Personal Finances - 2018


Lower Price Health Plans Could Come at a Higher Cost

By Mo Vidwans

There is plenty of confusion regarding health plans and faced with the hard decisions as to which ones are the best for you and especially for your family, we have to wonder what plan, among many, would work out for us in the long run. With the current Government bent on demolishing most of what was known as Affordable Care Act and with the political scene in Washington, DC in a total mismanaged flux, it adds to the confusion even further.

Luckily most of us who are in an employment scene working for a corporation have to just follow what is offered by them and pick an option, with the assumption that it would be adequate for you. Otherwise you are still caught in the horns of dilemma.

Some of us have to go find our own plans. Consumers are flocking to health plans that are pitched as cheaper alternatives to Affordable Care Act plans. But such smaller price tag plans can come with big risks, especially for those who become seriously ill. That chance (of becoming seriously ill) exists with all of us, no exception, even though it does not happen more frequently than it could. Knock on wood.

For early retirees, who are not yet ready and eligible for Medicare and others who need to buy health insurance in the individual market, the alternative plans' lower cost has proved to be a big draw. Insurance companies and brokers say that they have seen a big surge of interest in short-term health plans and other lower cost, lower benefit insurance products.

An executive order signed by President Trump last year in October gave a further boost to non-marketplace plans. The order directed governmental agencies to look at ways of expanding short-term plans.

But the cheaper plans also tend to offer skimpier benefits and sidestep a long list of consumer protections that are built into ACA compliant plans. Examples are: preexisting conditions, overall caps on the dollar amount of coverage or deny coverage to sick people – none of this is allowed in non-ACA plans. We don't think much of these important considerations until we experience them ourselves, but by then it is too late.

Many families find themselves in this odd situation where they make too much to qualify for Affordable Care Act's tax credits that reduce the actual premium and help people buy coverage. But they don't make enough to comfortably buy insurance on their own.

This largely lower middle-class crowd of insurance seekers is struggling to stay insured. They have weathered years of price hikes and shrinking insurance choices with seemingly no help forthcoming. Faced with very limited choices, they are mulling options of outside insurance or skipping coverage entirely; that decision could lead to a fine for remaining uninsured (at least for one more year) or remain uninsured with the possibility of huge bills if an emergency occurs.

The ACA helped reduce the US uninsured population by 41 percent to 28.8 million people earlier this year from 48.6 million in 2010 when it became law, according to the latest Government figures.

The law expanded Medicaid coverage and created health insurance marketplace where people can use income-based tax credits to buy a single or family health insurance if they don't get coverage through work. But that help stops abruptly for people making four times the Federal poverty level or more which converts to around $48,000 for an individual or $98,000 for a family of four. The part of the population that is just beyond these levels cannot get government assistance because they don't qualify, but at the same time, cannot afford insurance on their own.

The dilemma is clear: Do I pay high prices for the insurance premiums and cover myself and my family for all sorts of possibilities (of getting sick) or do I skimp on many benefits and pay less for the premiums and hope sincerely that my family will not walk into such situation where the sickness is not covered. Unfortunately, that hope is a fickle commodity and not dependable.

HSA plans are an excellent option and they also have many other benefits that are desirable in the long run. But these plans have to be offered by your workplace otherwise we are not able to take advantage of them.

Many people are turning to short-term health plans. When policyholders reach the end of the term the policyholders simply reapply for a new plan. If you don't have a serious health condition you can get a short-term plan for about $250 a month with a deductible of $5000 to $10,000. But these plans don't comply with ACA rules. They don't cover preexisting conditions or prescription drugs and they may have maximum coverage limit such as $1M.

As explained above, for those who are caught in the middle of the spectrum where they don't qualify for a special treatment and can't afford much on their own this is a very hard decision. They are caught between the proverbial rock and a hard place. The focus in such situations is to maybe, skimp for a year or two but get a decent health plan as soon as possible; even if it means some or much hardship.

Health calamities don't come pre-announced and we have to be ready for them. There are many small health insurance companies that offer good plans, but they sometimes don't cover all geographical areas. The current unemployment rate is low, so hopefully there aren't too many who are looking for health coverage and are covered by their workplace.

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Mo Vidwans is an independent, board certified financial planner. For details visit www.vidwansfinancial.com, call 984-888-0355 or write to mpvidwans@yahoo.com.