For the last few years, reform in healthcare has been in the news and people seem to be confused about what will happen in 2021. However, it is not a matter of few people but all need to know what are changes going to take place in 2021 and what will remain the same in the health insurance sector. This article talks about the changes applied to individual and family health insurance, though only a few of the U.S. population has individual health plan still the main focus stays with the individual plan market, as it was most affected by the Affordable Care Act.
Changes that are expected in individual and family health insurance need to be discussed so that people are aware of these changes because individuals covered through employer-sponsored plans get details about any changes from their employers for the coming year. Individuals having government-sponsored health insurance like Medicare and Medicaid will receive notification about the changes either from the state or federal government or from the insurance carrier that manages their coverage.
The Affordable Care Act has not been Replaced or Repealed
Despite the GOP’s efforts to repeal major portions of the ACA in 2017, there have not been major changes in this law. Though there is a judicial threat to the ACA and in December 2019, an appellate court struck down the ACA after which the Supreme Court agreed to take the case. The case is now called California v. Texas. and oral arguments were heard in November 2020 and a ruling is expected by mid-2021. The 18 GOP-led states are the original plaintiffs in the case who seek to overturn the ACA and the law has been defended by Democratic-led states because the U.S. Department of Justice declined to defend the ACA.
The lawsuit is based on the fact that after the end of 2018, the ACA’s individual mandate tax penalty was eliminated and so the plaintiffs argued that without the tax the mandate is no longer constitutional by the Supreme Court. The plaintiffs are also claiming that the mandate is not severable from the rest of the ACA so if it is eliminated then the entire ACA must be struck down. Though federal judges agreed with the plaintiffs in late 2018, and in late 2019, but still there have been no changes about the ACA and that will be the case at least until the Supreme Court issues a ruling on the case till mid-2021.
However, if the Supreme Court rules that the individual mandate is unconstitutional and unsevereable from the rest of the ACA then it will create havoc in the insurance market as well as in other aspects of the health care system. On the contrary, many legal experts have predicted that the court will instead rule that the individual mandate is severable from the rest of the ACA so the rest of the law can remain unchanged. However, no broad assumptions should be made on how the court will rule. But if the Supreme Court rule that only the individual mandate should be overturned, and the rest of the ACA upheld, then will not change anything, as there has not been any federal penalty for non-compliance with the mandate since the start of 2019. Thus, for the time being, nothing has changed about the ACA.
Individual Mandate Penalty no longer applies in most States
The efforts to repeal the ACA were unsuccessful but GOP lawmakers were successful in repealing the ACA’s individual mandate penalty as part of the tax bill that they passed in late 2017 and that took effect in January 2019. Thus, starting from 2019 there is no longer a federal penalty for being uninsured. However, some of the states like New Jersey, Massachusetts, Rhode Island, California, and DC have their own individual mandates, and so residents of these states face a penalty for not being insured, or they have to qualify for an exemption from the penalty.
The Rest of the Affordable Care Act Remains Effective
Besides repealing the individual mandate penalty and a few of the ACA’s taxes, the Affordable care Act is still completely effective. The other aspect of the Affordable Care Act like premiums subsidies, cost-sharing reductions, guaranteed-issue coverage, Medicaid expansion, the employer mandate, protections for people with pre-existing conditions, essential health benefits, caps on out-of-pocket costs, etc. is still in effect. Despite the federal government stopped reimbursing insurers for cost-sharing subsidies in late 2017, it is continued to be available for 2021. In most of the states, health insurance companies have included the cost of providing cost-sharing subsidies into the premiums they charge. Generally, this cost has only been added to silver plan rates that result in larger premium subsidies for everyone getting premium subsidies. Due to larger premium subsidies, millions of uninsured Americans are eligible for free health coverage for 2021.
