Affordable Rates, If You Do Your Research

December 22, 2014

The second Patient Protection and Affordable Care Act open enrollment period began on November 15th with just moderate rate increases for plans on the federal exchange. An influx of new plan offerings on the federal exchange was a main driver of the lower increases. In general, this year 90% of consumers buying plans through Healthcare.gov have a choice of at least three plans, compared to 75% last year.

Rates vary depending on the market in each state and on the level of coverage purchased, size of family, and age of the individual purchasing the plan. According to Washington Post data, 25 of the 34 states that opted to use the federal exchange, rather than create their own state run exchange, had higher premiums on average than this time last year for silver tier plans. Nine states had lower premiums.

However, even when premium rates are higher, the average premium rate increase was modest. The Centers for Medicare and Medicaid Services (CMS) recently released extensive data on approved rates by state and premiums by state.

Analysis of the data estimates the average premium would be $381 for a lowest-cost silver plan for a 50-year-old nonsmoker, and $307 for a bronze plan. These rates are just 4% and 3% higher than last year.

An important caveat: Health care consumers could miss out on low premium rate increases if they default to a new feature this enrollment season: automatic re-enrollment. The Department of Health and Human Services (HHS) announced on June 26, 2014 that individuals who purchased plans on the federal exchange last enrollment would be automatically re-enrolled in the plan they selected last year if they did nothing.

Because plan offerings have changed, and in most cases more plans have been added, individuals who default to auto-reenrollment could see on average a 7% increase, or pay approximately $34 more a month for silver plans. At the highest tier of coverage, the platinum plans, rate increases those who chose to auto-reenroll were even higher: a 15% rise, or about $111 per month.

This data says that consumers who shop around will see more affordable, and more, plan options this open enrollment period as compared to last year. Smart buyers will take notice and act accordingly.

For a state-by-state analysis of health insurance premiums, click here.

For more on the effect of competition among insurance carriers on premium rates, see our October post, “When Insurance Carriers Compete, You Win.”

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