The Affordable Care Act (ACA) has changed the dynamics around health-care choices in the U.S., especially in the midst of enrollment season for the Health Insurance Marketplace. Public health exchanges have been offering health insurance plans for three years now, and the Marketplace continues to garner attention and scrutiny. I’ve been spending a lot of time in Washington, D.C., lately, and the ACA remains front and center on the collective minds of Congress. Large insurers are talking to Wall Street about their ability to sustain profitability with Marketplace plans, and several carriers are merging. The jury is still out on these developments, but perhaps smaller regional carriers will find the opportunity to fill voids in the marketplace while remaining competitively priced.
I suggest we keep focused on what your clients need now and the current availability of Marketplace plans. A number of situations require examination. Prior to the ACA, early retirees were challenged to find affordable health-care coverage outside of their employer prior to Medicare eligibility at age 65. In addition, monitor your clients with an eye on their adult children who need health-care insurance in the near future. There was a small baby boom in the U.S.—rivaling the annual birth rate of post-World War II—from 1989 to 1993. One of my family members just asked for help assessing his 26-year-old (born in the first year of the boomlet) daughter’s options as she will “age out” of his employer’s plan very soon.
Also, some clients have persistent concerns and misperceptions about the Marketplace. As we head into the New Year, and with Marketplace open enrollment taking place now, let’s check out some key information and tackle a few myths that persist among those with limited exposure to the marketplace.
1. Only low-income individuals can benefit in a Marketplace plan. The truth is that higher income individuals may quality for subsidies or cost-sharing if they are able to adjust their taxable income. We are working with more financial advisors who are beginning to consider variables in their clients’ income options to ensure they can benefit from the subsidies. The characteristic of this federal health insurance program that can be overlooked is that subsidies are based on taxable income. Assets are not factored into the calculation. This means your clients who have significant resources or certain types of non-taxable income, such as IRAs, may still qualify for subsidies.
Most individuals at 100 to 400 percent of the federal poverty level (FPL) can receive tax credits toward the premium costs they incur for insurance bought through the exchanges. Also, those who are at 100 to 250 percent of the FPL can receive subsidies to support cost-sharing for the insurance they buy. Consider that a family of five could have household income of more than $100,000 and still receive tax credits toward their purchase of an exchange plan.