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Under the Senate’s new proposed healthcare bill, 24 million Americans may lose their Obamacare subsidies.
Much of the discussion about the Senate’s proposed healthcare bill has surrounded how the law would cut funding from Medicaid and how it will cut taxes for the uber-wealthy. What is often lost in these discussions is the impact this reform will have on middle-class Americans whose incomes may exceed the Federal Poverty Level (FPL).
Senate Healthcare Bill to Cut Subsidies
One of the first parts of the bill deals with cutting Obamacare subsidies for those who earn over 350% of the FPL. Under Obamacare, subsidies were provided for all those who earned under 400%. This means that only the group of people who earn between 350% and 400% of the FPL will be affected. That’s no small group though.
How many Americans this affects exactly is difficult to determine. The Congressional Budget Office score will be released this week and that report should give the exact number. However, it is possible to estimate that between 20 to 24 million Americans will be affected by this cut in premiums.
How to Determine Whether You’re at Risk of Losing Your Obamacare Subsidy
Don’t know if you’ll lose your Obamacare subsidy? We did our own calculations and estimated the household income groups that’ll be affected by the Senate healthcare bill if it passes. Take a look at the information below and see whether you’re at risk of losing your Obamacare subsidy.
According to US Census data from 2016, 40.2 million Americans make between 300% and 400% of the Federal Poverty Line. If just half of those Americans were in the range between 350% and 400% that would mean 20.1 million Americans are at risk of losing their Obamacare subsidies.
However, our estimates go further than that. If you look at the census data breakdown of income by household size you can estimate the number of households in each of the following ranges.
1 Person = $41,580 and $47,500 = 1.6 million households
2 Person = $56,070 and $64,100 = 3.9 million households
3 Person = $70,560 and $84,650 = 1.9 million households
4 Person = $85,050 and $97,200 = 1.4 million households
5 Person = $99,540 and $113,760 = 0.5 million households
6 Person = $114,030 and $130,320 = 0.15 million households
7 Person = $128,555 and $146,920 = 0.07 million households
If you multiply the household numbers by the number of people in each household you can determine the number of people in each category.
1.6 million households x 1 person = 1.6 million people
3.9 million households x 2 people = 7.2 million people
1.9 million households x 3 people = 5.7 million people
1.4 million households x 4 people = 5.6 million people
.5 million households x 5 people = 2.5 million people
.15 million households x 6 people = 0.9 million people
.07 million households x 7 people = 0.5 million people
Altogether, that’s an estimated 24 million people who will lose eligibility for Obamacare subsidies under the Senate healthcare bill.
Things You Can Do If You Lose Your Obamacare Subsidy
These groups will join those Americans who were previously earning above 400% of the Federal Poverty Line and were unable to afford health insurance. For these Americans, here are 7 options.
1. Buy Insurance on the Government Exchange without a Subsidy
Your first option is to buy insurance on a government exchange without the federal subsidy.
The Senate’s bill aims to reduce the cost of premiums and this should make purchasing insurance more affordable.
The bill hopes to stabilize the market, in the short-term. It does so by investing $50 billion over four years ($15 billion in both 2018 and 2019, and $10 billion in 2020 and 2021) and by continuing CSR payments (Cost Sharing Reduction) to insurers.
This should reassure insurance companies worried that the ACA marketplace was collapsing. As a result, fewer insurers should flee the exchanges and hike up premiums. The bill also allows insurance companies to offer less-comprehensive plans with lower premiums (but higher deductibles and co-pays).
2. Buy a Short-Term Insurance Plan
A short-term health insurance plan doesn’t cover the essential health benefits mandated by the Affordable Care Act but it’s a quick, easy, flexible and cheaper option than paying for an ACA plan. While deductibles can be high (as much as $10,000), premiums are usually very low (as low as $20/month).
If you are generally healthy, between jobs, or expect to receive insurance in the future (from an employer or the government), then this plan might be right for you.
3. Get Catastrophic Health Insurance
If you’re relatively healthy but worry over “what if everything goes wrong” scenarios, then consider Catastrophic health insurance, also known as a high-deductible health plan (HDHP).
Catastrophic health insurance is available to anyone under the age of 30 or to any household that qualifies for a hardship exemption. The hardship exemption kicks in if health insurance would count for over 8.05% of your income. If you make under 400% of the poverty level (and, in some cases, if you make just over the 400% of the FPL), then you probably qualify for the hardship exemption.
Premiums are very low for these plans but deductibles are extremely high ($7,150). They cover the same essential benefits as other ACA plans. That means this plan still covers all your preventative care before you pay your deductible; however, the rest of your care is completely on you until you meet your deductible. Once you do meet your deductible (which would probably happen in your “worst-case-scenario”) then your insurance would cover 80% to 100% of your medical bills.
4. Go for an Accident-Only Plan
Accident-only insurance is supplemental insurance plan that’s an option for many who can’t afford an ACA plan. An accident-only plan doesn’t cover the ten essential benefits but does cover qualified-accidents such as the breaking of limbs, paralysis or burns. So, if you sustain a major injury, these plans will pay to cover your expenses. These plans have extremely low premiums ($15 to $50 per month) but very high deductibles.
5. Purchase a Critical Illness Plan
A critical illness plan is similar to an accident-only plan in that it is a supplemental plan that does not cover the essential benefits guaranteed by the Affordable Care Act. However instead of covering major accidents, a critical illness plan covers major illnesses such as cancer, heart attacks and strokes. The price of these plans depends on your age but usually varies from $50 per month to $150 per month with high deductibles.
6. Go to a Christian Health Ministry
An alternative to traditional health insurance is paying for membership at a Christian Healthcare Ministry. These ministries are not insurance companies, they are non-profit religious organizations. You pay a monthly fee to the ministry and usually cover many of your regular healthcare fees out-of-pocket (like annual physicals). However, for larger fees such as hospital visits, the organization will pool together money of all those in the ministry and help cover costs.
While it’s becoming increasingly common for people to turn to faith-based groups for health coverage, as of 2015 it’s reported that only around 340,000 people relied on such organizations for coverage.
Also remember that because these are faith-based organizations, healthcare costs that are morally opposed to the group’s values, such as pregnancies out of wedlock, will not be covered.
7. Risk It and Pay Out-of-Pocket
This choice has inherent and obvious risks attached. It’s impossible to know when illness or injury may strike and living without insurance has serious costs and important implications. However, if you are a relatively healthy individual and determine that your annual healthcare costs are lower than the annual deductibles on these plans, then it’s a risk you might decide to take.
If you are insured and an illness or injury causes unexpected health care costs, you do have options to try manage costs. You can try to negotiate your medical bill or hire a medical bill advocate to do it for you. You can also try taking out a personal loan or crowdfunding your healthcare.