Be wary of those ACA health plans that don’t charge a monthly premium

The illusion of “free” health insurance under the Affordable Care Act could lure unwary shoppers into a costly trap.

Every county in North Carolina will have at least one health insurance plan in 2018 that doesn’t charge a monthly premium for people at the lowest income bracket eligible for ACA subsidies. Four Triangle counties – Wake, Johnston, Chatham and Orange – have four such plans sold by Cigna and by Blue Cross and Blue Shield.

But these plans come with massive deductibles and hefty out-of-pocket costs that could require an individual to spend up to $7,350 – and a family of four to shell out up to $14,700 – before their health insurance took over paying medical bills.

By shopping around, however, a low-income 25-year-old in Wake County could opt to spend $11.56 a month for a Cigna policy next year, with an annual out-of-pocket cost of just $1,250. The total annual cost of this policy: $1,388.72.

The same 25-year-old can also find a Blue Cross plan that costs $35.35 a month. The out-of-pocket maximum is $800, for a total annual cost of $1,224.20.

“Always consider your total cost of care,” advised Brendan Riley, a health policy analyst with the N.C. Justice Center in Raleigh.

More than 500,000 people in North Carolina are expected to sign up for ACA coverage during open enrollment between Nov. 1 and Dec. 15. ACA plans are sold to individuals who don’t have coverage through their employer or aren’t covered through a federal program like Medicare or Medicaid.

Because many ACA users have gone years without health insurance and lack familiarity with the subject, they could mistakenly conclude that their monthly premium payment is the sole cost of their health insurance.

Health insurance almost always requires the payment of an annual deductible before your health care expenses are covered by insurance. The customer’s share of medical bills are called out-of-pocket costs and include the deductible, co-insurance and co-payments.

The only things you get for free under the ACA is preventive coverage: annual checkups, vaccinations, and screenings for high blood pressure, diabetes and other conditions.

The “free,” or zero-premium, policies that appear on the healthcare.gov computer screen might jump out at shoppers as a giveaway too good to pass up. But in most such plans, the steep out-of-pocket cost would eat up nearly half the household income of about $16,000 a year, which is just over 100 percent of the federal poverty level for an individual.

In years past, people at the lower end of the income scale who are eligible for ACA subsidies could usually find health coverage that was heavily discounted, in some cases down to a zero monthly premium payment. But this year there will be more people qualifying for zero-premium plans because of a Trump Administration executive order, said Blue Cross spokesman Austin Vevurka.

Trump’s October executive order eliminated a subsidy called the “cost sharing reduction” that the federal government paid to health insurers for discounting out-of-pocket costs for low-income customers. This subsidy is available to individuals with household incomes from $15,060 to $37,650, and to a family of four with a household income from $30,750 to $76,875.

The elimination of the cost sharing reduction subsidy left insurers on the hook for millions of dollars of discounts they are required to provide to low-income customers under the ACA. So to offset the loss they raised their premiums for 2018. By raising premiums, the insurers triggered higher premium subsidies from the federal government for ACA customers. Because the premium subsidies are paid on a sliding scale based on household income, lower income customers qualify for larger subsidies.

And because the premium subsidies are markedly higher for 2018, they are erasing premiums down to zero on a number of policies for the lowest-income ACA customers.

Three North Carolina counties – Cleveland, Gaston and Lincoln – will have three zero-premium plans available for 2018. The rest of the state will have at least one, but many counties will have two such plans, according to Avalere, a Washington, D.C. health care consulting firm that analyzed the national data.

In North Carolina, Blue Cross is the only health insurer offering ACA plans in all 100 counties. Cigna sells individual ACA plans in just five Triangle counties.

This story was originally published November 6, 2017 at 3:13 PM with the headline "Be wary of those ACA health plans that don’t charge a monthly premium."