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Spring 2018  Volume 11, Number 1        

long term care

Watch for Health Insurance Premium Increases

Reinstating the Health Insurance Act and repealing the individual mandate to purchase insurance could both contribute to a rise in premiums.

Two new federal regulations will most likely affect the cost of health insurance premiums you pay in the coming years. One regulation, the Individual Mandate, has been repealed; the other, the Health Insurance Tax, has been reinstated.

Individual Mandate

When the Affordable Care Act (ACA) was signed into law in 2010, it required all individuals to have certain minimum essential health benefit coverages or pay a penalty. That penalty in 2017 was $695 or 2.5% of household income, whichever was higher.

In December 2017, the House and Senate passed a tax reform bill that also repealed the Individual Mandate. The repeal will not take effect until 2019, so most Americans are still required to have health care coverage or pay a penalty.

This does not mean that the ACA, or ObamaCare as it is commonly known, has been repealed. The Marketplace Exchanges are still open, and low-income Americans (making between 100 to 400 percent of the Federal Poverty Level) can still receive subsidies to help pay costs.

If you receive health care coverage from your employer or through Medicare, Medicaid or military health services, you will still receive coverage and you probably won’t notice any changes in your premiums. Health insurance experts are more concerned about premiums for individuals who earn about $48,000 or more annually and get their coverage through the federal Marketplace. Many insurers are leaving the Marketplaces because they are losing money, despite the subsidies paid on behalf of low income individuals. Fewer choices could mean higher premiums and no subsidies.

The Obama administration believed that for the ACA to work, insurers need a large, diverse pool of individuals buying coverage. Without the mandate that requires everyone to have coverage, experts are worried that those who can afford to self-insure or are very healthy — people who are well-off or or younger — will exit the market, leaving only sicker individuals to pay premiums. The Congressional Budget Office estimates that the repeal of the individual mandate means 13 million fewer Americans will be insured by 2027. If this happen, the CBO predicts that insurers will increase premiums in the Marketplace Exchanges by as much as 10 percent to make up for lost revenues. This also could happen on the open market.

We will know more this spring after insurers submit their requests for 2019 individual market premiums.

Health Insurance Tax

The Health Insurance Tax (HIT) is basically a sales tax on health insurance. The ACA in 2014 imposed the tax on all insurers who sell fully insured coverage — on or off the Marketplace Exchange, large and small group markets, and any insured public programs, including Medicare Advantage, Medicare Part D, and Medicaid Managed Care.

The tax was designed to help fund the federal and state marketplace exchanges. As the Congressional Budget Office pointed out, excise taxes such as these are usually passed along to consumers in the form of higher premiums. As a result, in 2015, Congress approved a one-year moratorium on collecting the taxes in 2017. That moratorium is set to lapse this year. Unless postponed again, the tax is expected to collect $14.3 billion in 2018. In 2019 and subsequent years, it will increase annually based on premium growth.

According to Oliver Wyman Actuarial Consulting, the tax could cause premiums to increase between 2.6 and 2.8 percent over the next few years. For an individual purchasing insurance on the open market, that could mean about $165 extra. The increases are expected to be higher in states like Alaska, where the increase could add an additional $386 to an individual premium.

Talk to us before your next enrollment period about your options for finding coverage that best suit your needs and budget.


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In this issue:

This Just In...

Watch for Health Insurance Premium Increases

Haven’t Saved Enough for Retirement? Here’s a Few Ideas

Life Insurance: When Free isn’t Enough

How Life Insurance Companies Get to the Truth


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