insurance

Employer Insurance Unfazed by Health Care Battle

Politics aside, employer plans won’t change much.

Despite warnings that Obamacare would implode if Congress didn’t repeal and replace it, the Affordable Care Act lives on. But even though the Senate couldn’t muster enough votes to dismantle the ACA, the 12 million people who buy health insurance on the exchanges face uncertainty—and several unresolved issues could affect availability and rates.

The vast majority of people—the more than 175 million workers who get health insurance from their employers—can rest easy. They won’t see big changes to their coverage for 2018. Large employers expect average health care costs to rise by 5% in 2018, to $14,156 per family, similar to increases in the past five years, according to the National Business Group on Health. Employers generally cover almost 70% of the cost, leaving employees to pay about $4,400 for family coverage. The spiraling cost of specialty drugs is primarily to blame for the increase.

Employers continue to make changes to their plans to help mitigate their costs, such as by raising deductibles and shrinking provider networks. When choosing a plan, make sure that your doctors are covered, and compare your out-of-pocket costs in addition to premiums. The median in-network deductible will be $1,300 for employee-only coverage and $3,000 for families, and nearly 40% of employers will offer only a high-deductible plan.

You can ease the pain of deductibles by signing up for a tax-advantaged health savings account, especially if your employer helps to seed it. Employers are offering a median contribution of $650 per employee and $1,070 per couple in 2018.

The Affordable Care Act has different rate-setting rules for small-employer plans (plans with 50 or fewer employees), which could be affected by any changes to the law. But many of these plans have locked in coverage for the next 12 months, or were “grandmothered,” which means they weren’t subject to all of the rules (in states where that’s allowed), says Suzy Alberts, an insurance broker in Southfield, Mich.

For individuals who buy coverage on the exchanges, the primary question is whether the government will continue to pay insurers cost-sharing reduction subsidies, which help cover deductibles and co-payments for lower-income people. Because of a federal lawsuit, the Trump administration could discontinue these subsidies without a vote from Congress. The resulting uncertainty has created huge disparities in insurers’ proposed rates on the exchanges. In Pennsylvania, the average rate increase in 2018 would be 8.8% with the subsidies, but 20.3% without them. The average 12.5% rate increase proposed in California could double without the subsidies. If premiums rise substantially, however, some people will qualify for bigger tax credits to offset some or all of the hike.

Rates must be finalized in early fall. “If we still don’t know at the time whether the cost-sharing reductions will be funded, we expect that insurers will use the higher rates,” says Janice Rocco, California’s deputy insurance commissioner.

The final plans and premiums for the exchanges will be revealed in early October. “There’s never been a more critical time to shop the marketplace,” says Heather Korbulic, executive director of Nevada’s Silver State Health Insurance Exchange.

You will also have less time to pick a plan. Open enrollment for 2018 runs from November 1 to December 15, instead of January 31.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
The Berkshire Hathaway Portfolio: All 41 Warren Buffett Stocks Ranked
stocks

The Berkshire Hathaway Portfolio: All 41 Warren Buffett Stocks Ranked

The Berkshire Hathaway portfolio is a diverse set of blue chips, and increasingly, lesser-known growth bets. Here's a look at every stock picked by Wa…
November 16, 2021
Should You Take an Extra Big RMD This Year?
required minimum distributions (RMDs)

Should You Take an Extra Big RMD This Year?

Sometimes only taking the minimum IRA distribution can be a costly mistake. When deciding how much to withdraw this year, you need to consider the big…
November 23, 2021

Recommended

7 Things Medicare Doesn’t Cover
Healthy Living on a Budget

7 Things Medicare Doesn’t Cover

Medicare Part A and Part B leave some pretty significant gaps in your health-care coverage. Here's a closer look at what isn't covered by Medicare.
November 16, 2021
11 Costly Medicare Mistakes You Should Avoid Making
Medicare

11 Costly Medicare Mistakes You Should Avoid Making

If you don't make the right choices, you could end up with high Medicare premiums and big out-of-pocket costs.
November 16, 2021
How to Restructure Your Assets to Qualify for Medicaid
health insurance

How to Restructure Your Assets to Qualify for Medicaid

Several types of special income trusts and other strategies can be helpful when trying to protect your family’s assets from the devastating costs of l…
November 7, 2021
Is Hybrid Long-Term Care Insurance Right for You?
Long-Term Care Insurance

Is Hybrid Long-Term Care Insurance Right for You?

If you hate the idea of paying for long-term care insurance you may never use, a hybrid policy could be for you. The money you paid in premiums doesn’…
October 28, 2021