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10 things millennials should know about health insurance

Even if you’ve done it many times, buying health insurance can be confusing. Now imagine you're a millennial signing up for health insurance for the first time in your life.

Researchers at the University of Pennsylvania found that even college-educated, technically savvy adults in their 20s and 30s have a tough time navigating Healthcare.gov, the official site of the Affordable Care Act (ACA).

The researchers surveyed 30 adults, ages 19 to 30, who were interested in signing up for health insurance and interviewed them before they completed their enrollment and again about a month later.

"We found that half of the participants could not define 'deductible' and three-quarters couldn't explain 'coinsurance,'" says Charlene Wong, a University of Pennsylvania pediatrician who led the study, which was published in the Journal of Adolescent Health.

Unfortunately for millennials, terms like “deductible” and “coinsurance” are not unique to the ACA. They are part of basic health insurance lingo, which means people need to be familiar with these terms no matter where they buy their insurance.

Dr. Wong says that misconceptions on these terms could leave young people exposed to financial risks down the road.

For example, she says, one young man thought the high-deductible health plan he was buying would cover his first $6,000 in medical expenses when it was the other way around: He had to cover the first $6,000 in costs under the plan.

"Anyone who doesn't understand the health insurance terms is going to have a difficult time making the best decisions for themselves when they shop for health insurance," Dr. Wong says.

Here are 10 things about the ACA and health insurance that millennials should know before they begin shopping for policies.

1. What is a deductible?

This is how much you pay out of your own pocket for most medical services before your insurance kicks in.

For example, if your plan has a $1,000 deductible, your insurance won't pay any bills until you've spent this amount. (Note: Deductibles may not apply to some preventive services such as wellness visits and vaccines.)

2. What is coinsurance?

This is your share of any claim for a medical service. For instance, you might pay 20 percent of the negotiated cost of your service and your insurer pays the remaining 80 percent. You start paying your plan's coinsurance once you've met your deductible.

Often, the lower your monthly premiums are, the higher your coinsurance will be.

3. What are premiums?

Premiums are the payments you make to maintain your policy.

4. What is a copay?

For some services, an insurer may require you to pay your health care provider a copay, which typically consists of a flat fee. For example, many policies have a $30 to $40 copay for each doctor’s visit. Copays are typically higher for visits to specialists or emergency rooms.

Your plan can require you to pay copays and coinsurance. Copays are often necessary when purchasing prescription medications. If you see a doctor regularly for a chronic health condition and are on medication, look for a plan that has low copays for those visits and for your prescriptions.

5. When can I sign up for health insurance?

Under the ACA, you can generally buy health insurance only during open enrollment. Open enrollment for ACA coverage in 2018 is underway, it began Nov. 1 and runs through Dec. 15, 2017.

However, you may be eligible to enroll at other times if you qualify for a special exception. Exceptions are granted for a number of reasons, including if you get married or divorced, have a child, change jobs or move to a new state.

6. Do I have to buy my insurance in the Health Insurance Marketplace?

If you are a U.S. resident and don't have access to health insurance coverage elsewhere – through work or your parents, for example – you can buy health insurance in the government-run Marketplace or directly from a health insurance company.

ACA premium subsidies are only available for polices purchased from the Health Insurance Marketplace.  These subsidies can lower the cost of health insurance for those who qualify. To be eligible for subsidies, a person’s income must not exceed 400 percent of the federal poverty level. For singles, that equals $46,680 for 2015 coverage and $47,080 for 2016.

Plans sold outside of the Marketplace must offer the same minimum benefits and may offer a wider network of providers, a better price or both. So it’s wise to shop both in and out of the Marketplace to find the best health insurance plan for your needs and budget, particularly if you don’t qualify for government subsidies. You can compare health insurance quotes on Insure.com, and be sure to choose from among the best health insurance companies, based on customer satisfaction ratings.

7. What happens when I turn 26?

Under Obamacare, you may be covered through your parents' health insurance until you are 26, at which time you will have to get insurance on your own. You may qualify for special enrollment if your birthday falls outside of the open enrollment period.

Start shopping before you turn 26 so your new plan starts when your old one ends to avoid any gap in coverage. If you enroll in a Marketplace plan before the 15th of the month, your coverage will start the first of the following month. For example, if you need coverage starting Aug. 1, make sure you are enrolled no later than July 15.

8. Does my student health insurance plan qualify under Obamacare?

Maybe, says Kev Coleman, director of research and data for HealthPocket, an insurance research site.

"Check with your school's health plan administrator to see if the plan meets the requirements of the Affordable Care Act," he says.

To qualify, the plan must cover preventative services (wellness visits, vaccines) and essential services such as emergency treatments, hospitalizations, and maternity and newborn care.

9. What if I’m insured through work and my parents' plan?

When you have two insurance plans, one is primary and the other is secondary. The plans will coordinate coverage. When you’re insured by both a workplace plan and your parents’ plan, your work plan will be primary and your parents' coverage will be secondary.

“You can't have two health insurance plans covering the same benefits," Coleman says.

The primary plan pays your claims minus deductible, copay and coinsurance. Your secondary plan may pay some of the unpaid balance after you've met its deductible.

There may be no real benefit to having two plans if you have to pay premiums for both, Coleman says.

10. Should I consider a catastrophic plan?

This type of plan protects you from worst-case scenarios such as a costly accident or serious illness. It kicks in only after you have paid for a lot of care on your own. Catastrophic plans still cover preventative screenings and shots. You may be eligible for this type of plan if you're under 30.

