FRISCO — Colorado passed some major pieces of health care legislation in the past year, intending to lower health care premiums for consumers. Colorado’s temporary reinsurance program promised to lower premium prices by an average of 20% across Colorado, and even more on the Western Slope, with the breakthrough health care purchasing cooperative, Peak Health Alliance.
But with the aggressive attempt to wrangle health care premiums, which were driving many Coloradans to opt out of health insurance, a few people have found the very efforts to help them afford health insurance have led to higher premiums next year.
Take the case of Breckenridge ski shop manager Brian Evans. Evans wrote the Summit Daily News about his unique situation.
Evans is a 45-year-old relatively healthy man making $36,000 in 2019, and has been paying a $126.32 monthly premium for his individual bronze plan with a $7,900 deductible. That monthly cost was reduced greatly from the actual monthly premium of $519.63, thanks to a $393.31 Advanced Premium Tax Credit from the federal government.
The tax credits, which are based on a complicated formula that factors in annual income and plan cost, were meant to help people like Evans shopping on the individual health care exchange afford insurance, up to 400% of the federal poverty level. The tax credits taper off the closer an individual’s income gets to 400%.
Ezra Watland, director of communications for Connect for Health Colorado, said the tax credits came with the Affordable Care Act when it went live in 2014.
Watland said those tax credits are tied to the cost of premiums, specifically the cost of the second-lowest priced silver plan available to an individual buyer in their region. When that “benchmark premium” is too expensive for an individual’s income, the tax credits kick in to help them pay no more than 9.86% of their annual income on health insurance. That subsidy could be used for any individual health plan, including the less expensive bronze plans.
In Evans’ case, the tax credit offset the lion’s share of the cheapest plan available to him this year, before reinsurance and Peak Health Alliance came to be.
But in 2020, he is seeing a very different reality. Evans’ income went up by $3,000 to $39,000 in 2020, and the cheapest plan available to him next year is Peak Health’s bronze plus plan, which costs $312.87 a month with a $6,000 deductible.
Evans acknowledged that Peak Health’s plan is a lot less expensive than the original price of the cheapest plan last year, with a lower deductible and better offerings. But because of the combination of his higher income and the lower pricing for the benchmark premium, the tax credit he can receive has dropped dramatically from $393.31 to $81.15 per month.
That means the cheapest plan he can buy for next year will cost him $231.72 a month, an 83% increase from what he paid each month this year. Evans was gobsmacked, especially given all he had heard about insurance premiums going down by an average of 20% across the state.
“I am sure many people believe $231.72 represents tremendous value for the product offered,” Evans said. “But there is no way around it. The most affordable product’s monthly cost to me is way up.”
Evans added that he was “incredibly frustrated” by the situation and was considering going without insurance next year because paying more than $200 a month for health insurance is a steep ask for his income.
Interviews with Watland as well as Colorado’s Commissioner of Insurance Mike Conway, State Rep. Julie McCluskie (D-Dillon), Peak Health Executive Director Tamara Drangstveit and Family & Intercultural Resource Center Executive Director Brianne Snow produced the same conclusions on Evans’ particular situation and others who might be affected by this “glitch” in health insurance pricing.
They emphasized that for most Colorado consumers, especially those who were paying the full price of their premiums without subsidies this year, insurance premiums are indeed going down, in some cases dramatically. Most Coloradans are benefiting from lower health care premiums for the first time since the health care exchange was introduced in 2013.
But they also acknowledged that some people like Evans, whose incomes increase while benchmark premium pricing goes down, are seeing the opposite of what was intended with health care legislation. The glitch is affecting people with average and below-average incomes, the very people the reinsurance program was intended to help.
It is unknown exactly how many people are stuck in this insurance premium “Twilight Zone,” but Watland said 75% of individual buyers in Colorado were eligible for tax credits this year, and Conway said the state expected only “a fraction” of those subsidized buyers to pay more next year than they did this year.
McCluskie said she and others who worked to craft the reinsurance bill were aware of the possibility that some people would see their premiums go up as they lost tax credits. However, they did not know how many people would be impacted because the tax subsidy varies by individual and their circumstances, including income changes, location and other factors.
Anticipating there would be the need to make tweaks, McCluskie and the bill’s other writers placed language in the bill that authorizes a study on the impacts of the new reinsurance program, thereby discovering and quashing the “glitches” like the one Evans is dealing with now. The solutions could come in the form of state subsidies, lobbying at the federal level to readjust the tax credit formula or finding some other way to reduce the still-high cost of premiums in Colorado.
But Watland, McCluskie, Conway, Drangstveit and Snow wanted to emphasize that, for the most part, people enrolling in the individual exchange have been pleasantly surprised by the drop in the full price of their premiums and are not affected by the problem with tax credit losses. They were adamant people should not be discouraged from shopping for health insurance and don’t want people to go without health insurance in 2020.
“I would tell anyone that going without insurance puts yourself and your family at risk during a medical emergency,” McCluskie said. “I hope that we will have so many more examples of people who are saving money and hope people shop around so they find a product that is cheaper than last year.”
Peak Health Director of Outreach Elise Neyerlin conveyed a testimonial from a couple who own several small businesses in the county who have been paying a $1,384 month premium for a bronze level plan this year but will save $588 a month starting next year with one of Peak’s new plans.
The officials and experts said consumers should be diligently shopping around the exchange for the best pricing and not just letting their insurance auto-enroll, as plans and rates might have dramatically shifted. If you’re not exploring your options on the health care exchange, you might wind up spending more for your desired health care than you need to.
Individual buyers also should talk with health care brokers and navigators to see what options they have and to work through their unique situations.
After hearing Evans’ story and a few others that have begun filtering in after enrollment began at the beginning of the month, McCluskie and Conway said the state is now looking to expedite that study in order to find those problems and solve them sooner.
Even if Evans’ situation is relatively isolated and an unintended consequence of aggressive legislation, McCluskie said he and others who are having negative experiences deserve to be heard and will not be ignored.
“I am hearing really great stories from people about their premiums going down, and we are celebrating that,” McCluskie said. “I’m thrilled even in (Evan’s) case to see that reduction in premium pricing. But the particular anomaly he and some others are experiencing is something we have to address. I am committed to doing that. I don’t want people to think we don’t care. It’s a piece of the puzzle we need to address.”
The Family & Intercultural Resource Center has a health care navigator available to help the public with their health care purchasing questions. To set up an appointment, call 970-262-3888. To see if your 2020 premiums will be affected by the tax credit offset, or to find out more about your options on the individual health care exchange, visit Connect for Health Colorado’s website at connectforhealthco.com.