Whether you’re a Fortune 500 executive or a retiree on a fixed income, healthcare costs represent a major chunk of your budget. And even though summer’s just begun, the U.S. government wants you to get the jump on next year’s financial planning.
On June 1, the Centers for Medicare & Medicaid Services (CMS), the federal agency overseeing Medicare, publicly posted the 2016 proposed rate increases for health insurance companies for insurance plans. According to the guidelines of the Affordable Care Act (ACA), insurers that are planning significantly rate increases to their plan premiums must submit their rates to either the state or federal government for review. As such, the CMS has posted its proposed rate increases on the website, RateReview.HealthCare.gov.
For 2016, proposed health insurance rates are expected to increase by 10 percent or more. This will impact all states using the the HealthCare.gov enrollment platform; these includes all plans inside and outside the Health Insurance Marketplaces, in all 50 states. The 10 percent level is also the threshold for this requirement.
However, you should know that these figures are NOT final. The CMS’s actual 2016 proposed rate increases will be published no later than November 1, 2015. The early release of these proposed rates is reflective of insurance companies’ initial requests. But generally, rate changes may differ due to the Marketplaces’ increased competition. The entire rate review process itself may impact the rates, as well.
Why consumers need to research proposed plan changes
By clicking on RateReview.HealthCare.gov, the agency’s diverse audience – including officials, experts and the public – is provided with an effective platform for educate and information. And, the release of these rates further strengthens the agency’s commitment to transparency and robust rate review.
“The rate review process kicks off an important set of steps designed to provide consumers and others the opportunity to weigh in on proposed rate increases of 10 percent or more,” stated Andy Slavitt, the CMS’s acting administrator. “These specific rates will be subject to vigorous rate review and revision and the final rates consumers will see this fall will reflect the breadth of choice and competition in the Marketplace.”
Positing these rate increases also provides all interested parties with the opportunity to discuss and question a wide array of health insurance topics. And yearly premium increases are certainly one of the most important areas of focus, especially those considered “high” (10 percent or greater).
But the rate review process’s flexibility and long time period are actually beneficial. That’s because both regulators and the public can evaluate whether proposed rate increases are based on reasonable cost assumptions. Marketplace consumers are also provided with a platform to comment on any proposed increases. They also have the opportunity to research and switch plans if they have any issues with rates or other features.
Research shows that for 2015, 20 percent of all HealthCare.gov consumers did select different plans. The majority of enrollees are projected to purchase a plan with proposed rate increases of less than 10 percent. But it’s important to note that any rate increases released now don’t take into account applicable tax credits.
On average, more than eight in 10 enrollees who purchased a 2015 Marketplace plan through HealthCare.gov were eligible for an advanced premium tax credit of $263 per person per month. Eight in 10 of enrollees in states offering Marketplaces had access to plans for less than $100 per month after tax credits. And, an estimated seven in 10 had access to a plan for less than $50 a month.
And what about those states running their own health insurance enrollment platforms, rather than Marketplaces? Proposed rate increases of 10 percent will be added to the Healthcare.gov website later this summer. But regardless of whether your state offers a government Marketplace, all insurance regulators operating effective rate review programs must publicly display these proposed rate increases and other relevant information; or, they must at least refer consumers to the CMS’ website. They must enable public comments on those proposed rate increases to be received, as well.