Due to the recent healthcare reforms, individuals shopping for health insurance may be confused and overwhelmed while shopping for health insurance. The COVID-19 pandemic had a sweeping implication on the health insurance industry along with a combination of factors like demographic changes, consumer preferences, and regulatory and compliance mandates that also spurred the changes in this industry. To tackle all these challenges, a new initiative is cropping up, as the health insurance industry is adapting to the new normal. Though some changes are going to have a long effect still it will be prudent for the key players of the industry to be resilient to the changes by being agile, turning to intelligent processes, and adopting the open ecosystem.
People also need to be resilient to the changes in this sector in 2021, so that they can wisely shop for health insurance in the year 2021. The changes mostly apply to individual and family health insurance plans. Though only 12 million people are enrolled in ACA-compliant plans in the U.S., it is the individual market that was greatly affected by the recent changes. Individuals having health insurance coverage from their employers get to know about the changes from their employers. And individuals having government-run health insurance plan receive notifications either from the state or federal government. However, individuals having ACA-plan need to find themselves about the changes that will take place because of the healthcare reform.
ACA has not been Replaced or Repealed
There is an ongoing judicial threat to the ACA, as there is a case called California v. Texas in the Supreme Court, the ruling of which is expected by mid-2021. The plaintiffs in the case are the 18 GOP-led states, who want to overturn the ACA, and the case is defended by Democratic-led states. The lawsuit is based on the fact that since ACA’s individual mandate tax penalty got eliminated at the starting of 2019 so without the tax penalty, the mandate is not constitutional, as the tax was the crux of the mandate. The plaintiffs are also claiming that mandate is not severable from the rest of the ACA that means if the individual mandate is eliminated, the entire ACA should be struck down. Though Federal judges agreed with the plaintiffs in 2018 and 2019 but still nothing has changed about the ACA during the appeal process and this will continue to be the same at least till the Supreme Court issues a ruling on the case in mid-2021. However, if the Supreme Court rules individual mandate unconstitutional and unseverable from the rest of the ACA, then it would definitely create havoc in the health insurance market. Though several legal experts have claimed that the Court will rule that the individual mandate is severable from the rest of the ACA, so the rest of the law can remain unchanged. Thus so far nothing has changed about the ACA.
In the Majority of States, Individual Mandate Penalty does not Apply
As per the tax bill that GOP lawmakers passed in late 2017, they succeeded in repealing the ACA’s individual mandate penalty, though their efforts to repeal the ACA were not successful. The individual mandate penalty was repealed in January 2019 after which a federal penalty for being uninsured no more remains effective. The only exception is the states Massachusetts, New Jersey, DC, California, and Rhode Island that still have their own individual mandates with a penalty for non-compliance. Vermont is another state having an individual mandate as of 2020 but without a penalty for non-compliance. So individuals living in any of those states go without coverage in 2021, then they will either have to qualify for an exemption from the penalty or pay a penalty while filing their 2021 tax return.
The Rest of ACA Remains Effective
Besides repealing the individual mandate penalty and a few of the ACA’s taxes like the Cadillac Tax, the remaining ACA is intact. The rest of the ACA like the premium subsidies, the cost-sharing reductions, guaranteed-issue coverage, protections for people with pre-existing conditions, essential health benefits, caps on out-of-pocket costs, Medicaid expansion, the employer mandate are still in effect. In the year 2021, the cost-sharing subsidies will be available despite the federal government not reimbursing the health insurance carriers for the cost from late 2017. In most of the states, health insurance carriers have included the cost of providing cost-sharing subsidies into the premiums of their plans. Mostly the cost of cost-sharing subsidies is included in the rates of the silver plans thus resulting in larger premium subsidies for individuals who get premium subsidies. Due to the larger premium subsidies, millions of uninsured Americans have becomes eligible for free health coverage in the year 2021.
Maximum Out-of-Pocket Limit has Increased to $8,550
The maximum out-of-pocket limit for essential health benefits under ACA rules is capped, as long as healthcare is received from an in-network provider. In the year 2020, the maximum out-of-pocket limit for a single person was $8,150 and in the year 2021, the maximum out-of-pocket limit has increased to $8,550. Thus, health insurance plans can have maximum out-of-pocket caps less than this amount but not more than this amount as per the rule. Generally, Catastrophic health plans have a deductible equal to the maximum out-of-pocket limit so all the catastrophic plans in 2021 will have a deductible of $8,550. The maximum out-of-pocket limits have been applicable for all non-grandfathered, non-grandmothered health plans along with the large group and self-insured plans. These health plans do not require to cover the essential health benefits but if these plans do cover essential benefits then also these plans cannot have out-of-pocket expenses above $8,550 for the year 2021.
Slight Increase in the Average Premium in 2021
In the last few years, the premiums of the individual health plans increased slightly and the premiums rate was usually flat in 2020. However, for 2021, the health insurance premiums will have a median increase of just 1.1%. Right from the last three years and even for the year 2021, the overall average premiums for the benchmark plan are decreasing by 3% in the 36 states that use HealthCare.gov. The overall reduction in benchmark premiums is mainly because of new health insurance carriers entering the individual markets in many states and also due to price reductions from some of the existing insurance carriers.
In the Most States, Average Benchmark Premiums Decreased in 2021
There are significant variations in the individual health insurance from one state to another, and also from one area to another in the same state. However, benchmark premiums are dropping whereas the overall average premiums are slightly increasing. As premium subsidies depend on the benchmark plan cost so when benchmark premiums decline even the premium subsidies will decline. Therefore, enrollees who receive premium subsidies in 2020 may find that their subsidy amount has been reduced in 2021. That could result in a higher after-subsidy premium in 2021 based on how the pre-subsidy costs of their plans are changing. Thus, individuals should carefully shop during the open enrollment period, especially in years when the average benchmark premiums decline.
Changes Implemented in 2018 are Still Applicable
HHS in April 2017 implemented several changes applicable for enrollees of the individual health plans and these changes continue to apply for 2021. Some of these changes are:
- The open enrollment period in most of the states now lasts for just over six weeks, starting from November 1 to December 15 with plans becoming effective from January 1 of the coming year. However, around 15 states that have their own enrollment platforms have the opportunity to extend open enrollment, and most of the states extend it.
- If a policy gets canceled for non-payment of premiums in the previous year and enrollees are planning to re-enroll with the same health insurance carrier during the open enrollment period, enrollees are required to pay their past-due premiums before effectuating the new coverage. Generally, it should only be one month of the past-due premiums owed by the premiums, as the health carrier cannot charge premiums after the termination of the plan.
- The actuarial value range that was allowable for each metal-level of coverage in the individual market was expanded in 2018. The actuarial value of Bronze plans is about 60%, silver plans is about 70%, gold plans is about 80%, and platinum plans is about 90%, but due to the widened minimum range, the actuarial value can vary according to it. Thus, individuals shopping for health insurance should carefully compare the different options available within each metal level.
Short-term Plans Available in Majority of States
The Trump administration in 2018 made changes in the short-term limited duration health plans, making these plans readily available as an alternative for regular ACA-compliant individual health plans. However, individuals need to be aware that the low price of short-term plans is a result of less robust coverage. Eleven states are offering no short-term plans because as per the new federal rules states are allowed to impose stricter rules on short-term plans. Besides, there are several other states where short term plans are available with stricter rules than the rules imposed by the Trump administration.