The Individual Market of Obamacare

There are a lot of moving parts with the Affordable Care Act (ACA), and most Americans have an opinion about the law. Some see the law in a positive light, others in a negative light. The reality is that there are pro’s and con’s with the law, and it probably falls somewhere in the middle, meaning that there are some good aspects of the law, and there are also some very bad ones.

One of the primary intentions of the ACA was to offer coverage to all legal residents of the US, with no strings attached, and to make coverage affordable. Affordability remains an unfulfilled promise of this law, and that doesn’t look to change anytime in the near future. It is no secret that premiums under the law have increased quite drastically.

The law does, however, make insurance coverage affordable for some people through the availability of Premium Tax Subsidies. Eligibility for Premium Tax Subsidies is determined by several factors, including age, modified adjusted gross household income, as well as availability and affordability of employer sponsored coverage.

As widely respected industry expert Kathy Garza explains, there are also very steep penalties involved for not complying with the individual mandate portion of the ACA, which requires most legal residents and US citizens to purchase compliant health insurance coverage. For the year 2016, this penalty is 2.5% of your gross income or $695, whichever is greater. This number has increased each year since 2014, when the individual mandate went into effect. It is expected to continue to increase each year.

One of the quirks with the law, however, is that the IRS will not collect this penalty unless an individual actually receives a tax refund once they’ve completed their personal tax return.

Perhaps the most widely praised component of the ACA is that the law now requires insurers to offer coverage to all individuals on a “guaranteed issue” basis with no medical underwriting. The law also disallows an insurer from offering two different sets of rates based on gender. Prior to the ACA being passed, it was common practice for “child bearing age” females to pay higher rates than males, and it was also very common for insurers to rider out pre-existing medical conditions, raise rates based on medical issues, or decline to offer coverage altogether. There were even instances where insurance companies would non-renew a policy holder who may have developed a major disease or illness.

The ACA has eliminated this practice, and now are required to offer medical coverage to anyone who applies, with no medical underwriting and no ability to change rates based on anything except for age and geographic location. This is a very popular part of the law.

Not everything is so rosy, though. One of the biggest areas of resistance has to do with the fact that those who are not receiving coverage with a Premium Tax Subsidy are essentially paying extra in the form of additional fees, such as the PCORI and Transitional Reinsurance Fees order to fund the subsidization of those who are.

Another major issue is that statistics indicate that a large percentage of people who have, so far, obtained coverage under the law who did not have access to coverage previously are people who have very costly medical conditions. This has contributed to the increase in premiums and has also led to massive financial losses for insurance carriers in the individual market.

One of the negative effects of this is that, due to these massive financial losses, health insurance companies have begun to restrict their networks. This ultimately means that there is much less available in terms of plan choice, and most insurance carriers are moving toward more restrictive networks, such as HMO’s.

Ultimately, the ACA is a political football. There is no hiding that. That said, we do expect that there will be any number of changes and amendments made to the law in the coming years, which speaks to the demand for people to seek out the expertise of industry experts such as Kathy Garza in order to avoid the pitfalls of a law that has proven to evolve in rapid fashion. Watch the video interview with Kathy Garza.http://rightonthemoneyshow.com/the-individual-market-of-obamacare-harvey-garza/