Understanding the Reasons Behind Potential ACA Premium Increases for 2022

The average change in medical insurance rates for individuals and households for 2022 is modest, as it has been for the past couple of years. The national average increase is approximately 3.5%. New insurers are joining the markets in most states.

All of this sounds great, but the reality is more complex. Most market participants do not pay full price. However, the modest fee changes apply to plans at full-price. New insurers may bring more competition, but their entry could also mean a significant reduction in the amount of premium subsidies, depending on how they price their plans.

The speed changes for the plan you have is unlikely to be anywhere near that common. But that does not imply you have to accept a major increase.

What factors affect the premiums you pay?

These annual premium changes that make headlines, and which are incorporated into the state and federal averages, apply to full-priced premiums. Only a small number of market/trade enrollees are paying full price. The majority of market/trade enrollees receive premium tax credits (subsidies), so their fees may change depending on how much their subsidy amount fluctuates between years.

The ACA tax credit is set so that the enrollee will pay a certain share of their earnings for the benchmark plan – the second-cheapest silver plan in their area. The tax credit score changes as the benchmark plan’s premium, which is not subsidized, varies from year to year. Your tax credit may shrink if a discount insurer enters the marketplace. It doesn’t really matter if the benchmark plan is chosen, but it could make other plans more expensive.

The averages also lump all plans together, so that even though an insurer might need to change its fees by 5% on average, it could have a range of -10% – +20% across all plans.

Even if your health plan has no annual fee changes, the cost of any of its plans will still be higher in the coming year simply because you’re older. If your health plan does not have any annual price modifications, you will still see a higher pre-subsidy cost in the next year simply because you are a year older. (If you receive subsidies, they will be increased to keep up with the age-related increase in premiums).

Anatomy of an increase in premium fees

Monique is 36 years old, lives in Lincoln Nebraska and earns $35,000 per year. She’s enrolled this year in a Silver CHI Health Silver Copay plan (Medica) with a $4.800 deductible and $45 copays on main care visits. The cap for out-of pocket costs is $8.150. She does not pay any monthly premiums, because the full price of the plan for 2021 will be $504/month.

Nebraska’s full-priced premiums are increasing faster than the national average for 2022. The median increase is less than 9%. Imagine Monique’s surprise when she received her renewal notice and learned that her premium after subsidies could go from $0/month to $226/month by 2022.

Why does her premium increase so much, when the common price increases in Nebraska are only a single-digit range?

The new well-being plan options can affect benchmark plans and your subsidies

Nebraska is a good example of a place where there will be more competition in 2022. Oscar and Ambetter both joined the marketplace in Nebraska, and now there are more than four times as many plans available. Monique had 22 options to choose from when she was shopping for insurance plans last fall. In 2022 she can choose from 95 different plans.

In 2021, Medica provided the benchmark plan (second lowest-cost Silver plan), which had a price of $657/month before subsidies. Ambetter, however, will be offering the lowest-cost Silver plan in Lincoln in 2022. They have thus taken over as the benchmark. The second-lowest Silver plan, for a 36 year-old, now has a premium that is only $475.

In Monique’s situation, the benchmark plan cost has decreased by $182/month. Since subsidy amounts are determined by the cost of the benchmark plans, Monique can expect her subsidy to be much smaller in 2022.

Medica also increased the monthly cost of Monique’s plan, from $504 in 2021 to 560 in 2022. This is partly due to Monique’s ageing, and partly because of the 10% increase in Medica’s total fee for 2022.

What is the right storm to improve a large internet fee?

This is a perfect storm for an internet fee increase: the benchmark fee has decreased by $182/month, while her health plan fee has increased by $56/month.

In 2021, Medica offered both the lowest and second lowest cost Silver plans in Lincoln. There was a significant difference in the value of the two plans ($504/month, for the lowest, versus $657/month, for the second lowest). Monique’s Silver plan was the cheapest option. The huge difference in premium between Monique’s Silver plan and the benchmark plan explained why Monique was able to enroll with no premium. all. When this happens, the cost of the Silver plan that is the least expensive will be drastically reduced.

But that is not the case in 2022. Ambetter offers the four lowest-cost Silver Plans in the area, with a difference of only $17 between them. The two lowest-cost Silver Plans are priced exactly the same. Monique’s most affordable Silver plan for 2022 will be $141/month.

Both plans have lower out-of pocket costs than her current plan. They’re both capped at $6.450 and $6.100, as opposed to $8.550, the new limit that her current plan will have in 2022. Her current plan requires copays from the start for office visits, but non-preventive visits are covered only after the deductible has been met. All plans cover preventive care in full, without any copays or deductibles.

The higher premium for 2022 is not a surprise.

Monique’s good news is that her $226/month monthly premium has not been increased. There are 15 Silver Plans that are more affordable than the 2022 plan, and 43 Bronze Plans, some of which are as low as $50/month. Bronze plans tend to have high out-of pocket costs. Monique may select from three Bronze plans offered by Shiny Health that include pre-deductible coverage for things like primary care visits and outpatient mental well being care. Monthly premiums range from $18 to $40.

These Shiny Well being Plans may have deductibles that are greater than the Medica plan she has, but she could find that they provide a stronger pre-deductible coverage that allows her to save money on out-of pocket costs. This is especially true when you add in the savings on premiums: A plan priced at $18/month would save her more than $200/month compared to renewing her current plan.

It is important to remember not to panic if your premiums are rising much faster than you anticipated. You may find that even if your premium is increasing significantly, there are other options that will better suit your budget.

Depending on the situation, the fact that more plans are available in many areas of the country for 2022 can be either a plus or negative. Monique’s subsidy amount has been reduced because a new plan is now the benchmark. There are also dozens of new plans available in her area, many of which will be a perfect match for Monique’s medical needs.

How to find a strong alternative insurance with a lower internet premium

Monique may want to consider the whole picture when choosing a plan. This includes premium costs, expected out-of pocket medical expenses, and provider networks. She’ll need to compare the different plan options to determine if her medications are covered and how much she can expect to pay at the pharmacy.

Although this article focuses on the plans available in Lincoln, Nebraska people in other parts of the country may have to deal with different levels of unusual internet price increases, even if total full-price rate modifications in their area are quite modest.

HealthCare.gov is used in states where the average enrollee has a choice of almost 108 plans by 2022. This is up from just 61 options for 2021. The new plans may offer you a better option in 2022 even if the benchmark plan for your area has not changed. You should never let your policy auto-renew without considering the other options. This is especially true when so many new plans are available.

There are Navigators and brokers in every neighborhood who can help you understand what is happening with your current plan and whether or not it’s best to change. Read our 2022 Guide to ACA open enrollment for more information about selecting a plan during open enrollment and the deadlines that apply in your state.