Explaining the Affordable Care Act

Question from Jill: I've been following your weekly ACA Updates and have become extremely concerned. My husband and I are 63 and have two years until we can get Medicare. It appears we're looking at paying over $1,000 more per month for our health insurance in 2026 than we are this year, forcing us to dip into our retirement savings. What are our alternatives for health insurance until we turn 65?

Answer: Although this isn't a Medicare related topic, it does affect millions of people who are approaching that age.

Explaining the Affordable Care Act (ACA)

For those who are unaware, ACA stands for the Affordable Care Act, the law enacted in 2014 that made it illegal for individual health insurance companies to deny anyone a policy or medical claims based on current or pre-existing health conditions. It also provided subsidies, or "tax credits," to substantially lower premiums, making health insurance affordable to those who previously it was not. The ACA may also be referred to as Obamacare or Pennie. It has become extremely popular. Today, 500,000 Pennsylvanians and 40 million Americans get their health insurance through the ACA.

In 2021 the American Rescue Act temporarily increased those subsidies which lowered premiums significantly more for nearly everyone. Maybe even more importantly, the American Rescue Act eliminated the income limit to get subsidies, enabling people like Jill and her husband to retire early. In 2022, the Inflation Reduction Act extended the "enhanced subsidies' through 2025.

Why are ACA premiums going up so much in 2026?

As of today, the enhanced subsidies are set to expire at the end of the year. In addition, the income cap to receive subsidies, 400% of the Federal Poverty Level, is also scheduled to be reinstated. This means Jill and her husband, along with what I estimate to be hundreds of thousands of others, will no longer qualify for a dime of help with premiums. This is why Jill's rates are going up so much. Unless the enhanced subsidies are extended, almost everyone who uses the ACA is going to see premium increases ranging from significant, $50 to $250 per month, to ridiculous, $1,000 per month or more.

Lack of options to the ACA are concerning

To answer Jill's question, and as I've stated in my weekly ACA updates, there are no legitimate alternatives for those who don't get employer provided benefits and need individual health insurance. Those in this situation may need to find a job that provides health insurance. I wish I had better news, but at this time, I do not.

Warnings for those seeking alternatives

Here in Western Pennsylvania, any company not named Highmark, UPMC, or AM Better who is advertising or offering alternatives to the ACA is not providing real health insurance! DO NOT BUY PLANS FROM ANY OTHER COMPANY!

Those who do and get cancer, have a serious injury, need expensive medication, or lengthy hospitalization, and have one of these "limited benefits", "indemnity", "faith based," or medi-share" plans as they might be referred to, will find themselves facing tens, or even hundreds of thousands of dollars in bills.

Maybe worse, those who are duped into buying one of these plans likely won't be able to access the care they need without payment in full up front! The scoundrels who push them make commissions that are as much as 500% more than what we're paid to enroll people in ACA Plan. It will almost never be disclosed that they ARE NOT health insurance as you know it!

What companies offer legitimate insurance?

Again, the only companies in Western PA selling legitimate individual health insurance that limit what you pay out of pocket for medical and prescription costs in a calendar year are UPMC, Highmark, or AM Better.

I've been told of the possibility of 12-month "short term" health insurance policies being made available in 2026, but they'll be medically underwritten, meaning companies will be able to deny policies or include pre-existing clauses, so they won't work for many. Again, this "fine print" will rarely be disclosed by those selling these plans or understood by people purchasing them.

Start planning for rate increases now

The Trump administration does have the power to extend the enhanced subsidies and there's still a chance they will. However, as of today, that's just speculation. It's important people who use the ACA start planning on how to budget for more expensive health insurance or consider getting a job that provides that benefit.

Fallout of millions going uninsured

I'm extremely concerned that millions of Americans will be forced to go uninsured again. This is extremely risky and will cause people to forgo necessary doctor's appointments and treatments. It may also put a burden on emergency rooms that will become more crowded with those who are forced to use them as their only means of care. It may also cause further strain on hospitals, many of which are already struggling financially.

With questions regarding the ACA, feel free to reach out. 724-603-3403 or email me personally, [email protected].