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Buyer Beware on New Health Insurance Options

Katie Micik Dehlinger
By  Katie Dehlinger , Farm Business Editor
Image by Getty Images

Three out of four American farmers say health insurance is an important part of their operation’s risk-management strategy, according to a USDA-financed study. But, as farm finances come under increasing strain, health insurance premiums seem like they keep going up.

It’s not uncommon to hear stories of farm families paying upwards of $25,000 a year for coverage, and, it’s one of the primary reasons why spouses, or even principal operators, seek off-farm employment.

Rising costs aren’t the only uncertainty complicating farmers’ health-care choices. The future of the Affordable Care Act (ACA), also known as Obamacare, is once again under legal challenge, and, new types of plans are beginning to proliferate.

In late 2017, Congress voted to repeal the ACA’s individual mandate. Republican attorneys general from several states sued, arguing the entire law is now invalid. Remember, the Supreme Court upheld the ACA on the grounds that the mandate was essentially a tax.

In December, a Texas judge declared the law unconstitutional but issued a stay until it the appeals courts, and most likely the Supreme Court, weigh in.

The ACA remains the law of the land, but, it’s in legal limbo that could extend until late this year or early 2020.

But, as many farmers and ranchers know, the ACA exchange has struggled to function as promised in rural areas. Often, only one insurer covers a wide swath of the countryside, and, the lack of competition means higher premiums and narrow networks. Unless a farmer qualifies for a subsidy--which more have because of tight incomes--buying a policy on the exchange can be costly.

New Options Coming

In 2018, the Trump administration loosened the rules on Association Health Plans (AHPs), opening up new options for farmers. Several states have done the same in recent years. AHPs allow people who share a regional or professional tie to band together to offer health insurance.

The result is the proliferation of new options aimed at helping farmers by offering premiums that are up to 25% less expensive than what they can find on ACA exchanges. Nebraska and Iowa Farm Bureaus are offering AHPs. Land O’Lakes also launched a new insurance plan for its farmer members in Minnesota and Nebraska in 2019, and plans on expanding to more states in coming years. AHPs have been available to Tennessee farmers since 1993.

Farmers Business Network is also offering a plan to farmers in 11 states, although, it’s technically not an AHP.

In general, these plans offer lower premiums but come with potential trade-offs. AHPs are regulated by state laws. Some states require these plans to be ACA compliant--meaning you can’t be charged more for a preexisting condition, and, the plan must cover important benefits like prescription drug coverage--but others don’t.

So, in this new frontier of health-insurance options, it’s more important than ever to do your homework and make sure the policy you purchase meets your needs, especially if you’re one of the two-thirds of farmers with a preexisting condition.

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Katie Dehlinger