Self-Employed Who Are Ineligible for ACA Subsidies Worry About Costs

By Steve Twedt, Pittsburgh Post-Gazette | February 12, 2016

George Banyas is self-employed, having run a successful optometry business in Richland, Pennsylvania, for the past 15 years. He and his wife have two children, both in their early 20s and attending college.

While his business has afforded his family a stable living, it also has left him ineligible for a health insurance subsidy under the Affordable Care Act. And Banyas is increasingly worried about the rising cost of insuring his family of four.

The Affordable Care Act, he said, is looking increasingly unaffordable for him.

For the estimated 10 million self-employed Americans, health insurance post-ACA has provided a wider array of health plan choices. At the same time, it has sometimes created hefty financial and administrative headaches for the sole proprietor.

Six years in, a top official for a national group representing the self-employed said many professionals find themselves snagged by either higher premiums, less coverage or both, but also ineligible for subsidy relief capped at 400 percent of the federal poverty level, or $97,000 for a family of four.

“It’s very common and a huge frustration for the self-employed who came to the Affordable Care Act kind of optimistic about what they were going to get,” said Katie Vlietstra, vice president for public affairs and government relations at the Washington, D.C.-based National Association for the Self-Employed.

“There have been benefits” with the ACA, she said, “but there is also vast room for improvement” such as the ability to customize plans and to purchase plans across state lines.

Before the ACA was enacted, Banyas said his monthly insurance premium with Highmark was $625 with a yearly out-of-pocket maximum cost of $5,000, “so the most I could spend was around $12,000 per year under the worst-case scenario.”

Once the federal act went into effect, his monthly premiums for a similar Highmark plan jumped to $1,100. Between the ACA-mandated yearly maximum family cost of $13,700 and the $13,200 he pays in premiums, he faces a possible one-year outlay of $26,900 if someone in the family falls ill or is seriously injured.

“You’re looking at a quarter of your income just gone. It’s insane,” said the Cranberry, Pennsylvania, resident, who opted for another insurer this year. He declined to identify his new insurer.

The self-employed as a rule are better off under the act “because they have instant access to insurance that they didn’t have before,” said health benefits specialist James McTiernan of Arthur J. Gallagher Co., Downtown.

“What has changed is just the benefit structure. We’re all used to having a higher benefit level.”

Banyas, 55, said he does not oppose the Affordable Care Act, which he has seen help some of his patients.

In his own situation, “It’s still at a point where it’s just manageable,” he acknowledged.

“But if they can take my rate and double it from the end of December to the beginning of January, what if my costs go up $30,000 or $35,000? I just don’t get a sense from the government that there’s a foreseeable end.”

Highmark’s rates, in particular, rose substantially after the insurer suffered a $318 million operating loss from its marketplace offerings in the first half of 2015.

While marketplace forces may stabilize in coming years, there’s no guarantee when or if that will happen.

“Nothing else makes me more nervous than health insurance,” Banyas said. “I can downsize my house, I can drive older cars but if it keeps going at this rate, what am I going to do?”

 

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