6. Qualifying for marketplace incentives is complicated. It is possible for some individuals to purchase an exchange plan but receive no subsidy. Yes—and this is a major challenge for a lot of people who need affordable coverage. Someone whose employer provides coverage at an affordable level will not be able to receive cost incentives through the exchange. The ACA outlines this stipulation by stating that if an employee’s contribution is less than 9.5 percent of his or her household income, then they do not qualify for subsidies.
Here’s the rub: this 9.5 percent is applied to the employee-only coverage, not family coverage. A common example is a two-earner household where one spouse is unemployed. The employed spouse with private coverage meets the 9.5 percent rule, and that disqualifies the unemployed spouse’s eligibility for a subsidy. It may still be practical (especially considering the high cost of COBRA and dependent coverage) for the employed spouse to purchase her employer plan, the unemployed spouse to purchase coverage through the exchange, even though they’re not getting a subsidy, and for any children to receive coverage through a state-provided plan.
Another area of confusion is determining someone’s household income when completing the marketplace exchange application. The ACA requires that applicants estimate their income and base the tax credits and subsidies on these estimates. If someone gets to the end of the year and they have earned more or less than they estimated—they may face additional costs or refunds on their healthcare expenditures for that year. Those costs or refunds would be provided to them upon filing their income tax returns. This means that some individuals may not find out until April 15 that they’ve overpaid or underpaid for their healthcare.
7. Challenges are not over for the Affordable Care Act. We are four years into the roll-out of the ACA, but the challenges to the provisions of the legislation continue. Members of the 114th Congress have outlined potential challenges to the ACA. In addition, the U.S. Supreme Court has another case before them, King v. Burwell, which addresses how subsidies are being applied to exchange plan participants. The case relates to language in the law that indicates subsidies can help those with incomes under the 400 percent federal poverty level in “exchanges established by a state.”
This case is receiving a lot of attention because it calls into question the millions of people who are receiving subsidies through the marketplaces operated by the federal government. There are only 13 state-based exchanges, plus Washington, D.C., while the remainder are federal or a combination of state-federal marketplaces.
In the meantime, year two of the health insurance marketplace is expected to draw 13 million people onto exchange plans, according to the Congressional Budget Office. Compare that to the estimated 29 million people nationally, according to KFF, who could see real financial and healthcare coverage benefits from checking out the new marketplaces.
The advantage for financial advisors is the opportunity to play a role in the broader picture of healthcare coverage choices and the economic impact on their clients. There are viable opportunities for individuals, especially those in their 50s and early 60s, that simply didn’t exist just a couple of years ago. Choosing to work with benefits coordination specialists who have experience in both the public health exchanges and Medicare can make a tremendous difference for financial advisors who are guiding their clients down the path of long-term financial prospects for their golden years.
Mary Dale Walters is senior vice president of Allsup Inc. Allsup and its subsidiaries provide nationwide assistance for individuals and business navigating the complexities of private and public health insurance benefits. The Allsup Medicare Advisor® is a nationwide Medicare plan selection service that, for a flat fee, provides a comparative analysis of plans and serves as a trusted resource for financial advisors and seniors. Allsup specialists can work with your clients one-on-one to assess their needs and research their healthcare coverage options. Financial advisors may contact (888) 220-9678 or go to FinancialAdvisor.Allsup.com for more information on benefits coordination services or the Allsup Medicare Advisor.