Understanding Health Insurance Changes for 2020

Three young adults talk about health insurance options

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Healthcare reform has been in the news almost non-stop for the last few years, so if you're confused about what's happened and what will happen in 2020, you're certainly not alone. Let's take a look at what's changing, what's staying the same, and what you can expect in terms of your health insurance in 2020.

Note: that this discussion mostly applies to individual market health insurance. Although only a small fraction of the US population has individual market coverage, this is where the bulk of the headlines tend to focus, as it's the market that was most affected by the Affordable Care Act.

[If you get your health coverage from your employer, they will provide details about any changes for the coming year. And if you have government-run health insurance (Medicare or Medicaid), you'll receive communications either from the state or federal government, or from the insurer that manages your coverage (Medicare Advantage, Medigap, Medicare Part D, or a private Medicaid managed care plan).]

ACA Has Not Been Repealed or Replaced, & Lawsuit Doesn't Affect Enrollment in 2020 Plans

Despite the ever-present headlines about health care, most of the proposed changes have withered on the vine. GOP efforts to repeal major portions of the ACA in 2017 were unsuccessful, and various Democratic-led efforts to improve on the ACA have also stalled.

There is an ongoing judicial threat to the ACA, however, with an appellate court ruling expected by late 2019 in the Texas v. U.S./Azar lawsuit. The plaintiffs in the case are 18 GOP-led states. And the case is primarily being defended by Democratic-led states, as the U.S. Department of Justice has declined to defend the ACA.

The lawsuit is based on the fact that the ACA's individual mandate tax/penalty was eliminated after the end of 2018, with the plaintiffs arguing that without the tax, the mandate is no longer constitutional (since the tax was the crux of the mandate being declared constitutional by the Supreme Court in a 2012 lawsuit). And they're also claiming that the mandate is not severable from the rest of the ACA, meaning that if it's eliminated, the entire ACA must be struck down.

A federal judge agreed with the plaintiffs in late 2018, but nothing has changed about the ACA during the appeals process. Oral arguments in the appeal were heard by the 5th Circuit Court of Appeals in July 2019, and a ruling could be issued by late 2019. If the appellate court agrees with the lower court—that the ACA should be overturned—the case could end up at the Supreme Court. But in that case, nothing would change about health insurance and the ACA until if and when the Supreme Court issued a ruling, assuming it was also in favor of the plaintiffs.

So for the time being, nothing has changed about the ACA. And nothing will change about enrollment in ACA-compliant plans, even if an anti-ACA ruling is issued in the Texas v. U.S. case before the end of open enrollment (open enrollment continues until December 15 in most states).

Individual Mandate Penalty No Longer Applies (in Most States)

Although efforts to repeal the ACA were unsuccessful, GOP lawmakers did succeed in repealing the ACA's individual mandate penalty as part of the tax bill that they passed in late 2017.

The penalty repeal took effect in January 2019, which means there is no longer a federal penalty for being uninsured in 2019 or future years.

But Massachusetts, New Jersey, and DC have their own individual mandates, with penalties for non-compliance. And California and Rhode Island will join them in 2020 (Vermont will also have an individual mandate as of 2020, but without a penalty for non-compliance). So if you're in one of those states and choose to go without coverage in 2020, know that you'll either have to qualify for an exemption from the penalty (details on those vary by state) or pay a penalty when you file your 2020 state tax return.

The Rest of the ACA Remains in Effect

Other than the individual mandate penalty repeal (and the delay of a few of the ACA's taxes, including the Cadillac Tax), the ACA is still fully in effect, including the premium subsidies, the cost-sharing reductions (aka, cost-sharing subsidies), Medicaid expansion, the employer mandate, protections for people with pre-existing conditions, essential health benefits, medical loss ratio rules, etc.

Cost-sharing subsidies continue to be available for 2020, despite the fact that the federal government stopped reimbursing insurers for that cost in late 2017. Insurers in most states have incorporated the cost of providing cost-sharing subsidies into the premiums they charge. In most cases, the cost has only been added to silver plan rates, which results in larger premium subsidies for everyone who gets premium subsidies.

Average Premiums Mostly Flat for 2020, but Average Benchmark Premiums Decreasing in Most States

Unlike 2017 and 2018, when individual market health insurance premiums increased significantly, average premiums increased by less than 3 percent nationwide for 2019, and are essentially flat for 2020.

But average premiums for the benchmark plan (the second-lowest-cost silver plan in each area) are decreasing by 4% for 2020 in the 38 states that use HealthCare.gov.

