Planning to Buy ACA Health Insurance for 2018? Here's What You Need To Know

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If insurance carriers want to sell health insurance on the Affordable Care Act exchanges in 2018, today is the deadline to file requests for the rates they want to charge.

The filings should provide the best look yet at what consumers who plan to buy on the exchanges next year can expect.

The deadline is key because a carrier that operates on the federally run exchanges must submit its rate request today for the states in which it wants to operate, or be shut out for next year. So today consumers can see which companies are in and out for 2018—and which markets may have fewer insurance carriers, or none at all.

“If we have a situation where lots of carriers are backing out, that’s obviously a big concern,” says Chris Jacobs, a health policy analyst and CEO of Juniper Research Group.

Of the insurers who remain, many are expected to request steep rate hikes for the third year in a row. In the roughly dozen states that have earlier filing deadlines, more than half of the major insurers have asked for rate increases of more than 20 percent.

A broad survey by Oliver Wyman, a consulting firm, found 43 percent of insurers are planning to ask for rate increases averaging more than 20 percent, and 36 percent want premium hikes of 10 to 20 percent. The rest say they’ll ask for about 8 to 10 percent increases.

What's Driving Up Premiums

Next year could be the third year in a row of steep rate increases for plans on the ACA exchanges, which went into full effect in 2014. This year premiums rose an average 25 percent, and in 2016, 12 percent, according to HealthPocket, a technology company that analyzes and compares health plans. That has angered many consumers, particularly those who don't qualify for tax credits that significantly reduce premiums and out-of-pocket costs for deductibles and co-pays. That's about 15 percent of all people who buy ACA health insurance.

Experts say rates spiked in the last few years because carriers initially underpriced policies. In addition, payments that the federal government provided to carriers to cover the expense of high-cost enrollees were phased out. In some states that didn’t expand Medicaid, a larger number of costly-to-insure sick people turned to the ACA exchanges, driving up insurer expenses.

Still, rate increases for 2018 were expected to be more moderate. In a recent report, the credit rating firm S&P Global Ratings predicted an average increase of 15 percent in 2018 and that going forward the market would continue to stabilize.

“If it remains business as usual, we expect 2018 premiums to increase at a far slower clip than in 2017,” according to the S&P report.

But this year, with the Trump administration and Congressional Republicans vowing to repeal and replace the ACA and no clear plan yet in place, that price moderation isn't happening. Instead, all of the uncertainty means that insurers have to factor wild cards into their pricing. Two main ones: 

Uncertainty about insurer subsidies. Insurers are particularly concerned about whether the federal government will reimburse them for $7 billion in cost-sharing reductions (CSRs) they must provide consumers. Insurers are required to pay that up front to reduce out-of-pocket healthcare costs for low-income people and are later reimbursed by the federal government. The Trump administration has been paying the CSRs on a month-by-month basis without making a future commitment. 

In the nationwide survey of insurers by Oliver Wyman, 94 percent of insurers currently offering plans on the ACA exchanges say they intend to remain in the market; 6 percent intend to exit. But if the federal government stops making CSR payments, 42 percent of insurers say they would exit. And 58 percent say they would revise their requested rate increase to reflect that higher cost.

Uncertainty about how many healthy people will enroll. The ACA's individual mandate exists to prod young, healthy people to buy insurance to offset the cost of sicker people. Under the ACA, with few exceptions, people who don’t buy insurance must pay a hefty penalty. Earlier this year, the IRS announced it would accept returns without proof of healthcare coverage. People who don’t have insurance still owe the penalty—but the IRS isn’t going to hold up your return if you don’t provide the information. If the penalty isn't strictly enforced, healthier people are more likely to forgo insurance and that would drive costs higher, says Beth Fritchen, a partner and actuary at Oliver Wyman.

How to Get Affordable, Quality Insurance

Despite all the uncertainty, there are steps that consumers can take to choose wisely.

• Pay attention to deadlines. The open enrollment window during which you can sign up for an ACA plan on the federal exchanges is shorter this year. In nearly all cases, it will be 45 days, down from 90 days, and will run November 1 through December 15. But states that run their own exchanges may vary the dates and provide more time and different dates, so check back in the fall and give yourself enough time to weigh your options.

• Get your due. About 85 percent of the 11 million people enrolled in ACA plans get tax credits that can lower premium costs significantly. The average premium before tax credits for a silver plan is $433 for 2017, but with tax credits, monthly premiums average as little as $75. Yet half of uninsured adults aren’t even aware that they can get financial assistance to buy plans on the exchanges, according to a Commonwealth Fund report. According to a 2016 report from HHS, 1.1 million people could have also gotten help paying for out-of-pocket costs through the CSR cost-sharing subsidies. To find out whether you qualify for financial assistance, go to healthcare.gov.

• Shop strategically. You can qualify for tax credits only if you enroll in a marketplace policy, and you can get cost-sharing help only in a silver plan. Don’t automatically re-enroll in the same plan if you had one in 2017. Tax credits can be used for any exchange plan but are tied to the lowest-cost silver plan in your area, and that can change every year. If you’re in a state served by a marketplace with no insurer for 2018, you can go off-exchange and buy insurance on the private market from a broker or directly from an insurance company, although you won't be eligible for a subsidy to reduce your premium. Note that a private plan may have a low premium but coverage that's not as comprehensive. If you get a plan that doesn’t meet mandated coverage requirements by the ACA, you'll be subject to the IRS fine.

• Use navigators. Insurance plans are complex, and choosing the one that suits you best can be overwhelming. You can get help enrolling and comparing plans by phone or with a local in-person guide, called a navigator. ACA marketplace call centers are available 24 hours a day, every day except holidays. At HealthCare.gov, you can search by city and state or ZIP code to see a list of local organizations that can help you.

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