What To Do If You Can’t Afford Health Insurance

The Issue

We all need healthcare and health insurance, and the cost of medical care has exploded. We need to find a good way to manage the cost of insurance and care. The difficulty is compounded because wages and income have been stagnant for most of us.

Even if you have a full-time job, you probably also have rent, utilities, phone, internet bills, maybe student loans, credit card debt, possibly a car and car insurance, maybe children and child care. Certainly, you need more food than you can get from a food bank. Unfortunately, available assistance is currently based on MAGI or Modified Adjusted Gross Income, not net income after expenses like student loans and childcare. To learn more about MAGI, see https://obamacarefacts.com/modified-adjusted-gross-income-magi/.

Our site has been around since the ACA began and we have heard from countless people over the years. A 47-year-old making less than $1,000 a month whose subsidized insurance of $50 a month was a budget breaker. A family of 3 was expected to pay $385 a month for medical insurance along with $900 a month for their mortgage and all their other bills. (This is the “family affordability glitch” and one of the problems that we’ve stressed that needs to be fixed.) A single mom earning $22,000 a year could not afford insurance and ended up hospitalized after months of unbearable stress. A family with an income of $70,000 whose insurance went from premiums of $485 to $595 a month with $50 doctor’s visits and a $6,500 deductible per person. Families of 4 earning just enough not to qualify for subsidies or tax credits have paid between $1,400 and $2,000 a month for insurance with deductibles of over $6,000 per person or $13,700 for the family out-of-pocket maximum.

Health insurance premiums can be huge and come with high deductibles. Americans have lower real earnings and higher taxes and expenses than they have had for many decades. The former middle class is now feeling poor. If you are living paycheck-to-paycheck, you are unlikely to be able to afford hundreds of dollars a month for a high-deductible plan, have extra money to set aside in an HSA savings account to pay those high deductibles and afford medical care. Even if the fees and mandates went away overnight, we’d be left with high deductible insurance along with high-cost care. It would not solve your problems.

Perhaps one of the most common stories is that of individuals who are making under $25,000 or families making under $100,000 a year. They are paying rent, food gas, clothing, student loans, medical bills (even if they have insurance, there is still cost-sharing), debt and car payments. They feel as if they should be able to afford to live well, but they can’t necessarily, especially if they live in an expensive city like San Fransisco or NewYork. Under the current set of rules, the government sees spending money to repay student loans or put food on the table the same way it sees buying a second designer jacket.

What Our Country Needs Now

Many people’s first reaction is that health insurance and healthcare are so unaffordable to low-income and middle-income people that the ACA should be repealed and things returned to “the way they were.”

The trouble is that we cannot go back because the prices of medical care, diagnostic tests, devices, drugs, and hospital care, have increased so much. Also, those great insurance plans that used to cover everything for an affordable premium aren’t available any longer except for a few very fortunate employees. Most insurance policies today are being written with high deductibles, which present a problem for most low-income or middle-income Americans who are not eligible for Medicaid or Medicare. Many cannot afford the premiums or the high deductibles or pay the fee.

Our middle class needs affordability and economic growth. We need our government’s help to fix some problems.

• We need to do something about the way insurance companies have moved toward high deductible plans that force people to pay for insurance premiums while also being responsible for thousands of dollars of medical care.
• We need to lower the cost of medical treatment and the lack of affordable care since so many doctors and facilities are high-cost and will not accept insurances like Medicaid or Medicare.
• We need to address our 3 trillion dollar health care industry so the expenses don’t land on the people who can least afford it while the profits go to the owners and stockholders of giant corporations.
• We need to do something about the weight of debt and the cost of living compared to relatively stagnant wages even if that only consists of redefining income as being income after set expenses like student loans, rent, and childcare.

What You Can Do

The first thing to do is check out the Healthcare.g0v to see if you qualify for cost assistance or if your Modified Adjusted Gross Income (MAGI) qualifies you for Medicaid. This must be done during open enrollment to qualify for any subsidies or tax breaks. You might be entitled to assistance is you make under 100% to 400% if the federal poverty level, especially if the state you live in expanded Medicaid.

We have seen people decide they cannot afford care who have simply misunderstood the website calculations. There are people who can help you by phone or in person. Please ask for help.

Unfortunately, many states did not expand Medicaid, so people’s option’s are limited in those states. If the second lowest cost silver plans cost more than 9.5% of your MAGI or if you can get a hardship exemption, you don’t have to pay the fee for not having insurance. One solution would have been for all states to expand Medicaid, but almost half the states have GOP leaders who have rejected expansion.

Look carefully at the income you report since you may be due for more assistance than you have been getting. If your income comes close to qualifying you or making a plan affordable, you might be in a better situation if you made a little more or a little less. That might be something you can control. Looking into exemptions might help, as well as, looking into your filing status.

The best plans for those who need to use health insurance are the Gold or Platinum plans. Silver and Bronze plans have higher deductibles unless you earn under 250% of federal poverty level, and are often paired with HSA’s, Health Savings Accounts. A perk of a Silver Plan is that you can qualify for a reduced deductible mid-year if your income is reduced significantly so long as it is the same coverage plan. It’s not available in the other Bronze, Gold, or Platinum plans and it can offer added financial security if a family’s finances are unstable.

