With a number of states approving health insurance rate increases for 2017, the federal government is looking to allay consumers’ worries by reminding them that tax credits could offset the costs of those who qualify for financial help.
The Wall Street Journal reported that Tennessee has approved an average premium increase of 62% for next year. Similarly, Mississippi gave the green light for an average premium increase of 43%, and Kentucky allowed major carriers in the region to raise their rates by an average of 23%.
The Department of Health and Human Services (HHS) released an analysis yesterday that said tax credits available to several lower- and middle-income consumers would soften the impact of the increases. The tax credits would also ensure that about three-quarters of those who secured health insurance through HealthCare.gov would pay under $75 a month for coverage.
“Headline rate increases do not reflect what consumers actually pay,” commented HHS acting assistant secretary for planning and evaluation Kathryn Martin.
Those who do not purchase individual health plans on their respective federal marketplaces will pay the full costs of their premiums, increases and all. Individuals whose incomes are above four times the poverty line will also not qualify for tax credits.
The ACA’s pricing rules, however, apply to nearly all individual health plans, both on and off the federal marketplaces.
Health insurers looking to raise their rates for next year reasoned that their decision to increase was due to their losses on the Affordable Care Act (ACA) federal marketplaces. Federal officials say that the increases are a response to the planned end of provisions in the ACA designed to financially support insurers taking in more high-risk customers.
Officials also noted that later rate shifts are to be expected as health plans adjust to the ACA’s overhaul of insurance pricing; such adjustments will require insurance to be sold equally to all consumers regardless of medical history or risk.
Some state regulators have commented that they were faced with the difficult decision to either allow a carrier to raise its rates considerably for next year or to let the insurer withdraw its plans from the federal marketplace.
As Nov. 1—the start of the Open Enrollment Period for ACA plans—nears, more finalized health insurance rates will be disclosed by the remaining states.
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