Obamacare customers who do not receive government help to pay for health insurance are expected to look for ways to reduce their costs during this open enrollment season by going uninsured, buying less extensive coverage or altering their incomes.
Industry and nonprofit insiders say people who are looking for ways to reduce their spending on monthly premiums tend to seek alternatives to Obamacare plans, such as through a religious health-sharing ministry, short-term health insurance, or indemnity plan. Others may choose to go uninsured or reduce their incomes so they can receive federal assistance.
"People are looking for sure," Louise Norris, who co-owns a health insurance agency with her husband and writes for consumers at Healthinsurance.org, said of unsubsidized customers shopping for Obamacare alternatives. "It kinds of depends on what your risk tolerance is and whether you’re exempt from the penalty."
That is occurring as premiums for Obamacare's mid-level plans, known as silver plans, rise by an average of 34 percent in 2018, according to the consulting firm Avalere Health. Though about 80 percent of customers who sign up for health insurance through Obamacare exchanges, such as the federal healthcare.gov, receive government assistance that may make their coverage cheaper in 2018 than in past years, a slew of other customers are facing significant increases in premiums. Most of them tend to buy coverage outside the exchange but that must still abide by Obamacare's rules.
Unsubsidized customers, estimated at roughly 6.7 million people in 2017, according to Kaiser Family Foundation data, make more than $48,240 a year for an individual or $94,400 for a family of four and are not eligible for subsidies because Obamacare cuts off assistance at 400 percent of the federal poverty level. People who buy Obamacare coverage tend to be self-employed or have a job that doesn't provide health insurance, and some are early retirees. Last year they faced price increases of an average of 22 percent for silver plans.
"There is a great deal of concern among the unsubsidized that are finding it very hard to afford health insurance to begin with and are now facing double-digit increases again this year," said Kev Coleman, head of research and data at Healthpocket, a health insurance research and comparison website.
Some are choosing to forego coverage altogether; about 27 million people are still uninsured under Obamacare, according to the Kaiser Family Foundation. Some potential customers find Obamacare unaffordable and instead pay a tax of $695 per adult or 2.5 percent of household income, whichever is higher, for going uninsured.
"I have had many people say to me, 'I will pay the penalty, it’s cheaper than buying insurance as I never go to the doctor,'" said Craig Gussin, owner of Auerbach & Gussin Insurance and Financial Services, Inc. in California.
But some customers who paid the penalty in past years won't have to anymore because health insurance prices are higher. Under Obamacare, unsubsidized customers are exempt from the penalty if the cost of the cheapest bronze plan makes up more than 8.05 percent of their income.
Norris said that despite that reality, some people would rather have some level of coverage. For instance, customers are turning to Christian health-sharing ministries, which don't offer preventive care for the first year and have rules that dictate certain behavior, such as requiring members to commit to a life of abstaining from smoking, drinking to drunkenness, or having sex outside of marriage. Members "share" in each other's medical costs by paying a set amount every month. The plans don't have to abide by the same requirements as those under Obamacare, such as guaranteed coverage for pre-existing illnesses.
Enrollment has more than doubled by about 350,000 in Nov. 2014 to above 860,000 today, according to the Alliance of Health Sharing Ministries. Joel Noble, the alliance's vice president, said he expects to see an increase in enrollees this year but not as large as the surges seen following the first several years of Obamacare's open enrollment.
"Since healthcare sharing is not insurance, the members can choose how to spend their healthcare dollars as it best suits their needs," Noble said in an email. "As cash pay patients, they are in complete control of their care instead of their insurance company or employer dictating where they go or what care is administered."
Members tend to spend their own funds for preventive care and then send a bill to the ministry for a catastrophic event, such as a car accident or cancer diagnosis. Coverage for medical needs is not guaranteed.
Norris said she has seen clients gravitate toward the plans.
"I’m sure we’ll see more this year," she said. "There are things to be aware of and the are caveats, but they are much less expensive."
She also sees clients gravitating toward short-term plans. Like health-sharing ministries, short-term plans do not include a wide range of benefits and do not pay for coverage associated with pre-existing illnesses.
"It’s not going to have the preventive care, but a lot of people don’t really want that. What they want is something that will protect them in the case of an accident or illness or sickness and these plans are very good at doing that," said Shaun Green, senior vice president at Agile Health Insurance, which sells short-term plans.
Green said his company expects to see significant growth in purchases of short-term plans.
“We’re very bullish," he said, adding that the purchase rises by 3 to 4 percent every 12 months. "We are looking to have a great year ourselves."
An executive order by President Trump seeks to reverse an Obama administration rule that limited the plans to 90 days, allowing them to last as many as 364 days as soon as the start of 2018. Coleman said some customers currently renew their healthcare coverage once the 90 days are up, but notes that if they do it re-sets their deductible. They also risk being turned away if they develop a pre-existing illness.
Some Obamacare customers pair a short-term plan with an indemnity plan, in which an insurer provides a set amount to enrollees to pay for medical claims, regardless of their cost. Others go to cash-only clinics.
Customers also are seeking ways to qualify for Obamacare's subsidies so that they can receive coverage without paying the full price. For instance, if they are self-employed they have looked to reduce their income, whether by cutting back hours, doing fewer projects, or putting some money into a retirement account.
"That way you get to keep that money versus paying for health insurance," Norris said. "It's definitely a conversation that comes up with people if you're just over the line."
Gussin, who is also spokesman for the National Association of Health Underwriters, said he had clients who had reduced their work hours to lower their income just enough to receive a subsidy.
"In one case, it was over $1,000 per month," he said.
Others are learning that they can find Obamacare plans that don't have the same price increases as those sold on the exchange. Most of the premium increases are attributable to Trump ending cost-sharing reduction subsidies. To deal with the changes, states shifted some of the costs of their premiums so they could charge the federal government more and make up for losses. In some cases, they selectively applied the increases so that fewer people would be affected. Through some of these changes, some states have made it possible for unsubsidized customers to buy cheaper plans at a different metal levels, such as gold, or to buy outside of the exchange and directly through a broker or health insurance company at a lesser price.
Green said he thinks many people benefited from Obamacare, but added: "It can be problematic if someone is in a plan that really isn't right for them. And that’s the key thing."
• A description of HealthPocket on this story has been corrected. The site is a health insurance research and comparison website.