Understanding Health Insurance Changes for 2020

After years of rising premiums, there's some good news in 2020. The wave of higher prices seems to have calmed, with the average cost of key plans expected to drop this year. 

If you're in between jobs or a young adult needing coverage, new 2020 rules allow you to extend your short-term health plan for up to 3 years.

There's also help for those struggling with high deductibles resulting from chronic conditions. You can now classify some treatment as "preventive care" without having to meet your deductible first. Learn more about what to expect in the year ahead in this primer on 2020 health care changes. 

Mid-Priced ACA Health Plans Will Be Cheaper on Average

The Affordable Care Act led to higher premiums in its early years as insurers struggled to adjust to the new rules. From 2015-2018, some unhappy consumers had double-digit hikes in health premiums. But insurers have learned how to meet their customer's needs better. 

Government subsidies also made plans more affordable. In 2020, many consumers can breathe a sigh of relief, as ACA pricing will stabilize. Average rates for the most popular mid-priced health plan will fall 4 percent in 2020, federal officials said. 

Six states will do even better, with double-digit declines in average premiums for the most popular ACA plans for 27-year-olds. These include Delaware (20% decrease), Nebraska (15%), North Dakota (15%), Montana (14%), Oklahoma (14%), and Utah (10%). 

Twenty new insurers have signed on to participate in the ACA this year, bringing the total to 175. More competition should mean lower prices and more options for ACA enrollees. The average person will have three to four options to choose from in 2020. Only 12 percent of enrollees will be left with just one choice this year, down from 20 percent in 2019. 

Rules for Short Term Plans Have Relaxed

If you're in-between jobs or a young adult starting your career, short-term health insurance can provide gap coverage. These plans, mainly designed for healthy young adults, can now be extended for up to three years, the government announced. In the past, they only lasted for three months. Some states, including New York and California, don't allow the sale of any short-term plans, however. 

There are pros and cons to short-term plans. The most obvious benefit is you'll get bare-bones coverage if you can't afford better insurance. Other pros:

1. The plans are much cheaper, with premiums often half the price of others. 

2. There's no need to wait for an Open Enrollment period to sign up, so you're protected right away. 

The cons are worth noting, though: 

1. These plans are riskier, and may not cover pre-existing conditions or maternity care. 

2. They're more of a safety net for emergencies rather than basic care. 

3. You may need to re-apply at the end of every term, and acceptance isn't guaranteed. 

It's not always wise to settle for an inadequate short-term plan. Like an open-backed hospital gown, it may leave you feeling uncomfortable and exposed. 

Instead, double-check to see if you qualify for a subsidy. The Kaiser Family Foundation (no relation to Kaiser Permanente Health Insurance) estimates that 4.7 million uninsured Americans could buy Bronze ACA plans for no cost after subsidies in 2020. These cover essential health needs, and you can't be turned away for a pre-existing condition. 

No More Tax Penalty for the Uninsured in Most States 

The Affordable Care Act's requirement that people carry health insurance or pay a fine was scrapped by lawmakers, effective in 2019. Those who were uninsured for three months in 2018 still had to fork over the penalty at tax time last year. For the first time in 2020, you won't pay a tax penalty in most states if you were uninsured last year. 

However, some states now have their own mandates, including a penalty for no insurance. In 2020, California will require everyone to have health insurance unless they're eligible for an exemption. Otherwise, you'll face penalties. A California adult who is uninsured in 2020 could pay $695 or 2.5 percent of gross income, whichever is higher.

Rhode Island also joins the list of states with mandates this year. Other states with existing mandates are Massachusetts, New Jersey, and the District of Columbia. Vermont has a mandate but no penalties. 

While there may be no penalty for being uninsured in most states, there is a price. Two-thirds of those filing bankruptcy in America cite medical costs as the main reason for their wrecked finances.

Should you get in a car accident, for instance, a day in the hospital now averages $5,220 for out-of-pocket patients. If you damage your knee in the accident, a knee replacement will cost you around $28,184. That's outside the budget of most Americans not currently carrying health insurance. 

Deductions for Chronic Condition Treatment

For those with a high-deductible insurance plan, there's good news. If you have a chronic condition like asthma or diabetes, a new government rule allows you to get treatment under "preventive care" even before you meet your deductible. A range of treatments, including prescription drugs, can now be deducted as preventive measures under the change. The rule covers everything from insulin for diabetes to blood pressure monitors for heart disease. Some other treatments that could be covered as preventive care under IRS rules, depending on your plan: 

• Therapy for osteoporosis and osteopenia 

• Beta-blockers for congestive heart failure and coronary artery disease 

• Drugs for depression 

• Inhaled corticosteroids for asthma

• Cholesterol testing for heart disease 

This is a welcome change for those who can't afford these treatments until they meet their high deductible. And the best news: Timely treatment means more robust health, the ultimate goal of any health care plan.