SACRAMENTO, California (AP) — After putting off routine health care for much of the pandemic, Americans are now returning to doctors’ offices in big numbers — a trend that’s starting to show up in higher insurance rates across the country.
Health insurers in individual marketplaces across 13 states and Washington D.C. will raise rates an average of 10% next year, according to a review of rate filings by the Kaiser Family Foundation.
That’s a big increase after premiums remained virtually flat for several years during the pandemic as insurers seek to recoup costs for more people using their policies, combined with record-high inflation that is driving up prices for virtually everything, including health care.
The rates review included Georgia, Indiana, Iowa, Kentucky, Maryland, Michigan, Minnesota, New York, Oregon, Rhode Island, Texas, Vermont and Washington.
“We’re at a point in the pandemic where people are using health care that they may have put off before,” said Larry Levitt, executive vice president for health policy with the Kaiser Family Foundation. “We have a double whammy right now of people using more care and inflation throughout the economy.”
In California, state officials announced Tuesday that rates would increase an average of 6% next year for the 1.7 million people who purchase coverage through Covered California, the state-operated health insurance marketplace. That’s a big jump after years of record low increases, when rate increases averaged about 1% in the past three years.
Increased use of health plans was the biggest reason for the increase, accounting for four percentage points, according to Jessica Altman, executive director of Covered California.
“That is really the consistent message that other states are seeing as well, and even more so than California,” she said.
That’s a small portion of the total number of insured Americans, as about 155 million people get their insurance through their employer-sponsored coverage. But Kaiser said the filings for the individual plans are more detailed and publicly available.
The annual open enrollment period for when customers can shop for and buy 2023 coverage starts this fall. That’s the main window each year when people on the individual market can buy coverage or change plans.
How much people will pay for coverage depends on a variety of factors, including where they live and what type of plans they choose.
The rate increases come as Congress debates whether to extend financial help for consumers through the American Rescue Plan — the $1.9 trillion economic aid package Congress passed last year to combat the economic impacts of the pandemic.
The American Rescue Plan included significant funding to keep health insurance premiums low for people who purchase coverage through state marketplaces.
California receives about $1.7 billion annually from that funding to make sure no one paid more than 8.5% of their household income on monthly premiums.
If that assistance expires at the end of this year, about 3 million Americans — including 220,000 Californians — would likely drop coverage because they will no longer be able to afford it, according to an analysis by Covered California.
Without guidance on whether Congress will extend the assistance next year, some insurers have reacted by proactively raising rates in anticipation of people dropping coverage. The uncertainty accounted for half a percentage point of California’s 6% increase, Altman said.
California officials have lobbied hard for Congress to extend the financial assistance through the American Rescue Plan. In general, the price of health insurance premiums depends on who is buying coverage. If its mostly sick people, the premiums are more expensive. If more healthy people buy them, the premiums cost less.
Altman said California has managed to keep its rate increases below the national average in part because more healthy people are buying coverage through Covered California than most other states.
She said that’s in part because of a California law that taxes people who refuse to purchase health coverage. But she said it’s also because of subsidies that keep premiums low so more people can afford them.
Altman said not extending the federal financial assistance would price some people out of coverage and “is the core outcome to be concerned about here.”
“That would be a big step backwards,” she said.
Associated Press health writer Tom Murphy in Indianapolis contributed to this report.
If your income is trending much higher this year than you anticipated, it's likely a welcome shift.
However, for anyone who gets their private health insurance through the public marketplace, that extra cash could mean an unexpected tax bill when they prepare their 2022 return next spring. A midyear income check could help avoid that.
Basically, if you receive premium subsidies (technically, advance tax credits) through the marketplace, having annual income that's higher than what you estimated when you enrolled could mean you're not entitled to as much aid as you're receiving. And any overage would need to be paid back at tax time.
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"You really should go into [your account] and take the steps to change your estimate so they can revise the subsidies as soon as possible," said Kristin Esposito, director for tax policy and advocacy with the American Institute of CPAs.
Esposito said a drop in income should also be reported — which could result in you getting bigger monthly subsidies. Make sure your account reflects other life changes, too, including marriage or a new member of your household, which also can impact the size of the aid.
"There are a lot of circumstances that can change and affect your insurance coverage," said Cynthia Cox, a vice president at the Kaiser Family Foundation and director of its Affordable Care Act program.
Changing your information generally involves calling the exchange or going to your online account and updating your application (or calling the exchange). If you used an insurance agent or broker to sign up, or were assisted by a community organization, you should be able to get help from them, as well.
Roughly 89% (12.9 million) of the 14.5 million people enrolled in private health insurance through the public marketplace — which was authorized by the Affordable Care Act of 2010 — are receiving subsidies. Generally speaking, people who get coverage this way — either through healthcare.gov or their state's exchange — are those who can't get workplace insurance or who don't qualify for Medicaid or Medicare.
Subsidies through the exchange were expanded for 2021 and 2022 due to the American Rescue Plan Act of 2021. (Senate Democrats are trying to get the current expansion extended for two more years, although it's still uncertain whether it will happen.)
It's still important to report an income change to avoid any kind of surprise, but hopefully the worst kinds of surprises won't happen as much this year.
Kaiser Family Foundation and director of its Affordable Care Act program
Prior to the temporary expansion, the aid was generally available to households with income from 100% to 400% of the federal poverty level.
The cap on income was eliminated for 2021 and 2022, and the amount that anyone pays in premiums is currently limited to 8.5% of their income as calculated by the exchange.
The temporary removal of the income cap means there may not be as many cases of people having to repay all of their subsidies: Before, if someone estimated their income was at 399% of poverty but it ended up at 401%, they'd have to account for those subsidies on their tax return.
"It's still important to report an income change to avoid any kind of surprise, but hopefully the worst kinds of surprises won't happen as much this year," Cox said.
When you start getting tax forms early in 2023 (for example, your W-2, or 1099 forms due to interest or dividend income), one of them generally will be a Form 1095-A from the insurance marketplace, which details how much you received each month in tax credits.
That document is then used to complete Form 8962, which shows whether you received the correct amount in subsidies — and if not, what the excess or shortfall is, Esposito said.
Any amount you weren't eligible for would reduce your refund or increase the amount of tax you owe. Likewise, if you are entitled to more than you received, the difference will either increase your refund or lower the amount of tax you owe.