Senate Republicans have included a very interesting element to their proposed tax reform bill that has tongues wagging. The bill includes the very interesting addition of a repeal of the Affordable Care Act’s individual mandate. The Affordable Care Act’s individual mandate requires all American’s to purchase and maintain health insurance that complies with the Affordable Care Act. Those who do not and are not exempt are slapped with a tax penalty.
Although the Affordable Care Act includes a mandate requiring American’s to purchase ACA compliant health insurance it also exempts those for whom plans are unaffordable. Unaffordable meaning premiums are beyond 8.l6% of an individual or family’s annual household income. With premium increases in many states to take another jump in 2018 many with annual household incomes well above 6 digits will be exempt from the mandate to hold an ACA compliant health insurance plan. That is a clear indicator of how out of control health insurance costs have become in the wake of “Obamacare”. Unfortunately, it is the middle class, healthy individual who has been dealt the hardest blow by the ACA mandate.
Our Experience with ACA?
As an insurance brokerage with a majority of customers in Texas our experience with Obamacare has been abismal. Each year we’ve seen shocking premium increases, increasing deductibles with dwindling benefits and national carriers exiting the ACA Marketplace each year. Many here in Texas have also had to deal with securing a new plan each year because of a carrier exiting the Marketplace or narrowing plan options. We have spoken with countless individuals over the years who cannot afford a health plan but are still subject to the tax penalty placing them in an impossible financial situation.
In January of 2016 our agency ceased to offer ACA Marketplace health plans and began offering alternative health insurance options. Offering the option of hospital indemnity plans is the best solution we’ve found to assist our customers in being able to secure health insurance that they can afford. There is one thing to consider, the hospital indemnity plans are not ACA compliant. So, why is this a good alternative?
The premium cost of the hospital indemnity plans are a fraction of an ACA plan’s premium. In many cases, the plan premiums and tax penalty combined still amount to a huge savings and provides people with great health insurance benefits. Often times the greatest savings we’ve found have been for families of 3 or more or individuals over 50 yrs. old for whom ACA compliant plans are $1,000 or more in a lot of cases. But we’ve found these plans to be a great alternative that works for a lot of people and we ourselves have seen a tremendous increase in the number of people who choose these alternative plans and love them.
To learn more about ACA alternative plans see Avoiding Obamacare/ACA plans: There Are Alternatives in 2017.
It seems we’ll soon find out what fate awaits the tax reform bill the Senate has handed to the Congress to consider. It seems unlikely that the ACA can survive this fatal blow if the mandate is repealed. It seems a growing number of Americans, chiefly the middle-class, young and healthy, have deemed ACA Marketplace plans either too expensive or undesirable. Without the mandate in place it is very likely the already struggling ACA will flatline! For many Americans it would be quite welcome to be released from the crippling noose of the ACA mandate that they’ve been burdened with long enough! In the meantime, American’s and insurance brokerages such as ourselves will continue to find creative and innovative ways to adapt and find workable solutions and that is something that the government hasn’t managed to regulate out of Americans yet!