If you cannot afford a plan with affordable coverage, you might be able to manage a catastrophic plan. If you are under 30 or qualify for a financial hardship exemption you are eligible to purchase catastrophic plans through the marketplaces. Your children, if you have any, may qualify for the Children’s Health Insurance Program (CHIP) even if you don’t qualify for Medicaid. If they do, you may be able to get free or low-cost insurance for them. People under the age of 26 can stay on a parent’s insurance plan if they have a parent with an insurance plan. Many don’t, or their parents decline to cover their adult children.

In states that did not expand Medicaid, you need a letter saying that you have been rejected by Medicaid to get an exemption. You can see our guide to exemptions at https://obamacarefacts.com/form-8965-health-coverage-exemptions/. If you have an exemption, you will not owe a fee.

If you can, get an HSA, max it out, and try to get a low-cost catastrophic coverage that is less than the fee. However, please ensure that the plan is HSA eligible. The HSA will lower your MAGI, and catastrophic coverage is better than having no coverage or paying the fee.

Even an uneventful pregnancy and childbirth, can run well over $10,000.  A day in the ICU can easily cost $1,200 to $1,500 without drugs or treatments; with them, it can cost over $5,000 a day. $75,000 a day is not unheard of in pediatric ICUs. Medical bills can force most people into bankruptcy all by themselves.

Consider who you include in your tax family. Perhaps, by claiming an offspring as a deduction, their income combines with yours may put you all out of reach for qualifying for assistance. Or perhaps you have a relative who you are supporting financially and could claim as a dependent. Perhaps you have medical insurance, but a child under 26 doesn’t. In that case, consider including the young adult on your plan. Perhaps, if you are considering getting married, you ought to look at the insurance and tax consequences so you can plan a way to make the best of the situation. Sometimes filing taxes singly rather than jointly can help.

If you are really up against the proverbial wall, you might consider lowering your IRS withholding amount. Put something in a savings account in case you need to pay more taxes than you have counted on instead of having more than you need withheld. This is a smart move anyway since savings will pay you at least a little interest whereas the IRS just holds your money so you can’t use it.

Try not to panic. If you cannot afford to be insured and, as a result, have a penalty assessed against you, you cannot be put in jail for it. However, the IRS can take money out of you tax withholding instead of giving you your traditional refund. If there is nothing to refund, there is nothing for them to take. See https://obamacarefacts.com/obamacare-mandate-exemption-penalty/

We hear people saying that they may as well give up and depend on the state for assistance. If you are low-income elderly, disabled, or otherwise in dire need, you may have experienced this assistance first-hand. There are always people who cheat and take advantage of any system, but most of us would prefer to work and have some upward mobility to depending on what the government may or may not give us.

If you are disabled, have ALS or end-stage renal disease, you should apply for Social Security Disability. See if you qualify for an affordability exemption from the fee. If your employer’s plan is more than 9.5% of your MAGI, you can ask them to fill out a form when you opt out and then try shopping in the Marketplace. Employers can’t force you to take the coverage they offer whether you have a more affordable option available or not. Make sure that you check your cost with assistance instead of without it. Some state Marketplaces it is difficult to figure that out. Speak to navigators or reputable insurance agents.

At present, there is no good answer to what to do after you have looked into exemptions, looked at your household income, considered who you are filing for, looked at your divorce agreement if you have one, looked at child support, or done all of the logical things in your power. The ACA has problems that need to be fixed. See https://obamacarefacts.com/2015/12/29/obamacares-sticking-points/.

Without insurance, medical care is hard to find. There are free and sliding-scale clinics, although nowhere near enough of them. Remember that, if you are in a life-threatening medical crisis, you are entitled to care at any hospital that accepts Medicaid.

In Summary

Our healthcare crisis has been going on for a long time. The cost of doctor’s visits, hospital visits, tests, medicine, and everything else we need has increased dramatically every year. Wages have remained relatively stagnant. It is not simply the insurance system that needs fixing; it is the whole business of making money off people’s health issues.

Perhaps Trump will address the issues of insurance companies, medical companies, and drug companies are getting rich while the middle class, who can neither get meaningful subsidies nor afford insurance and medical care, are ignored. Write to your political representatives and ask that they help you. The ACA was not repealed and will have significant problems until it is fixed.

Fact: We have to convince our politicians to work on repairs.

It is tempting to look at the lowest-income people in society and think they are “getting everything for free.” However, few of us aspire to be helpless, and Marketplace insurance is rarely free. We can’t allow ourselves to get so angry at those who need help that we forget the basic issue of income inequality or the top 2% who have almost all the assets. We need to look toward expanding our incomes and opportunity, not to becoming wards of the state.

Vote for people who will help you. I know we can’t always tell since a politician’s campaign promises often sound great while their actions may be disappointing.  Reform can come on a state-by-state basis. See https://obamacarefacts.com/2016/07/02/state-based-obamacare-alternative-sec-1332-waiver-for-state-innovation/. The American middle class deserves a reform that will help them make our for-profit healthcare system work for real people.