Q: Does the Affordable Care Act make it easier to get individual health insurance?
A: Yes, in several ways, it has been easier to get individual health insurance since the Affordable Care Act (ACA) was implemented. But consumers in the individual market need to be aware that there’s now an open enrollment period each year, and coverage is only available outside that time frame if you have a qualifying event. And for people who don’t qualify for premium subsidies (premium tax credits), coverage in the individual market can be unaffordable, depending on the person’s age, location, and income.
For 2021 coverage, the open enrollment period is November 1, 2020 through December 15, 2020 in most states. But there are several states that run their own exchange platforms (as opposed to using HealthCare.gov) and offer extended enrollment deadlines, some of which extend well into January 2021.
Enhanced shopping platforms
Health insurance exchanges make it easier to shop for coverage. Exchanges have been frequently likened to Travelocity or other travel web sites: online marketplaces where individuals can easily find and compare health insurance options. Each state has an exchange, although 36 states rely on HealthCare.gov for enrollment in 2021 plans.
Exchanges allow people shopping for individual health insurance to get the information they need in one location and give them confidence that they are comparing “apples to apples.” All health plans offered on the exchange must cover the ACA’s essential health benefits, but individual and small group plans offered outside the exchanges must also include coverage for the same essential health benefits.
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Premium subsidies (premium tax credits) are making health insurance affordable for millions of Americans, many of whom were unable to afford coverage at all prior to 2014. In many – but not all – cases, people who earn up to 400 percent of the federal poverty level receive subsidies to offset a portion of their premiums if they don’t have access to affordable employer-provided insurance. (For 2021 coverage, that’s $51,040 annually for an individual and $104,800 for a family of four.) As of early 2020, more than 9.2 million people were receiving premium subsidies through the exchanges.
For people with incomes up to 250 percent of the poverty level, cost-sharing reductions are also available, as long as they select a Silver plan through the exchange. These cost-sharing subsidies make it easier for people to actually use their insurance, since their out-of-pocket costs are lower than they would be without the cost-sharing subsidies. As of early 2020, more than 5.3 million people were receiving cost-sharing subsidies on silver plans purchased through the exchanges.
Premium subsidies became much larger starting in 2018, due to the way states and insurers handled the fact that the federal government stopped paying for cost-sharing reductions. The larger premium subsidies continue to be available for 2021, resulting in many enrollees being able to get free bronze plans, and in some cases, free gold plans.
The ACA also called for Medicaid expansion, providing coverage to people with household income up to 138 percent of the poverty level. Prior to 2014, in most states, childless adults couldn’t qualify for Medicaid regardless of how low their income was. And even adults with dependent children were often ineligible for Medicaid, despite having incomes well below the poverty level.
However, as of late 2020, there are still 14 states that have not expanded Medicaid. (The ACA called for expansion nationwide, but in 2012, the Supreme Court ruled that states could opt out).
No more medical underwriting
Prior to 2014, health insurance companies in the individual market could refuse to sell you a policy, charge you more based on medical history, or refuse to cover a pre-existing condition. According to the Department of Health and Human Services, as many as 129 million Americans under age 65 have some type of pre-existing health condition, and up to 30 percent of healthy Americans are likely to develop a pre-existing condition over the next eight years. Starting in 2010, the ACA banned coverage limitations for children with pre-existing conditions, and that ban went into effect for adults starting in 2014. Today, everyone has access to health insurance, regardless of medical history.
Insurance companies are also no longer allowed to charge women more than men for equivalent coverage. Prior to 2014, women almost always paid more than men – despite the fact that most didn’t cover maternity care. All new individual plans now include maternity coverage, and pricing is the same regardless of gender.
Pricing can still vary based on age, but only by a ratio of 3 to 1. So a person who is 64 can only be charged three times a much as a person who is 21. Prior to 2014, there were no official limits, and it was common for the ratio to be closer to 5 to 1. So the ACA has made coverage more affordable for older Americans (although younger people now pay more than they would have without the new rules).
Higher premiums for people not eligible for subsidies
Although the ACA has certainly improved access to individual health insurance – or Medicaid – for much of the population that’s not eligible for employer-sponsored health insurance, that isn’t universally true. For people who were able to obtain medically underwritten health insurance prior to 2014 and who earn too much to qualify for subsidies now, coverage is generally far more expensive than it was prior to ACA implementation.
Premiums increased sharply in the individual market in 2017 and 2018. And although they’ve been much more stable since then, they are still unaffordable for many people whose income is just a little above the subsidy eligibility cut off. If your income is a little above 400 percent of the poverty level, speak with a financial advisor to see if contributions to a pre-tax retirement account and/or a health savings account might bring your ACA-specific modified adjusted gross income into the subsidy-eligible range.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.