High Consumer Confusion About Recent Obamacare Changes

MOUNTAIN VIEW, CA--(Marketwired - Mar 13, 2017) - Amid growing confusion from consumers about how recent Obamacare changes will affect their coverage, AgileHealthInsurance.com today released answers to common questions consumers are asking right now when shopping for health insurance. Additional information can be found at AgileHealthInsurance.com/health-insurance-learning-center. 

If I was uninsured in 2016, am I required to pay the Obamacare tax penalty? While the technical answer is still "yes," the practical answer for millions of consumers may be "no." Under the Affordable Care Act (ACA), taxpayers must indicate whether they had been covered by an ACA-compliant health insurance plan, and they are subject to this "Obamacare Tax" if they lacked such coverage. This tax penalty has been one of the most controversial provisions of Obamacare. The tax penalty is still in effect, but on Feb. 15, 2017, the Internal Revenue Service (IRS) announced it will no longer require consumers to indicate whether they have ACA-compliant coverage to have their federal tax return processed. This change may result in consumers avoiding the Obamacare tax by not reporting a lack of ACA-compliant insurance. More information can be found here.

Will I be able to buy Obamacare plans for 2018, and when will those plans be available? Consumers should expect to have at least some Obamacare options for 2018. There are two important caveats here. First, many states will see health insurers pulling out of the ACA exchanges due to high costs and uncertain risk. When insurers leave the exchanges, it is likely that many consumers will be left with fewer ACA-compliant plans to choose from, and, in some counties, there may be no ACA plans. Second, consumers will likely have a shorter window to enroll in ACA coverage for 2018. The Centers for Medicare and Medicaid Services (CMS) proposed a new rule that will shorten the open enrollment period by six weeks. If the rule becomes final, open enrollment will run from Nov. 1, 2017, to Dec. 15, 2017. Consumers seeking an ACA plan for 2018 should mark their calendars accordingly so they do not forget the earlier enrollment deadline.

Will I lose my Obamacare cost-sharing subsidy in 2017? Cost-sharing subsidies lower the deductibles, coinsurance and copayments for consumers with household incomes between 100 percent and 250 percent of the federal poverty level. However, in May 2016, a federal judge ruled that these subsidies are illegal because they were not approved by Congress. While the Obama administration appealed the ruling, the case has been paused while the Trump administration considers its next steps. If the Trump administration chooses not to appeal the court ruling, the cost-sharing subsidies will cease unless Congress authorizes them as the judge's ruling required, which is very unlikely. When considering options for 2018, enrollees who received this subsidy should select their health plans in light of the possibility that they may not receive help with deductible, copayment and coinsurance fee costs.

Do I have health insurance options other than ACA plans? Yes. Consumers in 45 states and the District of Columbia can enroll in "short-term health insurance," which is a low-cost and flexible alternative to ACA plans. Short-term health insurance plans are health plans of up to one year in duration, can cost less than half the cost of an unsubsidized Obamacare plan and allow consumers to choose any doctor and hospital. However, consumers should be aware that the previous administration issued a regulation (CMS-9932-F) arbitrarily limiting short-term insurance coverage to a period of less than three months starting April 1, 2017. Consumers now in the market for short-term health insurance should enroll before April 1 in order to enjoy the maximum coverage period. Additionally, consumers enrolling in a short-term health plan after April 1 will need to reapply every three months so they do not have a lapse in coverage.

Will the Trump administration rescind the three-month limit for short-term health insurance? Insurance industry insiders believe the limit will probably be removed by the Trump administration or by Congress. However, when this will happen is not clear. There are a couple of avenues for this rule to be rescinded. One is via the regulatory process, and the other is via the legislative process. The three-month rule is a regulation so its elimination could be effected by a similar regulatory process, especially given recent Trump administration executive orders seeking to reduce the regulatory burden. There is also legislation pending in Congress that could eliminate the three-month rule.

If I buy a short-term health plan now, will I need to pay the Obamacare tax penalty in 2017? It is unclear at this time. The ACA is still the law of the land, but the IRS is not going to reject tax returns this year if a taxpayer fails to indicate whether they had ACA-compliant coverage. More clarification is needed on this point from the IRS.

Is short-term health insurance "creditable coverage" under federal law? Will short-term plans be eligible for tax credits under the new Republican reform plan? Yes, short-term health (STH) insurance is considered "creditable coverage" under the Health Insurance Portability and Accountability Act (HIPAA). Under federal law, if you have a gap in insurance coverage longer than 63 days, and you are diagnosed with a serious illness or become pregnant during that time, you will lose your health insurance rights to have these conditions covered by your next health insurance plan. Instead, the new health plan can impose a wait period of several months before you will be insured for these conditions. That is why it's important to have continuous health coverage under a "creditable" plan, such as short-term health insurance. Illnesses and conditions developed while on a creditable coverage plan will be covered on the date your new health plan becomes effective. 

If the new American Health Care Act proposed by House Republicans is passed, these same creditable coverage certificates will likely be essential for STH policyholders to avoid a premium surcharge of 30 percent by demonstrating continuous valid insurance coverage. The same legislation would likely also provide individual tax credits of up to $4,000 based on an individual's age, income and premium costs. These tax credits would reduce STH's already low costs and make the product accessible to even more people needing an affordable health insurance option.

Will there be more regulatory changes for health insurance this year? Likely yes. President Donald Trump has issued two executive orders focused on eliminating regulations considered expensive, burdensome, or harmful to consumers. In response, consumers can expect government agencies, including the IRS and the Department of Health and Human Services, to announce further regulatory changes that will impact the ACA.

To keep consumers up-to-date, AgileHealthInsurance.com has added a guide to its Learning Center at AgileHealthInsurance.com/health-insurance-learning-center. Designed to provide news, insight and tips, it is a tool empowering consumers to make informed and savvy choices. 

Notice: AgileHealthInsurance does not provide tax advice. Consumers should consult with a tax specialist for assistance with the tax implications of health coverage issues.

AgileHealthInsurance.com was created to educate people about the benefits of short term health insurance and provide a fast, online process for purchasing these plans. Short term health insurance is a flexible and low-cost major medical insurance for individuals without expensive pre-existing health conditions. It is not Obamacare. Short term health plans offer consumers the flexibility to choose health plans with the benefits that matter most to them and combine these benefits with broad provider networks. Additional information about AgileHealthInsurance can be found at www.AgileHealthInsurance.com.