The overall average reduction in benchmark premiums is due to a combination of new insurers entering (or re-entering) the individual markets in many states, as well as price reductions from some of the existing insurers.

As is always the case when it comes to individual health insurance, there are significant variations from one state to another, and even from one area to another within the same state. But in general, benchmark premiums are dropping while overall average premiums (for existing plans; not counting new entrants to the market) are remaining essentially flat.

Since premium subsidies are based on the cost of the benchmark plan. And when benchmark premiums decline—with all other factors remaining unchanged—premium subsidies decline as well. So enrollees who receive premium subsidies in 2019 may find that their subsidy amounts are smaller in 2020. Depending on how the pre-subsidy cost of their own plan is changing, that could result in a higher after-subsidy premium in 2020 if they opt to keep their existing plan. Enrollees should always shop carefully during open enrollment, and that's especially true in years when average benchmark premiums decline.

Changes That Were Implemented for 2018 and Continue to Apply

In April 2017, HHS finalized the market stabilization rule, which implemented several changes that apply to people who buy individual market coverage, on or off-exchange. These changes continue to apply for 2020:

  • In most states, open enrollment now lasts for just over six weeks, running from November 1 to December 15, with all plans effective January 1 of the coming year. State-run exchanges that have their own enrollment platforms (there are 13 of them) have the option to extend open enrollment, and some have done so for the enrollment period for 2020 health plans.
  • If your policy was canceled for non-payment of premiums in 2019 and you're planning to re-enroll with the same insurer (or another insurer owned by the same parent company) during open enrollment, the insurer is allowed to require you to pay your past-due premiums before effectuating your new coverage. In general, it should only be one month of past-due premiums owed, as premiums are not charged after the plan was terminated.
  • The allowable actuarial value range for each metal level of coverage in the individual and small group market was expanded as of 2018. Bronze plans can have a -4/+5 range, while silver, gold, and platinum plans can have a -4/+2 range. Bronze plans have an actuarial value of about 60 percent, silver about 70 percent, gold about 80 percent, and platinum about 90 percent. But they can vary according to the allowable de minimus ranges, which were widened as of 2018. This just means that compared with 2017 and prior years, there can now be more variation from one plan to another within a given metal level, so individuals and small businesses should carefully compare the various options that are available.

Benefit and coverage changes in the individual and small group market apply for 2020 just as they have in past years, with adjustments to deductibles and out-of-pocket limits, along with provider networks and covered drug lists. And there are new insurers offering plans in the exchanges in many states for 2020. All of this annual upheaval makes it particularly important for enrollees to actively compare available plans during open enrollment and select the one that offers the best value, instead of opting for auto-renewal.

Increased Availability of Short-Term Plans

In 2018, the Trump administration made changes to the rules that apply to short-term limited duration health plans (STLDI). The changes make the plans more readily available as a substitute for regular ACA-compliant individual market health insurance. But buyers need to beware: The cheaper prices that apply to short-term plans are a result of less robust coverage—you get what you pay for.

Because the new federal rules serve as minimum standards and states are allowed to impose stricter rules, the rules now vary considerably from one state to another. There are 11 states where no short-term plans are available at all and numerous other states where short-term plans are available but must meet stricter rules than those imposed by the Trump administration.

Large Group, Medicare, and Medicaid

Most of the health care reform debates in recent years have centered around the individual market, the small group market, and Medicaid expansion under the ACA (which accounts for about 15 million people, but still just a fraction of the total Medicaid population). For people who get their insurance from large employers, Medicare, or Medicaid (taken together, that's most of the population), the changes for 2020 will generally be the same sort of changes that happen each year.

Medicaid work requirements had been gaining traction in GOP-led states, but are mostly pended after a federal judge overturned them in three states—other states are watching to see how the appeals go in those cases.

Idaho is expanding Medicaid as of January 2020, making roughly 91,000 people newly eligible for coverage (more than 42,000 had already enrolled by late November 2019).

Open enrollment for Medicare Advantage and Medicare Part D runs from October 15 to December 7, with all changes effective January 1, 2020 (this is the same schedule that's been used for several years). Current plans will change somewhat for 2020—as they do each year—so it's important for enrollees to take time during open enrollment to compare the various available options and select the one that will best meet their needs in the coming year.

And there is now a Medicare Advantage open enrollment period from January 1 to March 31. This became available as of 2019, replacing the previously used Medicare Advantage disenrollment period and allowing Medicare Advantage enrollees to switch to a different Medicare Advantage plan, or to switch to Original Medicare.

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Article Sources

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