Purchasing Health Insurance in the Marketplace: Look Before You Leap

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The Patient Protection and Affordable Care Act (ACA), changed health care delivery, financing, cost and consumer protections and the way most Americans shop for individual health insurance. The law created a new marketplace structure for purchasing private, individual health insurance coverage from a federally operated site, healthcare.gov. Wisconsin, under then-Gov. Scott Walker, opted to use the federal site instead of creating a Wisconsin-run marketplace. The early days of the marketplace were rough, and the federal website frequently crashed, leaving many consumers and advocates frustrated. But after working through early challenges, the centralized purchasing of private, individual coverage is a centerpiece of the ACA.

The move to a central, online marketplace put control in the hands of many consumers. To understand the great opposition to these changes, one only needs to think about the fear of lost jobs to a very large and powerful group of stakeholders, health insurance agents and brokers. Remember that online purchasing virtually wiped out the travel agent; many insurance agents and brokers feared the same fate and fought the new marketplace structure tooth and nail. Others adapted to the new reality and new opportunities in a changing market.

In the end, the marketplaces permitted consumers to shop for health coverage with the new advantage of uniform insurance applications that promoted efficient apples-to-apples comparison of costs: premiums and out-of-pocket costs, as well as covered services, provider networks and consumer protections. Insurance company mumbo jumbo, typically hidden in the fine print of an application or policy, became more limited. Policies must prominently display cost information. The new rules helped streamline applications, since income and household information were often available through existing data from federal government agencies like the Internal Revenue Service (IRS). The new law also eliminated lifetime caps and annual benefit limits.

Essential Health Benefits (required in all individual plans) include maternity care, prescriptions and newborn screenings, and young adults are allowed to stay on a parent’s health plans up to age 26—a very popular feature of the ACA called “dependent coverage.” Similarly, by not discriminating against individuals with preexisting conditions, health plans changed rate-setting methods. Plans can be more expensive based on geography and age (to a controlled level), but not rated based on level of disability. Even after nearly a decade, many agents and brokers remain to assist consumers identify and select health plans. The ACA allows the sale of insurance plans outside the marketplace, as long as the plans cover Essential Health Benefits and follow prohibitions on discriminating against those with preexisting conditions.

ACA Still Going Strong; Open Enrollment Fast Approaching

More than 12 million people gained access to insurance through the ACA in 2014, the marketplace’s first coverage year. (More than 8 million individuals purchased private insurance, while an additional 4.8 million enrolled in Medicaid.) Substantial, new enrollments reduced the number of uninsured individuals and dramatically reduced instances of uncompensated hospital care. Patients had coverage for the first time, and hospitals had an insurance source to bill. In recent history, however, the 2017 Republican tax bill zeroed out the individual mandate’s penalty for not having insurance, chipping away at a critical enforcement mechanism of the ACA. For individuals without health coverage in 2019, the penalty owed on taxes in 2020 is now $0. Census data already shows the number of uninsured individuals creeping up, and hospitals have already reported an uptick in uncompensated care.

Purchasing health insurance does not need to be a painful process, and, in fact, a little work in advance can save you from a lot of painful debt and expenses later on. The ACA’s Open Enrollment Period occurs each fall, now running Nov. 1-Dec. 15 each year. But remember, changes in household size or income could qualify an individual for a “special enrollment period”—an opportunity to secure coverage after a qualifying life event that is outside the traditional Open Enrollment Period.

The 2020 Open Enrollment Period for private health insurance coverage on healthcare.gov kicks off on Friday, Nov. 1, and runs through Sunday, Dec. 15, for coverage that begins Wednesday, Jan. 1, 2020. There are several ways to connect to the marketplace:

• By going online: visit healthcare.gov.
• By telephone: 1-800-318-2596.
• By paper and mail: visit marketplace.cms.gov and view “Applications and Forms.”

Applying online is usually the easiest way to apply and is largely a two-step process. First, answer the questions about household size and income, immigration status and employment and tax dependents in the home. Gather all important documents and information on each member of your household in advance to make these questions easier: names, dates of birth, Social Security numbers, immigration document information for lawfully present immigrants, employer and income information, insurance carriers and a copy of last year’s taxes. Then, select a plan category from the listing of “metals;” that is, a Bronze, Silver, Gold or Platinum plan. These are largely distinguished by how the customer and plan split costs and don’t necessarily indicate a difference in plan quality or covered services.

The marketplace enrollment process uses consumer information to help identify and direct eligible people to Medicaid or BadgerCare Plus. This process is not foolproof, and people with fluctuating monthly income due to work hours, commissions or those with student loan expenses can sometimes miss eligibility options and credits in the simple screening process. Likewise, people with pre-existing conditions can secure health insurance coverage through the marketplace but should still review eligibility for Medicaid programs for people with disabilities who can still work part time. The marketplace’s “no wrong door” eligibility approach helps direct lower-income individuals and families to more appropriate coverage systems but does not always account for different states’ Medicaid eligibility rules.

The second step in the application process evaluates the applicant for financial assistance in the form of tax credits to reduce premiums or Cost Sharing Reductions to reduce out-of-pocket costs for deductibles, co-insurance or other co-pays associated with a plan. These financial incentives are both income dependent and plan based.

• Advance Premium Tax Credits are subsidies to reduce health insurance premiums. Eligible individuals will have household income within the range of 100%-400% of the federal poverty level (FPL) determined at the time of application. The subsidies are based on your anticipated income during the upcoming tax year and are later reconciled against your actual income on your tax return.

