Employer Insurance Unfazed by Health Care Battle

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Despite warnings that Obamacare would implode if Congress didn’t repeal and replace it, the Affordable Care Act lives on. But even though the Senate couldn’t muster enough votes to dismantle the ACA, the 12 million people who buy health insurance on the exchanges face uncertainty—and several unresolved issues could affect availability and rates.

10 Things You Need to Know About Health Savings Accounts

The vast majority of people—the more than 175 million workers who get health insurance from their employers—can rest easy. They won’t see big changes to their coverage for 2018. Large employers expect average health care costs to rise by 5% in 2018, to $14,156 per family, similar to increases in the past five years, according to the National Business Group on Health. Employers generally cover almost 70% of the cost, leaving employees to pay about $4,400 for family coverage. The spiraling cost of specialty drugs is primarily to blame for the increase.

Employers continue to make changes to their plans to help mitigate their costs, such as by raising deductibles and shrinking provider networks. When choosing a plan, make sure that your doctors are covered, and compare your out-of-pocket costs in addition to premiums. The median in-network deductible will be $1,300 for employee-only coverage and $3,000 for families, and nearly 40% of employers will offer only a high-deductible plan.

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When to Sign Up for Medigap and Prescription-Drug Coverage

You can ease the pain of deductibles by signing up for a tax-advantaged health savings account, especially if your employer helps to seed it. Employers are offering a median contribution of $650 per employee and $1,070 per couple in 2018.

The Affordable Care Act has different rate-setting rules for small-employer plans (plans with 50 or fewer employees), which could be affected by any changes to the law. But many of these plans have locked in coverage for the next 12 months, or were “grandmothered,” which means they weren’t subject to all of the rules (in states where that’s allowed), says Suzy Alberts, an insurance broker in Southfield, Mich.

For individuals who buy coverage on the exchanges, the primary question is whether the government will continue to pay insurers cost-sharing reduction subsidies, which help cover deductibles and co-payments for lower-income people. Because of a federal lawsuit, the Trump administration could discontinue these subsidies without a vote from Congress. The resulting uncertainty has created huge disparities in insurers’ proposed rates on the exchanges. In Pennsylvania, the average rate increase in 2018 would be 8.8% with the subsidies, but 20.3% without them. The average 12.5% rate increase proposed in California could double without the subsidies. If premiums rise substantially, however, some people will qualify for bigger tax credits to offset some or all of the hike.

Rates must be finalized in early fall. “If we still don’t know at the time whether the cost-sharing reductions will be funded, we expect that insurers will use the higher rates,” says Janice Rocco, California’s deputy insurance commissioner.

The final plans and premiums for the exchanges will be revealed in early October. “There’s never been a more critical time to shop the marketplace,” says Heather Korbulic, executive director of Nevada’s Silver State Health Insurance Exchange.

You will also have less time to pick a plan. Open enrollment for 2018 runs from November 1 to December 15, instead of January 31.

Health Savings Account vs. Flexible Spending Account: Which Is Better for You?

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.