation

5 Things to Read on Health Care Access

Interested in ways we can make the
health care system work better?

Interested in ways we can make the health care system work better?