Californians with individual and family plan health insurance are opening letters from their existing carriers notifying them of steep premium increases due to the implementation of the Affordable Care Act. The skyrocketing rate increases are leading some policy holders to question the wisdom of Obamacare. But upon closer inspection, the higher rates may not necessarily be all that they seem.
Old health insurance plans scrapped
What the members of these health plans may not realize is they may not have to either accept the increase or they may be entitled to discounts based on their income. In an effort to comply with new ACA provisions for new health plans beginning in 2014 many insurance companies have had to scrap their existing plans and create whole new health insurance policies. The insurance companies have been “mapping” their existing clients to new health plans that most closely resemble their old health insurance.
New “mapped” plans may be misleading
If the plan member does nothing, they will be enrolled in the new ACA compliant plan that the health insurance company has chosen for them. If the member allows the roll-over to the new plan with out first investigating whether they are eligible for premium assistance through Covered California, they may be paying more than they should. Within the notification letter the plan members are usually informed that they might be eligible to premium assistance to reduce the new monthly premium. Unfortunately, that recommendation is lost as the family absorbs the sticker shock of the new rate.
New rates, new assistance
I have received several calls from concerned clients about the new rate increases. In all but a few instances we have found that the individual or family can migrate to a plan different from what the carrier suggested, with a lower premium, or they were eligible for tax credits through Covered California to substantially reduce the new rate.
After I reviewed the new rates for clients with one of my carriers I found-
- 25% were getting a rate decrease
- 50% were seeing a modest 18% increase
- 25% were facing a rate increase of over 100%
Lower premiums, better benefits
A good portion of my clients will be eligible for some sort of premium assistance through Covered California. This mean that they will end up paying less per month for a new plan that offers better coverage. Other clients will have the opportunity to shift to a health plan other than what the health insurance carrier has “mapped” or an entirely different company for a lower rate. Ironically, some clients can downgrade from the recommended Gold plan to a Silver and still have better benefits than their current plan.
Old health plans with unreasonably low rates
Of the folks facing a steep rate increase, many of them were in health plans that had been discontinued and closed to new enrollments over a year ago. Many of the old health insurance plans lacked a substantial number of essential health benefits under the ACA and additional California requirements for newer health plans issued in 2012. The new health plans virtually mirror the health insurance offered to small groups. The rates I have seen for the individual and family plans closely resemble those on the small group side of the health insurance business.
Substantially lower deductibles
Most of the plans didn’t originally include maternity coverage, benefits for Autism treatment, coinsurance for mental health office visits and had maximum out of pocket limits of $15,000 to $20,000. The new health plans have substantially better coverage for many different health issues and the maximum out-of-pocket amount has been reduced to $6,350. In addition, the old plans could have a pharmacy deductible up to $7,500. New health plans average a $250 deductible for Brand name prescriptions.
Competition no guarantee of low rates
Of course, there are families that are receiving letters notifying them that not only their current health insurance but the entire company will no longer be offering health insurance in their region. Part the cause of the reduction in statewide coverage has to do with number of physicians, hospitals and other providers under contract by the health plan at competitive rates. Even though there seems to be a lack of competition in some regions of California that is not reflected in the premiums. Some of the highest premium areas are those regions with the greatest number of health plans to choose from.
Explore your options
If you have received a letter notifying you that you are being mapped to a new health plan with higher rates, compare your old plan to the new plan. Call your agent or check out Covered California to compare the cost of health plans in your region. You might find a health plan that more closely fits your health and lifestyle with lower rates from a different company.