If you get health insurance through the Affordable Care Act, your insurer is required to send you a renewal notice telling you what your premium will be for the coming year, and what it will cost based on your premium subsidy for the current year.
That’s giving consumers in certain states a massive case of sticker shock and most likely leading some to conclude they can’t afford to keep their health plan. But the picture isn’t as dire as it appears. Here’s what’s going on.
If the cost goes up, so does your subsidy
Because of the government’s decision to stop funding Cost-Sharing Reduction payments, premiums have jumped in certain states, especially for the popular Silver plans. (Here’s the background on that.)
But your insurance subsidy actually shields you from higher premiums. It’s calculated to guarantee that you will never have to pay more than a certain percentage of your income for insurance. Your subsidy is the difference between that amount and the cost of a standard Silver plan — so if the cost goes up, so does your subsidy.
You can see where this is heading. Applying 2017 subsidies to much higher 2018 premiums can result in a misleadingly high premium estimate for 2018.
In a useful background article on this issue, experts from the Kaiser Family Foundation include an actual notice received by a 60-something couple from Virginia declaring that their monthly payment will go from $171 in 2017 to $1,441 in 2018. That’s because the unsubsidized premium for this plan will increase from $1,690 to $2,960.
But of course the couple won’t really have to pay this much because, assuming their income stays roughly the same, they’ll only be expected to contribute the same $171 that they did in 2017. What will go up — a lot — is their subsidy, but the notice doesn’t make that clear.
How to figure out your 2018 subsidy
If you’ve gotten a notice like this, your first step should be to figure out what your subsidy will be for 2018. You can do this in one of a few ways:
• Log into your state marketplace account and apply for 2018 coverage.
• Use your marketplace’s plan preview feature if you want to window shop first and enter your expected 2018 income. This year, Healthcare.gov has made it a bit difficult to spot this preview feature, so here’s a direct link.
• Use the updated Kaiser Family Foundation calculator.
You can then take this subsidy and apply it to any plan sold on your exchange.
If you don't get a subsidy
If you don't qualify for a subsidy, look both on and off the exchange for a health plan. The main challenge for shopping off-exchange is making sure you’re looking at the full range of plans available.
Aisling McDonough, a health communications consultant who worked for six years helping to run open enrollment for the federal government, advises consulting a reputable agent or broker, or starting your shopping at an online broker such as Ehealthinsurance.com.