The federal government has announced that it will not pay scheduled benefits called Cost Sharing Reductions for lower income working class people who buy their own health insurance. It turns out that relatively few people are actually affected. Here are six things for consumers to know:
- In most cases the action does not directly affect the amount your pay for insurance. A ‘subsidy’ is not the same as a ‘premium tax credit.’ The amount of premium tax credit is unaffected. In fact, the number of people who qualify for the credit may increase.
- Insurers will increase the premium rates for all policyholders. But most of this increase is paid by the federal government. The 15% of policyholders who pay the full premium will pay more unless the increase now qualified them for a premium subsidy.
- The amount of ‘out-of-pocket’ payment for lower income policyholders could increase. If so, in some cases it might be possible to adjust your HSA, FSA and payroll tax withholding to nullify the change by an insurer.
- Some insurance companies say they already anticipated Trump’s move when they set their 2018 premiums. States granted insurance companies an extra rate increases to make up for the lost federal funding.
- No insurance companies have announced their attention to withdraw from any market because of the federal government action.
- Employers that want to help employees make up the difference have a range of tax-free options that allow them to do so. Talk to us about the range of options,
Despite the strong public objection to this action, it might turn out to have minimal impact. The larger danger is that low-income individuals will become frustrated or confused about their health benefits and choose to not enroll in subsidized insurance coverage next year.