• Cost Sharing Reductions are savings on out-of-pocket expenses that are available to individuals who fall between 100% and 250% of the FPL who have purchased a Silver tier marketplace plan. Cost Sharing Reductions are still available despite recent political decisions impacting insurance company compensation for these payments.

Most people seeking insurance can purchase coverage through the marketplace with the exception of those eligible for Medicare and those not lawfully present in the United States. Eligibility for tax credits, though, can be a trickier and potentially costly determination. For example, a person with anticipated annual income under 100% of the FPL should be directed to Medicaid and BadgerCare Plus for coverage, since they are ineligible for marketplace-related tax credits under the law. On the flipside, people with higher incomes must report any additional income increases in order to avoid repayment of tax credits at the end of the year.

A New Plan or Renew Your Plan?

An individual with marketplace coverage in 2019 can renew or change coverage during the Open Enrollment Period. If they fail to act, the plan will renew into the “closest plan available” unless the exact same plan is being offered in 2020. While “auto-renewals” are a helpful feature, consumers should always review their options to avoid a default renewal for at least two good reasons. First, the “new” plan may have dramatically different costs, network of providers or covered services. Second, the consumer’s information and eligibility for tax credits may have changed due to a new job, income or household size. Open enrollment is an opportunity to review current information and make adjustments. It certainly is the better alternative to doing nothing only to find that your income information was incorrect at renewal and that you now owe income tax to repay excess premium tax credits.

For 2020, there are three major things to watch for when applying for marketplace coverage:

• First, a process called “Direct Enrollment” allows an individual to purchase individual coverage through an insurance company or online health insurance seller directly, without redirecting to healthcare.gov. These plans include qualified health plans with ACA protections as available options. However, such plans may not include tax subsidies; this is true even if that same plan is available for purchase on healthcare.gov. Where you purchase your plan matters.

• Second, cheaper plans may be deceiving. Short-term health plans are available for sale that are not comprehensive insurance, may not cover preexisting conditions and don’t follow Essential Health Benefits requirements. Be aware of plan benefits when shopping for insurance during Open Enrollment. That plan may indeed be too good to be true. Don’t get saddled with a junk plan. Review the exclusions or limitations of the plan.

• Finally, watch for scams! The official marketplace is healthcare.gov—not any website that ends in “.com,” “.net” or “.org.” Specifically, look for the “.gov.” Other websites may look quite similar, even using official-looking logos and patriotic colors. Those sites are hosted by insurance sellers or brokers and are not the marketplace.

When shopping for insurance, remember that help is available. The marketplace itself has a “Find Local Help” button that lists Marketplace Navigators, assisters, agents and brokers, sorted by zip code. Unfortunately, in another attempt to stifle enrollment in the ACA, the Donald Trump administration slashed funding for navigators, outreach, education and advertising. Still, some resources remain for consumers who need help with marketplace enrollment, but those with more complex insurance concerns, such as advanced medical needs or fluctuating income, may require a higher level of eligibility assistance. This level of consumer support is currently unavailable or severely limited. The situation is dire for rural populations and those with health disparities or exceptional medical needs. Wisconsin can and should do more. But despite the executive orders, the dozens of attempts to repeal and replace, the lawsuits and the tweets, the ACA is still the law of the land, and the marketplaces have remained remarkably resilient.

Reviewing Your Policy: A Checklist

As you review your health insurance policy and plan options, make sure you fully understand how the insurance would work for your family and your needs. Here’s a handy checklist to help guide you through your review:

• Know Your Policy: Read through your health insurance policy. Make sure to keep letters and updates from your insurer about changes in network providers and covered services.•

• Policy Provisions: Identify important provisions that define the quality of health care and services. Review them carefully. Review your coverage limits and copayment and deductible responsibilities. It pays to know about your insurance before you need it.

• Keep a Paper Trail: Keep a good set of written records. A paper trail consists of any records that verify your contacts with your provider and your insurer. These records will be extremely useful in the event that you need to build a case to get the care you need.

• Pre-Authorization and Preapproval: Some policies require notice before you have certain types of medical procedures. Make sure you are aware of them. If you do not notify the plan as required, there is a good chance they will not pay out benefits on your claim.

• Co-Insurance: Covering a deductible may not be the end of your liability. You might also be responsible for paying co-insurance, which is the percentage of the bill you pay after the deductible is satisfied.

• Out-of-Pocket Maximum: If you have a serious or chronic medical problem, you have the potential to build up large hospital bills just from deductibles and co-insurance. ACA policies have an out-of-pocket maximum where insurance caps the deductibles and co-insurance at a set level each year. For the 2020 plan year, the out-of-pocket limit for a marketplace plan is $8,200 (individual plan) or $16,400 (family plan). After your expenses reach that level, the insurance company pays for all of your medical expenses for the rest of that year, except for co-payments.

• Inpatient and Outpatient Coverage: Some insurers only pay for inpatient hospital stays and do not cover outpatient services. However, physicians treat some very serious and expensive illnesses on an outpatient basis. For all these reasons, make sure to read the fine print.

• Benefits and Exclusions: Despite the ACA provision related to Essential Health Benefits, every plan still has unique benefits and exclusions. Read sections of your policy carefully to identify covered and non-covered services alike. If you have unanswered questions after reading the policy, contact the plan or an insurance agent.

• Provider List: Health insurance through the ACA will offer you a provider directory that includes the clinics, specialties and doctors covered under the plan. For many people, choosing their health care provider is the most important issue in selecting insurance coverage.