Health insurance cost to soar? Not so fast

Aug. 03--Local Covered California insurance customers might have heard their premiums are expected to skyrocket in 2017, but the reality is the increase for people using the state health insurance program is expected to be slight, if at all, according to experts.

First, premiums are expected to rise 13.2 percent on average across the state, up significantly from previous years' increases of about 4 percent annually. But Sutter, Yuba, Colusa and Glenn counties -- part of Region 1, or the Northern Counties -- will experience a rate change of 12.1 percent, lower than the state's average.

Second, the rate increase varies by type of plan.

For the lowest-priced Bronze Plan, the increase will be about 5.9 percent. For the Silver Plan, the increase will be about 10.8 percent. Those two plans are the most popular in the area.

Third, government subsidies, or tax credits, will also increase for individuals. The subsidies are meant to balance or offset the rate hike to allow for affordable coverage.

"Subsidies are probably going to cover it," said Eric Lewis, consulting agent for David Ernstam Financial & Insurance Services Inc. in Yuba City. "Subsidies increase each year with age. The last few years, as our clients became a year older, they saw a 4 to 5 percent decrease."

He said tax credits depend on an individual's plan, zip code, income and age.

"Because this year is a bigger increase, maybe it will break even or be a slight increase instead of the decrease we saw last year for the majority of people," Lewis said. "We'll find out when Covered California allows us to quote for 2017."

Lewis expects quoting to occur sometime in late August or early September.

Larry Hicks, information officer for Covered California, said about 90 percent of Covered California enrollees receive assistance in paying for their premiums through subsidies. He said the average subsidy covers about 77 percent of the total cost.

"Premium costs are rising, but subsidies are rising, too," Hicks said.

Higher incomes

The people who will be hit hardest by the rate increase are those who make more than 400 percent of the federal poverty level.

That means for a household of one person, if you make more than $47,520 annually, you will not receive federal subsidies and will be required to pay the full 12.1 percent increase. For a household of four, you will be required to pay the full rate increase if you make more than $97,200 annually.

As of the most recent enrollment numbers through March 2016, about 400 people in Yuba, Sutter, Colusa and Glenn counties will experience the full, unsubsidized rate increase.

These rate increases do not affect those who receive their health insurance through their employers -- though they, too, can expect their insurance rates to increase -- but focus primarily on individuals who receive their insurance from the private market (i.e. Covered California).

Why the increase?

"It's a big increase, but one thing I would like to point out is over the past two years, there have been really small increases," Lewis said. "Over the past three years, it's been about 7 percent, which really isn't too big over three years. This year's increase is big for some specific reasons."

Lewis said the obvious reasons for the increase -- which are the same every year -- are due to medical inflation: compensating employees, new medical instruments, advancements in science and studies, etc.

The one area that is somewhat of a new phenomenon involves qualifying events. These are when an individual is allowed to sign up or change coverage mid-year, not during the typical open enrollment period between Nov. 1 and Jan. 31.

Qualifying events can be anything from losing employment and starting a new job or a baby being born into the family, to changing addresses by moving to a new area. Insurance companies have reportedly been losing money from people signing up outside of the open enrollment period.

Lewis said insurance companies are losing payments because qualifying events pose more of a risk to insurers by having to cover special enrollees' unanticipated medical costs.

Both Hicks and Lewis suggested individuals concerned about their premiums should contact their insurance providers to see how they might be affected by the increase. Consumers will have the option to shop around and switch insurance plans starting Nov. 1.

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(c)2016 the Colusa County Sun-Herald (Colusa, Calif.)

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