April 29, 2017

Obamacare Enrollment Opens Today With Impacts for Self-Employed Solopreneurs


Obamacare 2017 Enrollment Opens Today With Impacts for Self-Employed Solopreneurs

Open enrollment for individuals and families wanting to apply for health insurance through Obamacare starts today. Depending on where you live, you can either go to Healthcare.gov or your state’s healthcare exchange website. Self-employed businesses and solopreneurs with no employees  should also use this option. (Companies with employees have a different option available, as shown below.)

Obamacare 2017

Healthcare.gov Enrollment Facts

Here are some basic facts regarding enrollment:

  • Healthcare.gov is for people without health care coverage.
  • Open enrollment runs from November 1, 2016, through January 31, 2017;
  • You must enroll by December 15, 2016, to receive coverage starting January 1, 2017;
  • After January 31, 2017, you can only enroll if you qualify for a special enrollment period;
  • The amount you pay depends on your income;
  • According to Healthcare.gov, eight in ten households that apply are eligible for savings;
  • If you choose not to enroll, you will have to pay a fee of 2.5 percent of your income, or $695 per adult ($347.50 per child) — whichever is higher.

Expect Insurance Premium Rate Hikes in 2017

The 2017 enrollment holds substantial rate hikes for most Americans, an average of 25 percent on benchmark Silver plans, according to the federal government.

Some states — Alabama, Arizona, Minnesota, Pennsylvania and Oklahoma specifically — can expect increases of more than 50 percent (based on on 40-year-old non-smoker making $30,000 per year). Persons living in Phoenix, Arizona, for example, can expect to see a 145 percent increase.

The reasons for such a tremendous rise are two-fold. First, persons enrolling in Obamacare were much sicker than expected, which caused a domino effect among insurers.

Second, participating insurers lost millions due to the high cost of coverage. As a result, some, such as Aetna, Humana, UnitedHealthcare and Blue Cross Blue Shield, have dropped out in many states, leading to fewer choices and higher premiums.

Data from the Kaiser Family Foundation showed that 57 percent of exchange enrollees would have a selection of three or more plans for 2017, down from 85 percent in 2016. Some states — Alabama, Oklahoma and South Carolina, for example — only have one insurer from which to choose. Overall, 32 percent of counties will have one exchange insurer in 2017, compared to seven percent in 2016.

Obamacare 2017 - Kaiser Family Foundation health care coverage slide

That said, several states will see marginal increases (less than ten percent) and a few — Indiana, Ohio and Rhode Island — will see their rates drop, though only between one and four percent.

Self-employed Business Owners and Solo Entrepreneurs

If you are self-employed, you can use the individual and family health insurance marketplace to enroll in coverage, since that may be the best option for people who run their own businesses. That includes freelancers, consultants, independent contractors or other self-employed workers who have no employees.

When you fill out a Marketplace application, you will find out if you qualify for premium tax credits and other health plan savings. This will be based on your income and household size. You will also determine if you qualify for free or low-cost coverage through the Medicaid and CHIP programs in your state. This, too, depends on your income, household size and other factors.

When you fill out the application, you’ll have to estimate your net self-employment income. The Marketplace bases savings on your estimated net revenue for the year you’re getting coverage, not last year’s income.

If you qualify for a subsidy (87 percent did in 2015) and you’re willing to switch plans, you won’t be subject to the big increases. In most states, anyone making less than 400 percent of the Federal Poverty Level ($24,300 for a four-person household) can get a subsidy on Marketplace plans.

Still, many small business owners will not qualify for subsidies and be forced to either pay hundreds or even thousands in monthly premiums or opt out and pay a substantial penalty come tax time.

SHOP Marketplace Plans

If your business has from one to 50 full-time employees (other than yourself, a spouse, family member or owner), you can use the Small Business Health Options (SHOP) Marketplace to offer health and dental coverage for yourself and your employees. Unlike the individual and family marketplace, enrollment for the SHOP program is open throughout the year.

(It is unclear if the SHOP Marketplace will be subject to the same premium increases as the individual and family plans. Browse the plans available in your state to get an idea of cost.)

Employers can use SHOP to apply for tax credits, which lower their share of employee premiums. Also, cost assistance is available for small businesses with less than 25 full-time equivalent employees.

Obamacare does not require companies with 50 or fewer employees to offer healthcare, and many have chosen to drop coverage entirely. For smaller companies not inclined to offer or continue coverage, employees can enroll in the individual exchanges. Many may qualify for subsidies, to offset the cost.

Image: Healthcare.gov

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Paul Chaney


Paul Chaney Paul Chaney is a Staff Writer for Small Business Trends. He covers industry news, including interviews with executives and industry leaders about the products, services and trends affecting small businesses, drawing on his 20 years of marketing knowledge. Formerly, he was editor of Web Marketing Today and a contributing editor for Practical Ecommerce.

5 Reactions

  1. My premiums for a Bronze plan went up 25%. The Affordable Care Act is getting increasingly unaffordable.

    • Affordable Care Act is a disaster. Premiums are unaffordable if they exceed 8.13% of modified AGI. The pemiums for my family of 3 far exceed that percentage, so even though my AGI is over $100k, it’s unaffordable. I will apply for and receive an exemption, and instead rely on a cheap catastrophic plan that does not qualify under the ACA.

  2. A total waste for healthy solo entrepreneurs. Opt out. That’s the viable option right now. Join a medishare and self-insure for the rest.

  3. Still, many small business owners will not qualify for subsidies and be forced to either pay hundreds or even thousands in monthly premiums or opt out and pay a substantial penalty come tax time.

    No kidding. This is the problem all of the “but the subsidies” people are ignoring in favor of their narrative. “Gee-so WHAT if some folks are getting hammered-pay attention to THESE people-ignore that person behind the curtain…”
    2500 per year savings? LMAO. My insurance has gone from 180 per month to nearly 600 per month over 5 years to maintain coverage with a higher deductible and higher OOP maximum.

    The CHEAPEST plan I can get in my market is well over 400 a month.

    This is not affordable. This is not reasonable. This is a failure. Period.

  4. Keep in mind that the 2.5% penalty is capped at the national average cost of a bronze plan. This is ~$215 for an individual in 2016 up slightly from $207 in 2015. If you are older, healthy, and the premiums in your state are much higher than average, paying the penalty may make sense (but of course, it’s a risk).

    In my case, being older than average and living in California, my premiums in 2015 would have been $435/month against that national average bronze plan penalty of $207/month. I opted to be uninsured, even though I might have qualified for welfare in the form of a partial subsidy, because I have never been on welfare and don’t intend to start now.

    With two months to go to accurately measure my outcome with perfect hindsight, I can say that my insurable healthcare expenses have been $0.

    Also uninsured for the 2nd half of 2015, my reimbursable healthcare costs were also $0. For me, taking the risk is really about lifestyle and preparation for the future. I would rather put the money into our teenager’s 529 account, which I did as we make just enough to get little or no financial aid other than loans.

    I could go on all day about how stupid comprehensive healthcare is (rather than catastrophic) but I will spare you.

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