As continues to be the case for the last couple of years, average individual and family medical health insurance rate changes for 2022 are mainly modest. The nationwide average increase is about 3.5%, and there are new insurers joining the marketplaces in the most of the states.
That all seems like great news, however the reality is a bit more complex. The modest average rate changes apply to full-price plans, but most marketplace enrollees don't pay top dollar. And although new insurers bring added competition, their entry could also mean a clear, crisp reduction in premium subsidy amounts, for the way the new insurer prices its plans.
So despite the headlines about small average rate changes, the speed change for your specific plan might be nowhere near that average. But that doesn't necessarily mean you need to swallow a large increase.
What affects fluctuations with what you pay for insurance costs?
The annual premium changes that grab headlines which factor into federal and state averages are for full-price premiums. But not many marketplace/exchange enrollees pay full price. Most receive premium tax credits (subsidies), which means that their rate changes will also rely on just how much their subsidy amount fluctuates from one year to the next.
ACA tax credits are set so the enrollee pays a set number of income for the benchmark plan – the second-cheapest Silver plan within their area. Once the unsubsidized benchmark plan premium changes from year-to-year, so does the size of the tax credit. If your discount insurer enters the marketplace, your tax credit may shrink. That does not matter when you purchase the benchmark plan, but it may make other plans more costly.
The averages also lump each insurer's plans together, so although an insurer might have an average rate change of 5%, it could possess a range of -10% to +20% across all its plans.
And average rate changes also don't take into account the truth that rates increase with age. Even if your health plan has no annual rate changes at all for any of its plans, your pre-subsidy price it's still higher in the coming year simply because you are a year older (if you receive subsidies, the subsidies will increase to help keep pace with the age-related premium increases).
Anatomy of the drastic increase in premium payment
Let's consider Monique, who is 36 years old, resides in Lincoln, Nebraska, and it has an annual salary of $35,000. This year, she's signed up for a Silver EPO plan from Medica (Medica with CHI Health Silver Copay) that has a $4,800 deductible, $45 copays for primary care visits, as well as an $8,150 cap on out-of-pocket costs. She pays no monthly premiums whatsoever, since the full-price price of the plan in 2022 is $504/month (according to her being 35 when she enrolled in that plan), and she's entitled to a subsidy of $513/month.
Full-price premiums in Nebraska are increasing by a lot more than the national average for 2022, by having an average increase of a little under 9%. But imagine Monique's surprise when her renewal notice demonstrated that her after-subsidy premium could be going from $0/month in 2022 to $226/month in 2022.
Why is her premium rising a lot, when average full-price rate increases in Nebraska are in the single-digit range?
New health plan options can impact benchmark plans – as well as your subsidies
Nebraska is a good example of a place where there is lots more competition in 2022. Oscar and Ambetter have both joined industry statewide, and also the number of available plans has more than quadrupled. When Monique was shopping for plans last fall, she had as many as 22 options to choose from. For 2022, however, she will select from among 95 different plans.
In 2022, the benchmark plan (second-lowest-cost Silver plan) was offered by Medica coupled with a pre-subsidy cost of $657/month. However for 2022, Ambetter provides the lowest-cost Silver plans in Lincoln, so that they have taken over the benchmark spot. And the second-lowest-cost Silver arrange for a 36-year-old now has a pre-subsidy premium of just $475.
So in Monique's case, the cost of the benchmark plan has dropped by $182/month. And since subsidy amounts derive from the price of the benchmark plan, Monique's subsidy can also be smaller for 2022 – it doesn't have to be as large in order to keep the price of the benchmark plan at the level that's considered affordable.
In addition, Medica has raised the base cost of Monique's plan from $504/month in 2022 to $560/month in 2022. That's partially because of Monique's increasing age, and partially because of the 10% overall average rate increase that Medica imposed for 2022.
The perfect storm for any large net rate increase?