Maximum Out-of-Pocket Limit Capped at $8,550 for 2021
As per the Affordable Care Act rules, the maximum out-out-of-pocket limit for essential health benefits is capped, as long as an individual received healthcare from an in-network medical provider. The maximum out-of-pocket limit for a single person in 2020 was $8,150 that has increased to $8,550 for 2021. Thus health plans can have smaller out-of-pocket caps but not more than this amount. The maximum out-of-pocket limits apply to all non-grandfathered, non-grandmothered health plans along with large group health plans and self-insured plans. Though these plans do not have to cover the essential health benefits of the Affordable care Act, but since most these plans do cover these benefits these plans cannot have out-of-pocket expenses above $8,550 for 2021.
Slight Increase in the Average Premiums for 2021
The individual health insurance premiums significantly increased in 2017 and 2018 but the average premiums increased by less than 3% nationwide for 2019 and in 2021 there is a median increase of just 1.1%. However, for the third year in a row, overall average premiums for the second-lowest-cost silver plan are decreasing in the 36 states for 2021 that use Healthcare.gov. The average premium decrease for the benchmark plans is 3% for 2021.
The reduction in premiums of benchmark plans is mainly because new insurers are entering or re-entering the individual markets in many states, and even the existing insurers are opting for price reductions. In the case of individual health insurance premiums there are variations from one state to another, and even from one area to another within the same state. Benchmark premiums are generally dropping while overall average premiums are slightly increasing. Since premium subsidies are based on the cost of the benchmark plan, so when the premium of this plan decline while other factors remaining unchanged then premium subsidies also decline. Therefore, enrollees receiving premium subsidies in 2020 will find that their subsidy amounts are reduced in 2021.
Changes Implemented in 2018 Continue to Apply in 2021
HHS in April 2017 finalized the market stabilization rule and so implemented several changes applicable to people purchasing an individual plan, either on or off-exchange. These changes apply even in 2021 and these changes include:
- The open enrollment period in most states lasts just over six weeks. It starts from November 1 and ends on December 15, becoming effective from January 1 of the coming year. State-run exchanges having their own enrollment platforms have the opportunity to extend open enrollment and most of the states do extend it.
- If an individual’s health insurance policy was canceled for non-payment of premiums in 2020, and the person wishes to re-enroll with the same insurance carrier during the open enrollment, then the person is supposed to pay past-due premiums before effectuating the new coverage. Generally, it is only one month of past-due premiums owed because premiums are not charged after the plan was terminated.
- The allowable actuarial value range for each metal level of coverage in the individual health market was expanded in 2018. Bronze plans have an actuarial value of about 60%, silver about 70%, gold about 80%, and platinum about 90%, though they can vary according to the allowable minimum ranges. Therefore individuals and small businesses must carefully compare the options available within each metal tier.
There are changes in the benefits and coverage in both the individual and small group market in 2021, just like it has been in the past years. And with more new insurers offering plans in the exchanges in many states for 2021, it is actively important for the enrollees to compare all the available plans during the open enrollment and choose a plan that offers the best value, instead of just going for auto-renewal.
Short-term plans still available in the Most States
The Trump administration made changes to the rules applied to short-term plans in 2018. Due to these changes short-term plans were readily available as a substitute for regular ACA-compliant plans. However, buyers need to be cautious while buying short-term plans because these plans have less robust coverage because of the cheaper price. There are 11 states where no short-term plans are available and all other states where short-term plans are available need to meet stricter rules compared to rules imposed by the Trump administration.
Changes in Large Group Plans as well as Medicare and Medicaid Plans
The health care reform debates in recent years are mostly around the individual and small group market along with Medicaid expansion under the ACA. Individuals obtaining health insurance from large employers, or through Medicare or Medicaid will likely have the same sort of changes that take every year. Medicaid work requirements have been gaining momentum in GOP-led states but these were suspended after a federal judge overturned in three states. The COVID-19 pandemic led to federal changes that prohibit states from terminating Medicaid coverage for the public health emergency duration. Thus, all the states that are receiving enhanced federal Medicaid funding to address the pandemic cannot terminate Medicaid, and since all states are receiving this additional funding so Medicaid will be available for sale in all the states of the U.S.