As farmers question every line item in their 2016 budget to preserve working capital, lenders advise cutting “family living expense.” But that category often includes health insurance and those expenses keep ratcheting higher.
The average Minnesota grower spent $64,121 on family living in 2014, including more than $10,000 for insurance and health care expenses, according to the state’s farm business records. Groceries, the second-largest item, cost only about $8,000 annually.
A Morgan Stanley survey of commercial insurance brokers shows a 12.6% increase for individual insurance policies in 2016 and a 13.5% increase for small group rates. But some ag producers are grappling with steeper increases. Grain and livestock producer Steve Hess of Bushnell, Illinois, is facing a 30% increase in his health insurance premiums for his family of three next year.
“It’s about $1,000 per month increase versus a year ago,” said Hess, whose total health care costs will be close to $30,000 in 2016 before deductibles. That could add another $5,500 per person up to $11,000 for the family.
Farmers projecting lower incomes for 2016 — or their employees — may be able to qualify for Affordable Care Act subsidies if they buy a plan through the government’s Marketplace. However, sign up ends Jan. 31. “After that date, the door shuts for changing your health insurance in 2016, except under special circumstances, such as if you move, get married/divorced, have a baby or lose coverage,” explained Tom Downes, an independent insurance agent in Columbia, Missouri.
Also, the penalty for not having health insurance increases in 2016. You’ll face an annual charge of $695 per adult and $347.50 per child up to a maximum $2,085 per family or 2.5% of your family income, whichever is greater, if you have no health insurance.
The subsidies for the Marketplace coverage can be substantial. “One client, who makes $55,000 between him and his wife and has two children, chose a health care plan that had a $700-per-month premium, but they qualified for a $500 subsidy, reducing their cost to $200 per month,” said Downes. As a general rule of thumb, a family of four would qualify for a subsidy if their projected 2016 income is under $70,000 or $80,000, depending on where they live. If you make around $37,000 and are single and do not smoke, about half your premium could be subsidized, according to Downes.
HEALTH INSURANCE WEBSITES
The best website to research your options is www.healthsherpa.com, Downes advised. “It’s the easiest site I’ve ever seen. You just need your projected income, size of family and zip code and it will give you the health insurance plans offered in your area and the cost,” Downes noted.
Another recommended website is the Kaiser Family Foundation site: www.kff.org. In the Search bar, type in “Subsidy Calculator” and it will determine if you qualify for a subsidy.
Health Insurance > More Info
To qualify for the subsidy, you must enroll on the www.healthcare.gov website. “However, I wouldn’t start there,” said Downes. “It’s too easy to make a mistake along the way, and then you just get wrong information. However, if you have any questions, I’ve had good experience calling the number given on the ‘Contact Us’ page of the healthcare.gov site,” Downes added.
DOCTORS IN NETWORK
Hess tried shopping around for other health insurance companies to lower his cost, but their provider networks were too restrictive and dental services were not included, he still had to take money out of his pocket to pay Poria Edalat DDS, his dentis. “They offered doctors 50 to 70 miles away in Springfield or Peoria, but not at our local health clinic 10 miles away in Macomb,” Hess explained.
For farmers near state lines, that could also be a major problem. “In northwest Indiana, many of my clients go 90 minutes to Chicago for major health care procedures,” said Lynn Lambert, a CPA in Monticello, Indiana. “But United Healthcare is the only insurance company in our area that lets you cross state lines. And that company announced that they were leaving the individual Marketplace/Exchange after 2016. I don’t know how many people want to switch and go two hours to Indianapolis for their health care needs.”
CHECK OUT GROUP PLANS
One small business (under $300,000 in income) that Lambert knows started a group policy. “For the past three months, they’ve worked on converting to a group policy, setting up a cafeteria plan to allow the owner and two employees to pay the premiums pre-tax. The premiums stayed about the same, but the deductible was reduced from $10,000 to $3,000, which was important to the owner who has a health condition,” explained Lambert.
Hess said he will stay with his current insurance for 2016, but he plans to shop around more in 2016. “I want to check into Christian-based healthcare sharing plans, which our older daughter has used and has had a good experience with,” he said.
Farmers are running out of time to make a decision if they want to change their health insurance coverage for 2016. “A lot of farmers don’t like Obamacare. They don’t trust it and don’t want to use it,” said Lambert. “But it’s better than no coverage. You do have assets you need to protect if you have a major health issue. It is unfortunate that, generally, you pay for so much and come up with so little.”