Regulators in California are letting health insurers build the death of a major Affordable Care Act subsidy program into their individual rates for 2018, in a way that may create a major opportunity for agents to reach out to consumers.
The move will let issuers increase the full cost of mid-level, "silver tier" public exchange plan coverage, and only silver-level exchange plans, an average of 12.4%.
Managers of Covered California, California's state-based Affordable Care Act public exchange program, and officials at the California departments that oversee insurance companies and managed care companies, announced the change today.
Open enrollment for 2018 is set to begin Nov. 1.
Issuers are making the CSR loss rate adjustment to protect themselves against the possible end of the Affordable Care Act cost-sharing reduction (CSR) subsidy. The CSR subsidy reduces the effects of deductibles, co-payments and coinsurance amounts on Affordable Care Act exchange plan users with income under 250% of the federal poverty level.
Low-income exchange plan users can also qualify for another subsidy: the advanced premium tax credit subsidy.
Because the CSR subsidy loss adjustment is so narrow, about 78% of the consumers who have been using the subsidy and take active steps to shop for new coverage for 2018 will face little or no increase in their actual out-of-pocket coverage payments as a result of the change, officials said.
The adjustment will mainly affect exchange plan higher-income users who qualify for little or no subsidy help, and even they may avoid the effects of the CSR subsidy loss adjustment by shopping carefully for coverage, officials said.
About 1.4 million California residents have purchased their health coverage through Covered California. Only about 65,000 exchange users have full-cost, unsubsidized silver-level coverage, exchange officials estimate.
Need for consumer support
Charles Bacchi, the chief executive officer of the California Association of Health Plans, said in a statement that California regulators and health plans had to make adjustments for the possibility of loss of CSR subsidy help because of all of the uncertainty in Washington.
"With open enrollment rapidly approaching, consumers need to know what their premiums are for next year and what their choices are," Bacchi said. "This is going to be logistically challenging, and plans will work closely with Covered California to provide consumers with the information they need to find the plan that will work best for them."
Peter Lee, Covered California's executive director, also talked about the importance of consumers taking active steps to avoid unnecessarily large price hikes.
"While some consumers will face higher costs than expected this year unrelated to the CSR surcharge, they can still shop for a better deal to reduce the impact of the surcharge," Lee said in a statement.
Covered California requires exchange plan issuers in the state to meet statutory agent compensation standards.
The exchange said consumers and agents can already review 2018 coverage options using the Shop and Compare tool on its website.
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