That's an ideal storm for any large net rate increase: The benchmark premium has came by $182/month while her health plan's rate has grown by $56/month.
In 2022, Medica offered both lowest-cost and second-lowest-cost Silver plan in Lincoln, and there was a significant difference in price forwards and backwards plans ($504/month for that lowest-cost, versus $657/month for the second-lowest-cost). Monique's plan was the lowest-cost Silver option, and also the large improvement in premium between her plan and the benchmark plan explained why she was able to sign up for her plan with no premium at all. all. (A variety that big forwards and backwards cheapest Silver plans is unusual and helps to create a huge discount for that cheapest Silver plan when it happens.)
But that's no more the case for 2022. Ambetter has got the four lowest-cost Silver plans in the region, and there's only a $17 improvement in price across all of these. The two lowest-cost Silver plans are actually priced at the identical amount. Consequently, the cheapest Silver plan that Monique could possibly get for 2022 is going to be $141/month.
The two plans at that price have lower out-of-pocket costs than her current plan. (They're limited to $6,450 and $6,100, versus $8,550, which is the new out-of-pocket limit that her existing plan will have in 2022.) But non-preventive office visits are just covered after the deductible is met, whereas her current plan has copays for visits to the doctor right from the start. (Certain preventive care is covered entirely on all plans, without a have to pay any deductible or copays.)
You might not be tied to that higher 2022 premium.
The good news for Monique is the fact that she's not tied to her new $226/month premium. You will find 15 Silver plans that are less than that for 2022, and there will also be 43 Bronze plans which are less expensive, including several that are under $50/month. Bronze plans do generally have fairly high out-of-pocket costs. But Monique can select from among three Bronze plans offered by Bright Health which include pre-deductible coverage for such things as primary care visits, outpatient mental healthcare, and urgent care visits, with monthly premiums that range from $18 to $42.
Although those Bright Health Plans do have deductibles which are higher than her current Medica plan, she will dsicover that they arrives ahead on out-of-pocket costs due to the more robust pre-deductible coverage that they provide. And that may be especially true when she factors in the premium savings: An agenda which costs $18/month helps you to save her a lot more than $200/month in premiums, compared with renewing her current plan.
The takeaway point here is to not panic if your plan's premium is increasing with a much more than you may have expected. Even when your rates are increasing significantly, you will probably find that there are other available choices available that will be a better fit for your budget.
The proven fact that there are other plans available in most regions of the nation for 2022 can be a plus or a minus, with respect to the circumstances. In Monique's case, a brand new plan has had over the benchmark spot and reduced her subsidy amount. But there's also dozens of other new plans in her own area, many of which might be a perfect fit on her medical needs.
How to find solid replacement coverage having a lower net premium
In order to choose a plan, Monique will have to think about the whole picture, including total premium costs, expected out-of-pocket medical costs, and provider networks. If she takes any medications, she'll need to compare the various plan options to decide if her medicine is covered and just how much she will count on paying in the pharmacy.
Although this short article concentrates on plans obtainable in Lincoln, Nebraska, people in other areas of the nation can be facing varying examples of surprising net rate increases, even when overall full-price rate alterations in their area are fairly modest.
In states which use HealthCare.gov, the average enrollee can select from among almost 108 plans for 2022, up from just 61 in 2022. Whether or not the benchmark plan in your town has always been unchanged, the influx of recent plans might mean that there's a better option for you in 2022, and now's the time to switch your coverage. It's never to your advantage to simply let your plan auto-renew without taking into consideration the other options, and that's especially true when there are plenty of new plans available.
In every community, there are brokers and Navigators who can help you understand what's happening with your current plan, and consider whether an agenda change may be to your advantage. For more information about picking out a plan during open – and open enrollment deadlines in your state – read our 2022 Guide to ACA Open Enrollment.
Louise Norris is definitely an individual health insurance broker that has been covering health insurance health reform since 2006. She's written a large number of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform by other health insurance experts.