However, if you buy a catastrophic plan in the Marketplace, you won't be eligible for premium tax credits. You will pay the standard price for this type of plan. Catastrophic plans may not be much less expensive than entry-level plans in the Marketplace, Coleman says.

ACA open enrollment: What's changed and what hasn't after Trump cost-sharing reduction announcement

President Donald Trump recently announced that he will no longer pay cost-sharing reduction (CSR) payments to insurers in the Affordable Care Act (ACA) exchanges.

The CSR payments total about $7.2 billion annually. They help keep down out-of-pocket costs for about 7.5 million Americans with incomes less than 250 percent of the federal poverty level.

Premiums on ACA plans were already averaging 20 percent in 2018, but insurance companies are increasing premiums even more without CSR payments. Without the payments, insurers may also abandon the ACA exchanges and leave some Americans without an ACA plan choice in either 2018 or 2019.

Trump's announcement comes as millions of people in ACA exchanges plans head into open enrollment on Nov. 1. The Trump Administration cut open enrollment in half this year. It usually runs through the end of January, but open enrollment for the ACA exchanges is only Nov. 1-Dec. 15 this year. Plus, the administration cut marketing for ACA plans by 90%. Insurers and ACA advocates worry that the Trump Administration’s moves will reduce enrollment and create unbalanced risk pools, which will mean higher premiums. 

What does the CSR announcement mean for open enrollment?

Trump's announcement doesn't affect open enrollment. It still runs from Nov. 1-Dec. 15.

Losing CSR payments may also not change the plan offerings. Insurance companies already signed on and set their premium increases for 2018.

However, some insurers could argue that losing CSR payments allows them to get out of the 2018 contracts. In that case, they could try to leave, but states may still stop them from leaving.

Even if all insurers stay, members may see higher than expected premiums in 2018. Insurers need to comply with an ACA provision that requires them to keep down out-of-pocket costs for lower-income members. CSR payments helped insurers do just that. Insurance companies will now need to figure out a way to fill the funding gap. One way is to increase premiums.

A recent report by Avalere found that premiums for ACA “silver” plans will increase an average of 34% in 2018. Silver plans are the most popular plans in the ACA exchanges and insurance companies have proposed large premium increase for those plans. Insurers are implementing such huge premium increases on silver plans that people shopping for ACA plans may find more affordable “gold” plans once you take into account ACA tax credits. In other words, make sure to shop around for plans in different “metal” levels.  

Trump's announcement wasn't exactly a surprise. Many insurance companies included the possibility of the president stopping CSR payments in their proposed increases for 2018.

One state, Oregon,  even suggested that payers increase their proposed rates on silver plans  by another 7.1 percentage points in 2018 to help offset the loss of CSR payments.

However, insurers that set rates expecting CSR funding may request to revise premiums for 2018. One state, Oregon, is even suggesting that payers increase their proposed rates on Silver Plans, which is the most popular plan option in the exchanges, by another 7.1 percentage points in 2018 to help offset the loss of CSR payments.

So, even if you have ACA plan options, you may see higher premiums than expected.

In one bit of good news, healthcare.gov now organizes plans based on your monthly premium after you account for tax credits and subsidies. This means shopping on heatlhcare.gov is more consumer-friendly than before and it’s easier to comparison shop.  

Tax credits may help buffer CSR payment loss

For most people in ACA plans, higher premiums will get swallowed up by tax credits. The ACA offers a premium tax credit for members in ACA plans. Those credits help members between 100 and 400 percent of the federal poverty level reduce premiums or out-of-pocket costs. More than 80 percent of ACA plan members are eligible for the tax credit.

What this means is that premium tax credits may offset premium increases for those who qualify. However, the tax credits won't help many middle class and upper-middle class members who don't qualify for the tax credit. They will face higher premiums and feel the brunt of the CSR payment cuts and subsequent premium increases.

What happens now?

The CSR payment issue is now in two different places -- Capitol Hill and the courts. Eighteen states and the District of Columbia sued because of Trump's CSR decision, but a federal judge ruled that Trump does not have to make the CSR payments. Insurance companies may also sue for the payments.

Congress is hoping to resolve the issue with legislation to continue CSR payments for two years. Senators were already talking about a possible bipartisan solution in September. Senators Lamar Alexander (R-Tennessee) and Patty Murray (D-Washington) were working on a plan for Congress to appropriate the money for the CSR payments through 2019.

This would have taken the payment issue away from the president, guaranteed insurer payments and stabilized the market somewhat. However, Republican leaders set aside that proposal and instead decided on pushing a large healthcare reform bill that would have repealed the ACA. That proposal failed to gain enough support, and now we're back to a possible bipartisan solution.

The Congressional Budget Office estimated the bipartisan plan would reduce the deficit by $3.8 billion over 10 years and not affect coverage premiums.

In addition to the Alexander-Murray plan, Republicans are proposing more conservative CSR bills that could include expanding Health Savings Accounts and delaying the employer mandate to offer health insurance.

There are still questions as to whether the Republican-led Congress can garner enough support for CSR payments. Congress may not take up the issue until December and could include it among other bills in a final end-of-year spree.

If Congress doesn’t pass CSR legislation, states may forge lengthy legal battles to get the federal government to pay. Some states may even try to make the payments in the interim in hopes of getting repaid later. Until all of these issues are resolved, the ACA exchanges will remain teetering, and insurers will discuss internally whether the business is worth it. Stay tuned

-- by Les Masterson

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