NEW YORK (MainStreet) — November 15 marks the start of Obamacare open season, when individuals can once again sign up for Marketplace health insurance under the Affordable Care Act. That has consumers wondering if Obamacare Marketplace insurance premiums will be hiked up at the first opportunity. A recent Kaiser Family Foundation (KFF) study of the largest city in each of the 15 states and the District of Columbia, for which rate filings have been made available, shows that rather than rising, the average silver plan premium will fall slightly in 2015, before applying tax credits. The second lowest cost silver plan, which will decrease on average by 0.8%, is used as the benchmark to which the amount of federal financial credit assistance in the form of tax credits to individuals is linked.
But that average cost reduction is not necessarily good news, and not all consumers will be pleased with their new premiums.
The analysis found that premiums for the benchmark silver plan will drop in only seven of the 16 areas analyzed. Some individuals will see a rate hike. The KFF study found that while a 40-year-old nonsmoker's premiums will drop 15.6% in Denver, they will rise 8.7% in Nashville before taking into account any tax credits. However, tax credits may prevent an actual increase in premium rates for qualifying individuals.
The KFF report looked at premiums for a 40-year-old single nonsmoker earning $30,000 a year. KFF notes that overall findings could change when data on premiums from all 50 states are released.
Regardless, premium rates overall so far are “generally modest” compared to the common double-digit growth in the past, according to Drew Altman, KFF’s president and CEO.
But watch out: simply signing up for the same plan “on cruise-control is a flawed approach,” warns Mitch Rothschild, CEO and co-founder of Vitals, a website where patients rate their doctors. “Consumers must double-check the value they will receive.”
With plan prices changing, consumers who simply opt to re-enroll may find that their plan is no longer among the lowest-cost offerings. That may lead to a larger rate hike than necessary for those who receive tax credits, because consumers must pay the difference between their plan and the second lowest silver plan in their Marketplace. KFF found that in 12 of the 16 cities studied, at least one insurer that had offered one of the two lowest silver plan premiums in 2014 is no longer offering one of the two lowest cost silver plans in 2015.
"There are also changes to the federal poverty level and subsidy percentages that will change things a little bit,” says Ivan Williams, senior policy expert at GetInsured, a comparison shopping portal.
Therefore, consumers must shop around all over again during open enrollment.
“The best way for consumers to know what their health insurance costs will be in 2015 is to first find out if they qualify for tax credits and cost-sharing reductions, then shop around and compare plans not just by monthly premium, but by total annual cost,” Williams says. “Deductible amounts, co-pays, coinsurance, prescription drug coverage, provider networks, etc., all help determine how much a consumer will have to spend out of their own pocket for healthcare in 2015.”
--Written by S.Z. Berg for MainStreet