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Why are premium rates going up?
The Affordable Care Act created new requirements for both consumers and insurers. Consumers are required to obtain health insurance that has a broad set of benefits and covers a specific percentage of the costs of those benefits, regardless of their individual health and financial needs. Consumers who do not have this mandatory insurance will be required to pay a penalty that varies based on income. In addition, consumers can no longer receive a lower premium for maintaining good health, and instead will have to pay an amount based on the average health of the community. Consumers must also pay for health insurance that allows any individual to incur an unlimited amount of medical costs. This is why health care reform requires healthy consumers to participate and not just the persons needing insurance which is called adverse selection. Insurers are required to pay new taxes and will also have to pay additional fees for selling plans through the federal exchange.
Will I have to pay more for my health insurance?
There are many factors that will affect how each individual’s health insurance costs will change. In general, younger and healthier consumers can expect to see increases due to new federal laws. These laws tie the minimum costs for younger consumers to the maximum costs for older consumers. They also prohibit a person with good health from paying a lower rate or a person with bad health from paying an exorbitant rate. The federal law allows younger adults under the age of 30 and some adults experiencing hardships to purchase catastrophic plans that offer lower premiums and zero co-pay preventative services, but these plans generally require consumers to pay all of their medical costs up to a certain amount called a deductible, and depending on the plan selected could be several thousand dollars. Older consumers and consumers with serious medical conditions who before health care reform were either rated non-standard if they were accepted, ridered for a specific medical condition or could not buy health insurance at all because of their pre-existing medical conditions may see their own health insurance premiums go down. Some individuals will be able to obtain federal subsidies for paying for a portion of their insurance premiums. The two primary types of federal subsidies are called premium tax credit subsidies and cost-sharing reduction subsidies. Eligibility for these subsidies is based on several factors including family size, income (100% to 400% of the federal poverty table), and the health insurance being purchased, and is determined by the federal government.
What is a premium tax credit subsidy?
A premium tax credit subsidy is an advance tax credit that can be applied to monthly premium costs in advance of filing a tax return. Consumers who are eligible may choose how much advance credit payments to apply to their premiums each month, up to a maximum amount. If the amount of advance credit payments received for the year is less than the tax credit due, consumers will get the difference as a refundable credit when they file their federal income tax returns. If the advance payments for the year are more than the amount of the credit, consumers must repay the excess advance payments with their tax returns.
What is a cost sharing reduction subsidy?
A cost sharing reduction subsidy is a discount that lowers the amount consumers have to pay out-of-pocket for deductibles, coinsurance, and copayments. Consumers can get this reduction by purchasing individual health insurance through the Federal Marketplace if their income is below a certain level and they choose a health plan from the Silver plan level. Members of federally recognized tribes may qualify for additional cost-sharing benefits not limited to the Silver plan level.
Who can I contact with more questions?
The Oklahoma Insurance Department regulates the individual and small group health insurance policies sold outside of the Federal Marketplace in the state and can help you answer questions about health insurance. We also license and regulate the agents, brokers and insurance companies that sell insurance products in the state. You can reach the Consumer Assistance division by phone at 800-522-0071.