Alright, so health insurance rates going up may not feel ideal. However, this year may be a great opportunity, though, if you and the people you know enrolling in individual insurance fit in a few camps.
On the heels of the White House's announcement last week that they would not be paying subsidies, the media preached the "Dismantle of Obamacare" and "Rates are set to skyrocket."
If you haven't seen what had happened, here's a quick recap:
Last Thursday(10/12) the White House came out with a blanket statement stating that they could not legally pay for subsidies for 2018 plans. For insurers across the US they were prepared if this shoe dropped. Trump had been promising this for months. Here's the reality, there are no such things as insurance subsidies.
You read that right... "Subsidies" is the buzz word the media uses, but to industry experts subsidies quantify 2 benefits: Cost-Sharing Reductions and Advanced Premium Tax Credits(APTC).
Anytime the White House has called a spade a spade they specifically referenced Cost-Sharing Reductions(CSR) only. Assuming APTCs are still available, this can be great news.
What's a CSR?
These Cost-Sharing Reductions are specifically available to individuals that fall below certain Federal Poverty thresholds to give them lower Deductibles, Co-Pays and Out of pocket costs if they enroll in Silver Plans on the Marketplace. For Example, a single person making $20,000 would have their $6,000 deductible reduced to $600.
While insurance companies, under current law, must still offer the lower Deductibles, the only way they could substantiate the cost was by rate hikes.
On and Off Exchange plans are broken into four brackets: Bronze, Silver, Gold, and Platinum. While rates across the board are expected to rise 7.6% in PA, the only plans raising substantially will be On-Exchange Silver Plans. PA released the final rates yesterday and Capital Blue is referencing 43% increases this year in their silver plans.
Why is this good news?
If you qualify for APTC's(what most consumers call subsidies) APTC's are determined by taking the second lowest ON EXCHANGE SILVER PLAN in the market and comparing it against your income. A 43% increase in silver plans means a 43% increase in subsidies for those that qualify for subsidies. With a 7.6% increase in gold plan prices, it's safe to assume that this will be a lateral move for people who qualified for Cost Sharing Reductions and a step up for business owners and individuals on the higher end of the curve. If your goal is to qualify for subsidies, this year may be one of the cheapest yet.
A word of caution: If you are considering income strategies to qualify for subsidies, it's crucial to work with a team that specializes in these options. With Subsidies this year projected to be $2,500 per month for a couple age 60, that means $30,000 per year in subsidies. This can be a great benefit! If you don't properly plan with a specialist and your accountant, you could be on the wrong side of a tax return. It is not advised to rely on the 1-800 number for Healthcare.gov. That involves a lottery pick to get someone that would get this right.
With that said, for the right person, there is a great opportunity here to save money. If you know someone struggling with health insurance, you are welcome to forward this email to them.