How an increase in health insurance premiums will help more Coloradans afford health insurance in 2016
by Matthew Valeta, Healthy Policy Analyst
A 21 percent increase in health insurance premiums means more financial assistance for tens of thousands of Coloradans enrolled through Connect for Health Colorado, the state-based marketplace.
Currently, thousands of Coloradans are saving money on their monthly health insurance premiums thanks to advanced premium tax credits (APTC) available through Connect for Health Colorado. In 2015, over 76,000 Coloradans qualified on average for $229 in financial assistance per month on their monthly health insurance premiums. This financial assistance is essential to expanding access to health insurance and driving down the uninsured rate in Colorado.
The ACA’s tax credit amounts change every year as health insurance rates change. The tax credits are designed to make sure that individuals making between about $15,000 and $46,000 a year do not have to pay more than a certain percentage of their income for health insurance. The difference between the second lowest cost silver plan, called the benchmark plan, and the ACA affordability guidelines determines how much financial assistance someone qualifies for. So, when the premiums increase, the amount of financial assistance increases to meet those guidelines. These tax credits can be used to purchase bronze, silver, gold or platinum level plan from any insurance company on an exchange.
Recently, proposed 2016 rates were submitted to the Colorado Division of Insurance for review and approval. In the individual market, average proposed rate percentage changes range from a decrease of 5.1 percent to an increase of 34.4 percent.
|
Company |
Policy Holders |
Average % Rate Change |
Minimum % Rate Change |
Maximum % Rate Change |
|
Anthem |
9,202 |
8.2% |
-11.6% |
11.7% |
|
Colorado Access |
339 |
26.6% |
4.3% |
44.8% |
|
Colorado Choice |
6,217 |
9.4% |
-0.1% |
18.1% |
|
Colorado HealthOP |
55,383 |
21.6% |
7.63% |
44.51% |
|
Cigna |
410 |
-5.1% |
-5.1% |
-5.1% |
|
Denver Health |
134 |
12.7% |
11.4% |
15.8% |
|
Humana |
6,296 |
20.9% |
0.1% |
25.7% |
|
Kaiser |
46,064 |
2% |
-5.4% |
12.3% |
|
Rocky Mountain HMO |
16,377 |
34.4% |
12.8% |
89.3% |
|
United |
New Plan |
N/A |
N/A |
N/A |
Rate changes can occur for many different reasons, including more use of health care services, newer technologies, or an aging population. Although rate increases have always occurred, thanks to the Affordable Care Act, the process has become more transparent.
Of particular interest for Coloradans receiving financial assistance is the Colorado HealthOP’s proposed 21.6 percent increase. Even though the Colorado HealthOP is proposing one of the largest rate increases in the individual market, they will likely remain the most affordable option for consumers in many parts of the state. As the most affordable option, one of their silver level plans will likely be the benchmark plan used to determine how much financial assistance people qualify for once again. With the rates going up, tens of thousands of Coloradans are going to qualify for more financial assistance than they did in 2015.
The charts below show how financial assistance could change in 2016 for individuals based on their income and age if the proposed rates from the health insurers are not adjusted or rejected by the Division of Insurance.
Avanced Premium Tax Credits: 27 Year Old, Individual Plan- Denver
|
Federal Poverty Level (FPL) |
Approximate Annual Income |
2016 Maximum APTC (Not yet finalized) |
2015 Maximum APTC |
|
133% |
$15,654 |
$165 |
$133 |
|
150% |
$17,655 |
$144 |
$113 |
|
200% |
$23,540 |
$80 |
$47 |
|
250% |
$29,425 |
$6 |
$0 |
|
300% |
$35,310 |
$0 |
$0 |
|
400% |
$46,600 |
$0 |
$0 |
Advanced Premium Tax Credits: 40 Year Old, Individual Plan – Denver
|
Federal Poverty Level (FPL) |
Approximate Annual Income |
2016 Maximum APTC (Not yet finalized) |
2015 Maximum APTC |
|
133% |
$15,654 |
$210 |
$172 |
|
150% |
$17,655 |
$189 |
$151 |
|
200% |
$23,540 |
$125 |
$85 |
|
250% |
$29,425 |
$51 |
$11 |
|
300% |
$35,310 |
$0 |
$0 |
|
400% |
$46,600 |
$0 |
$0 |
Advanced Premium Tax Credits: 60 Year Old, Individual Plan- Denver
|
Federal Poverty Level (FPL) |
Approximate Annual Income |
2016 Maximum APTC (Not yet finalized) |
2015 Maximum APTC |
|
133% |
$15,654 |
$489 |
$409 |
|
150% |
$17,655 |
$468 |
$388 |
|
200% |
$23,540 |
$404 |
$322 |
|
250% |
$29,425 |
$330 |
$240 |
|
300% |
$35,310 |
$248 |
$167 |
|
400% |
$46,600 |
$202 |
$77 |
Here is an example of how the rates going up could actually mean rates going down for Coloradans using financial assistance:
Kaiser has proposed an average rate increase of 2% for their 2016 individual market plans. For a 40 year old in Denver the KP CO Silver 2500/30 plan is proposed to increase from $272.22 per month to $274.96 per month before financial assistance. At an income of $29,000 a year their plan would have cost about $261 after tax credits in 2015. In 2016, the plan could now cost $223 per month after applying their financial assistance of $51 per month. Total savings for the consumer: $38 a month or $456 over the course of a year. (That’s 57 Chipotle burritos, carnitas no guac).
Additionally, more young Coloradans are going to qualify for financial assistance in 2016. The increase in cost for the benchmark plans raises the income threshold of when financial assistance kicks in. Health insurance rates were low enough in 2015 for millennials in some parts of the state that young adults making $29,000 did not qualify for tax credits. The increase in rates means that some Coloradans who did not qualify for financial assistance in 2015 will qualify in 2016.
The Affordable Care Act is designed to protect low and middle-income Americans from these types of increases in the health insurance market. Without financial assistance, thousands of Coloradans would still find health insurance out of their reach. As the new health insurance market starts to settle-in for Colorado, make sure you are exploring all the financial assistance that may be available for you.