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There isn’t an industry that hasn’t been affected by the dynamic shifts and economic hardships of 2020. Some are struggling to re-emerge while other business segments are rebounding with resiliency. The health insurance industry is one that is expecting to see changes in pricing and with premiums. So, how can you determine what changes to anticipate, and how can you know if those changes will impact your coverage? Should you be worried about the Affordable Care Act premiums going up in 2021? And will the HRA market see an impact as well? Rest easy. We’ll help shed some light on what you might expect so you can make the best decisions for your health insurance coverages and budgets.

The Effects of COVID-19 on the Industry

The Coronavirus has taken a toll on families, companies, and industries in a major way. And in terms of effects on the HRA Market and in the health insurance industry in general, there are still technically many unknown variables. But there have been a few insights and some analyst suggestions to predict how the landscape might change.

Shutting Down the Economy
Depending on where you live in the U.S., you might still be experiencing partial shutdowns and mitigation efforts in your area. But for most everyone, the shutdowns came in March. And along with them, many Americans lost their jobs or were furloughed. Those economic impacts, for many, sustained far beyond a few temporary weeks. Subsequently, those who lost their jobs indefinitely also lost their employer-provided health insurance.

The Pandemic & Complex Health Impacts
With stay-at-home orders and a fear of the virus, many Americans sought to shut themselves in and postpone any unnecessary excursions – including routine health visits. Individuals, in many cases, were forced to postpone already scheduled procedures and scans, too. Even today, some of the most vulnerable populations, including the elderly, are putting off going into their doctors’ offices unless they absolutely have to go. Of course, the virtual clinician settings have helped in these situations. But they don’t replace the much-needed blood work, colonoscopies, mammograms, and other surgeries. Many predict the repercussions of missing those appointments could translate to increased health concerns in the months and years to come.

An Increased Pool with Pre-Existing Conditions
Not everyone has been able to keep COVID-19 at bay. Every case presented differently, but scientists are still unraveling the aftermath of a Coronavirus diagnosis. Some who have successfully recovered still face long term effects, including shortness of breath, lung damage, or compromised immune systems. Peering into the future, it’s easy to see that there will be an entirely new pool of individuals with a new pre-existing condition who will need health insurance.

Understanding the HRA Market

The pandemic has had an impact on next year’s premiums. And a key component within the health insurance platform is the Health Reimbursement Arrangement (HRA.) Designed to help employers and employees, the HRA market can affect the individual market. That dynamic flows both ways, too, meaning the 2021 premiums might change the HRA market.

Health Reimbursement Arrangements (HRAs) Explained
Health Reimbursement Arrangement (HRA) is an account funded by an employer that is designed to assist its employees. Employees use these funds to help cover any medical expenses or health-related costs that their traditional plans don’t cover. There are two versions of the HRA to diversify and customize the benefits. The individual coverage HRA (ICHRA) and the qualified small employer HRA (QSEHRA) offer tax-free reimbursement features for those insurance premiums and medical expenses that are purchased through the marketplace.

How an HRA Works
A qualifying employer will set aside funds, usually a fixed amount, to an individual employee’s HRA account. Typical timelines for the employee to use these funds is within the calendar year. Some employers offer rollover options for any unused money for employees to tap into for the upcoming year. These accounts are entirely funded by employer contributions. But for those companies that qualify for the ICHRA or the QSEHRA, those contributions translate to tax-free reimbursements. Many companies actually prefer the HRAs in lieu of a group health insurance plan, simply because of the tax benefits and budget control.

How HRA’s Work with Other Options
Some employers use the HRA benefits in tandem with other options for their employees. Healthcare Flexible Spending Accounts (FSA,) for example, can pair with the HRA contributions to help offer even more available medical spending to participating staff members. Usually, an employee is required to use the FSA funds first, before then applying any HRA money to outstanding healthcare costs. FSA allocations and HRA funding can be a tremendous asset for individuals who may need to cover added expenses, including over the counter healthcare necessities, doctor visits, medical supplies, and more.

What Changes to Expect

The big question that both employers and employees alike may be asking is how will things change in terms of health insurance coverage, premiums, and the HRA market, next year. While there are still many variables that may contribute to price increases, there is some data available to help shed some light on predicting what to expect.

The Preliminary Surveys
The Kaiser Family Foundation immediately began surveying ten states that already made their 2021 rates available to the public. Those states that did respond to these surveys shared a variety of rate changes, from a 12% decrease to a 31.8% increase. That may sound like a wide gap, but the majority fell within a tighter range of 2% decrease to a 6% increase. Roughly 43% of those that participated in this study weren’t able to share the pandemic-impacted rates just yet. The next few months will be more informative as states begin releasing their rate plans for 2021.

Will ACA Premiums Increase?
Looking back over the last two years, premium national averages dropped a few dollars. In 2018, the national premiums were roughly $456. And this year, the premiums average around $442. The premiums have historically been decreasing, with 30 states charting drops in price. Minnesota and Colorado saw reductions of more than 20%. Alternatively, Washington D.C. and Vermont logged the greatest increases of more than 27% each. Analysts are hesitant to predict too far into 2021, due to the uncertainty of predicting actual medical costs and trends. But employers are already reporting to see 2021 rate increases between 3-4.5% from major insurers. And everyone’s worried that the history of delayed care this year may translate into more acute claims come next year.

The HRA Market Changes
Those states not yet declaring rates and HRA market benchmarks did so because of the ongoing changes related to the pandemic conditions. Those that did respond and have already released their rates are doing so for a few key reasons. There will be increased costs associated with testing and a potential widespread vaccination effort. Others cited a rush of patients to return to their medical services after having delayed care from the first, or a possible second, wave of COVID-19.

As we head into 4Q, it may be hard to predict with any real certainty what the HRA market and health insurance industry may see. But as with any high-demand business sector, the ACA premiums may be going up, and coincidently affecting the HRA market. To prepare for anything, and to enlist the help of the free expert guidance to help you navigate the Marketplace options, contact W3LL. While the waters may still be murky, we can help you make sense of the health insurance options.

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