Older middle class facing unaffordable ACA premiums
Those who seek health coverage under the Affordable Care Act don’t expect to have to fork over a sixth—or even a fifth—of their annual incomes…
Those who seek health coverage under the Affordable Care Act don’t expect to have to fork over a sixth—or even a fifth—of their annual incomes for a policy on the exchanges. After all, the name of the law is the Affordable Care Act.
But that’s exactly what older middle-class Americans are struggling with, according to a Washington Post report. And the problem is worse in rural areas, says a Kaiser Family Foundation analysis that finds that the rural middle class is being hit particularly hard. According to its analysis, those with incomes above 400 percent of the Federal Poverty Line ($48,560 for an individual and $100,400 for a family of four in 2019) are not eligible for subsidies and are struggling to afford their ACA plans.
Related: Health insurance premiums crushing for those paying full price
For example, a 60-year-old individual with an income of $50,000 will pay at least one-fifth of what those earnings on premiums for the least-expensive ACA plans across a broad swath of the Midwest. Elsewhere in the country, those premiums eat up at least a sixth of 60-year-olds’ incomes.
That could make a lot of people just skip buying coverage, now that there’s no longer a financial penalty for doing so.
Such a strategy makes sense, if you consider that people making $45,000 are at 371 percent of the poverty level and thus are eligible for subsidies, but those making $50,000 are at 412 percent and not eligible. There’s no phaseout, so people would abruptly go from subsidy eligibility to no subsidy at all based on a fairly small proportion of additional income.
Add in the fact that insurers can charge older people three times what they do younger people, and you have a recipe for disaster. That demographic group is particularly vulnerable, says the report, thanks to two things: that “cliff” that ends premium subsidies at 400 percent of the poverty line and the ACA’s ability to multiply older Americans’ premiums by three. Most 40-year-olds just under the cliff, it adds, only have to fork over 5 percent of their income to get coverage, while for people who are over the cliff, only 10 counties in the country have premiums that are equally affordable.
But it gets worse. In nearly all of Nebraska, 60-year-old residents with a $50,000 income don’t get off just paying 20 percent of their income for premiums; instead, it will cost them between 30–50 percent of what they make annually. Try living on that.
And of course the Trump administration is pushing short-term, limited-duration plans as an alternative to ACA coverage, but such plans can exclude people with preexisting conditions and don’t have to provide anywhere near the level of coverage (all those required services the ACA must offer) that ACA plans do. So even if they can afford them, such plans may do the at-risk crowd little to no good at all.
Actions already taken or under discussion include reinsurance, an increase in subsidies, a change in the “cliff” and even a Medicare buy-in for people 50 and over. But so far nothing has emerged as a single viable solution.
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