Saturday, October 27, 2018

Our Choices for 2019

As self-employed individuals with access to employer-based health insurance plans we closely watch developments related to the Affordable Care Act (ACA) in Washington. To understand our choices for 2019 it’s important to understand what’s happened with the ACA:

First, the current administration effectively ended the tax penalty for not having an ACA compliant health insurance plan. I won’t get into the technicalities but you won’t incur any penalty if you indicate you had no health insurance, or any other non-compliant ACA plan, on your 2018 tax return. What’s an ACA compliant health plan? Essentially anything sold on the ACA exchange ( and employer-provided health insurance plans. Recall, however, customers of Christian healthcare ministries had been exempt from this penalty based on the original ACA rules.

Second, the fact you won’t be penalized for not having an ACA compliant plan created the opportunity for the administration to adjust access to non-compliant health insurance plans:

Short term health plans – In short (pun intended), these plans have traditionally provided shorter term (~30 days) health insurance coverage for those changing jobs or in another situation requiring short term insurance. They are not new. They do not cover the 10 essential categories of an ACA compliant plan (i.e. pre-existing conditions, mental health, maternal care, etc.). So what’s new? Short term plans, dependent on state rules, can now have terms for a year and in some cases be renewable for up to 3 years. In Ohio, short term plans are available for 360 days (I won’t get into the technicalities of being 5 days short of a year). There’s been no change to what short term plans do or don’t cover but the ability to have this type of plan for a full year makes it an option. Due to the fact these plans do not cover pre-existing conditions, and other essential categories, the cost is far lower than ACA compliant plans (at least for those not receiving subsidies). 

Association health plans (AHPs) – We haven’t done as much research on association health plans but we understand the basics. These plans have always allowed employers, or self-employed individuals with employees, to join together to buy health insurance. In fact, self-employed individuals with no employees can now participate in AHPs. “Associations” are generally people with a common interest – whether that be economical, through a business, geographically, etc. AHPs cannot exclude individuals with pre-existing conditions but, as we understand it, do not need to cover the 10 essentially categories of an ACA compliant plan. For example, certain AHPs may choose to exclude prescription drug benefits. We have not found relevant AHPs for our purposes but it is an option that seems more accessible under current standards.

Of course, the same options as last year exist as well: (a) self-insure and purchase no health insurance (not an option) (b) continue with Liberty and (c) purchase an ACA compliant plan on the health insurance exchange.   

We just wanted to outline the choices we are considering for 2018. We have been doing a lot of research on short term health plans. In our next post we’ll dive into the structure of these plans and the specific plans we are considering for 2019!