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Many Americans costing themselves money with health insurance missteps

Health Care and Health Insurance
by Jacqueline Lee
More changes for health insurance laws in the near future?
More changes for health insurance laws in the near future?

In the last few years, millions of Americans have been able to get health insurance for what could be the first time ever thanks to the insurance exchanges that were opened by state and federal governments. However, it seems that a fairly large portion of them might not be eligible for some of the subsidies that make buying this coverage more affordable, largely because they make mistakes when buying those plans.

In all, roughly 2.2 million Americans are not eligible for some federal assistance because the health insurance coverage they chose to buy through the exchanges mandated by the Patient Protection and Affordable Care Act is non-qualifying, according to a report from Avalere. Those subsidies, known as cost-sharing reductions, could come in addition to those available to a broader number of people, as they are targeted specifically to people with incomes of between 100 percent and 250 percent of the federal poverty level. Overall tax credit subsidies are available to people whose salary is as high as 400 percent of the poverty line.

Why is that happening?
In all, only 5.9 million out of a possible 8.1 million people who could qualify for CSRs actually enroll in these plans, leaving them with much larger out-of-pocket costs than they might otherwise have had to face on their own, the report said. Dan Mendelson, the chief executive officer at Avalere, indicated that much of this might come because people are choosing their plans based on what has the lowest monthly premiums rather than lowest out-of-pocket costs. premiums rather than lowest out-of-pocket costs. This means that, in general, consumers are purchasing bronze plans over the CSR silver plans because of the lower monthly premium but not accounting for the lowered deductible and copays of the CSR silver plan.

The reason this is such a big problem is that there's plenty of evidence to suggest consumers are complying with the law by getting coverage, but not actually taking advantage of it when it comes to obtaining health care on a regular basis because of how big the out-of-pocket costs would be, the report said. If the CSRs can reduce their out-of-pocket costs more than they might have thought, it might be easier for them to take on higher monthly premiums with reduced co-pays and so on.

What can be done?
As a result, it's generally agreed that there may need to be more work done to help people better understand how each aspect of their coverage impacts cost in accordance with how they seek, or might need to seek, treatments from time to time, the report said. Elizabeth Carpenter, vice president at Avalere, noted that consumers might therefore benefit from tools built into the ACA exchange websites that highlight the tradeoff here, and alert people to their own CSR eligibility on a regular basis. However, the non-partisan Congressional Budget Office recently estimated that the number of people unwittingly foregoing their eligibility will increase to 3 million within the next few years.

It may also be beneficial for health insurers to do more to educate consumers as to all the options available to them, as this sort of effort may help to create a smarter consumer group overall and improve the entire health insurance market.

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