The data is leaking out on 2023 health care insurance plans and for already shell-shocked Americans, the outlook calls for a big boost in health insurance prices. That’s especially the case for consumers buying policies on government healthcare exchanges.
The primary problem is a wrinkle in the 2021 American Rescue Plan Act, which temporarily removed the income cap for eligibility for U.S. government subsidies for 2021 and 2022.
That legislative feature enabled 13 million Americans participating in Obamacare federal and state health insurance marketplaces to qualify for health insurance subsidies, who previously wouldn’t have qualified.
Now that the two-year ARPA exemption is expiring, the income caps (household income more than 400% of the US poverty level) are no longer in place, leaving millions of Americans at the mercy of healthcare industry marketplace pricing.
“The default is that the expanded subsidies will expire at the end of this year,” said Cynthia Cox, a vice president at the Kaiser Family Foundation and director of its Affordable Care Act program, in a June 26 interview with CNBC. “On average, premiums would go up more than 50%, but for some, it will be more.”
Real World PricingWhat does 50% or more translate into actual spending dollars for Americans?
It’s complicated, experts say.
With the ACA still ramping up enrollment, an individual can be expected to pay on average $7,000 per year or a family of four an average of $30,000, according to the Milliman 2022 Medical Index.
“These costs have increased every year, except for 2020, and have generally outpaced both inflation and GDP,” said Kumar Srinivas, chief technology officer for Health Plans at NTT DATA, in Tampa, Fla.
However, what consumers are expected to pay and what they end up paying at the end of the year are complex topics.
“There are a lot of other costs outside of the premiums, including the deductibles, co-pays, and the different social determinants (transportation insecurity, housing instability, food, homelessness, employment status, material hardship, etc.) that are not usually factored into such numbers,” Srinivas told TheStreet.com.
A better way to target the expected payment for “total healthcare” would be to look at a tax rate-like model, like a flat 7% of your overall take-home. “If it’s in excess of 10%, then you’re over-paying,” Srinivas added.
Employers to the Rescue?As US health care consumers struggle to keep up with rising costs, employers may be forced to step in to alleviate some of the financial pain.
“While medical insurance offered by employers typically pays a good portion of medical costs, it doesn’t cover everything,” said Rob Grubka, head of health insurance benefits at Voya Financial in Minneapolis, Minn. “This could put some individuals or families in a challenging financial situation, as research from the Kaiser Family Foundation shows that roughly four in 10 Americans would struggle to cover a $400 emergency expense.”
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As a result, more employers are adding new voluntary benefits, often referred to as supplemental health insurance, to their benefit line-ups in 2022.
“Topping the list are voluntary benefits like critical illness, hospital indemnity, and accident insurance,” Grubka told TheStreet. “When you consider the average cost of one day in the hospital in the U.S. is around $2,400 with the average patient staying for more than four days, out-of-pocket expenses associated with a hospital stay can add up fast.”
Typically, these types of voluntary benefits cost less than what most people expect. “For example, according to a May, 2022 report from Eastbridge Consulting Group, the employee cost of critical illness insurance averages $286 per year — that’s less than a dollar per day,” Grubka noted.
What to Do When You Can’t Afford Health InsuranceAccording to government statistics, there are more than 31 million uninsured Americans today, a problem that the Affordable Care Act tackled with limited success, largely due to high marketplace premiums.
“Getting health insurance coverage is critical and there are options to find high deductible plans,” said Chris Orestis, CSA, president of Retirement Genius, in Cumberland County, Me. “ACA plans, short-term health insurance, Medicaid coverage can help, and once someone turns 65 they can qualify for Medicare.”
If that doesn’t cut it, Orestis offers the following strategies to get healthcare without having it crushing your finances:
— Go to local health clinics and keep an eye out for community care events.
— Go to private Urgent Care facilities and find out their prices if paid in cash.
— Call around to care providers and price shop.
— Ask for discounts or free care if you are a senior, low-income, single parent.
— Set up a payment plan with care providers to pay off medical bills.
— Use generic drugs, join pharmacy discount programs such as RxSaver, Mark Cuban Cost Plus Drug Co. or purchase FDA approved drugs from outside the U.S. mail order through online pharmacies such as The Canadian Medstore.
One bright side for people in need of healthcare are the new federal rules governing billing for care services enacted on Jan. 1, 2022.
“These new billing protections restrict excessive billing for both emergency and non-emergency care, and that emergency services must continue to be covered without any prior authorization,” Orestis said.