Altogether, 8.2 million Americans signed up for health plans through the Affordable Care Act’s insurance exchanges, and this compares to 6.4 million during last year’s enrollment period. So far, over 2 million enrollees are under age 35, and make up over one-third of total enrollment.
While enrollment for coverage beginning January 1 has ended, enrollment continues through January 31 for coverage starting later in 2016. Though some people qualify for exemptions, most people who go without insurance are subject to financial penalties. The healthcare market changes from year to year just like any other market does, with some of these changes are influenced by the Affordable Care Act. Here is some of what to expect in 2016.
Changes to the ACA Affecting Employers
Under the ACA, employers must comply with certain requirements. The biggest change for 2016 is the definition of “small employer” changing from businesses with 1 to 50 full-time equivalent employees to those with 1 to 100 full time equivalent employees. Employers with between 51 and 100 full-time equivalent employees must meet ACA requirements for small group employers unless they offer grandfathered plans.
Small employers must offer minimum essential coverage that is affordable and provides minimum value to 95% of full-time employees and dependents up to age 26. Otherwise, they will have to pay financial penalties. Heretofore, only employers with 100 or more full-time equivalent workers had to pay penalties for not complying with the employer mandate, but starting in 2016, employers with 51 to 100 full-time equivalent employees are subject to penalties as well.
At the same time, however, businesses with 51 to 100 full-time equivalent employees were eligible to use the Small Business Health Options Program to purchase health plans for employees starting November 15, 2015, which they were not able to do before.
The Employer Mandate in 2016
Larger employers – those with more than 100 full-time equivalent employees – will have to offer qualifying coverage to 95% of employees in 2016. For 2015, the figure was only 70%. The penalties for employers that don’t offer qualifying coverage to employees in 2016 can be severe. Employers that don’t offer coverage must pay penalties of $2,000 per full-time employee, though there is an exclusion for the first 30 employees.
Employers offering coverage that is not affordable or doesn’t cover 60% or more of allowed costs will have to pay a penalty equal to $3,000 for each employee who receives a federal subsidy. This is also an option if that figure turns out to be less than the $2,000 per employee penalty. If most of a company’s workers are not eligible for subsidies, this option can lower the overall penalty the employer will have to pay for not meeting the employer mandate.
Individual Mandate Penalties Increase
It isn’t only employers affected by mandates under threat of financial penalty. Individuals who do not have exemptions and who are required to buy coverage under the Affordable Care Act will pay a penalty of $695 per adult (previously $325) and anywhere from $162.50 to $347.50 per child. The maximum family penalty goes up from $925 to $2,085. Furthermore, if an alternative calculation method that uses income above the tax filing threshold results in an amount greater than what would be calculated under the per-person method, the actual penalty is whichever amount is greater, and this is true even if the income-based calculation is higher than the family maximum of $2,085.
The only people exempt from the individual mandate penalties are those who qualify based on income and other types of personal and financial hardships.
Premiums Under the ACA
Overall premiums under the Affordable Care Act have risen, but tax credits have risen faster, so what people pay out of pocket for policies purchased on healthcare exchanges online is in many cases lower in 2016. Silver-tier plans in major cities across the US are rising by more than 10% in some cases, though these higher increases are mostly concentrated in states with low populations. Across the board, premiums will go up by around 3.6%.
However, most participants who receive tax credits to help pay for their insurance won’t see any increases in their premiums. Five states (Arizona, Hawaii, Minnesota, New Mexico, and Tennessee) are seeing premiums rise even after tax credits are figured in. In most of these cases, after-credit premium increases were seen in situations where participants were paying less than the average nationwide amount for premiums.
More Millennials Signing Up for Insurance, and That’s Good
The fact that more young adults are signing up for health insurance under the Affordable Care Act is a positive trend. That’s because younger adults tend to be healthier and help balance out the market against older, sicker people who purchase plans on the exchanges. Many insurance companies have lost money on their plans sold through the exchanges, but with more Millennials signing up, this could change. The goal is to eventually have 38% of enrollees under the Affordable Care Act be younger than age 35 to balance the market.
Prescription Drug Price Trends for 2016
Prescription drug prices have been in the news, in many cases due to specialty drugs that are used only by a small number of people with rare illnesses. But those specialty drugs aren’t the only ones that have increased in price faster than inflation. Merck, Pfizer, and Eli Lilly have respectively increased prices by an average of 10%, 14.3%, and 15.3% every year between 2012 and 2015.
With 2016 being a presidential election year, consumers can expect prescription drug prices to be hot topics raised with political candidates at all levels, from local to national. After Turing Pharmaceuticals’ decision to raise the price of the drug Daraprim by 5,500% overnight inspired calls for prescription drug price reform, Congress decided to investigate the methodology behind how prescription drug prices are set. Wall Street may also start questioning the ethics of prescription drug pricing, putting pharma CEOs under increased scrutiny in 2016.
By June 30, 2015, 9.9 million Americans had coverage through the federal and state exchanges, and more than 80% of them received tax credits to help pay for premiums. Secretary of the Department of Health and Human Services Sylvia Mathews Burwell expects more than 10 million Americans to have coverage through the exchanges by the end of 2016.
While more Americans have insurance that can forestall financial disaster in the event of a serious illness or accident, the cost of healthcare remains high for most, and comparing prices where possible, with health plans, healthcare services, and prescription medications is becoming a standard part of the consumer experience with the American healthcare system.
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