Frequently Asked Questions, 2017 Individual Plans
1. Why are premiums for individual ACA (Affordable Care Act) plans increasing?
ACA plans require a significant increase in order to continue operating individual health insurance plans.
When the ACA passed, we knew that many of the new enrollees needed care to address previously undiagnosed conditions or support ongoing treatment. We took that increase of care into account when setting the premiums. However, not only did the new members use more services than anticipated, fewer healthier individuals enrolled to offset the costs. In the end, the amount of care provided exceeded the premiums collected. In order to provide the services members need, premiums must be adjusted.
2. Are individuals in other states facing these type of increases?
This trend is not unique to Arizona. Insurers nationwide are needing higher rate increases for ACA individual plans. A compounding fact for our state is Arizona’s premiums have been some of the lowest in the country, which are insufficient in covering the costs for those newly insured.
In fact, a recent study by the Blue Cross Blue Shield Association shows that newly enrolled members’ medical claim expenses are significantly higher per month today than prior to the ACA. Those enrolling in ACA plans tend to have higher rates of diabetes, depression and high blood pressure, among other conditions, and visit the emergency room more frequently. In order to offset these increased expenditures, insurers nationwide are raising premiums.
3. Will the premium increases affect all BCBSAZ members?
In total BCBSAZ serves almost 1.5 million members across the state with a variety of plans and benefits.
These premium increases for individuals do not affect members with employer coverage, Medicare coverage or federal plans.
Individual increases apply to members with ACA-compliant plans and individual Grandfathered plans –those purchased prior to March 23, 2010. Grandmothered plans (also known as transitional plans)–those purchased between March 23, 2010 and October 1, 2013– will not receive an increase until renewal or May 1, 2017.
Average increases take effect upon plan renewal. The increase varies by person and by plan.
• Grandmothered – not yet known. The 37,000 members with this type of plan will not receive an increase on January 1. They are not subject to an increase until time of renewal on May 1, 2017, pending DOI approval. Rates have not yet been filed yet.
• Grandfathered – 17 percent average increase. This will affect approximately 2 percent of our total membership or 28,000 members. The new rate will take effect for a majority of members on Oct. 1, 2016.
• ACA – 65 percent average increase, pending DOI approval. This will affect up to 5 percent of our total membership or about 73,000 people. The increase will take effect Jan. 1, 2017.
It is important to note that three out of four Arizonans purchasing plans on the Health Insurance Marketplace receive a tax credit subsidy to help pay for their premiums. That means subsidy eligible members’ out-of-pocket increase could be lower.
4. Will premium increases affect tax subsidies?
Depending on the plan and where an individual lives, subsidies may significantly reduce premiums. Subsidies will continue to pay a portion of premium for those who are eligible. As premiums go up, even with the subsidy, some individuals and families could pay more for health insurance depending on the plan they choose.
Subsidy levels are based off the rates filed by insurance companies. They vary from county to county.
5. Are new enrollees using more healthcare than the previously insured?
Insurers across the country are citing significantly higher healthcare needs among those newly enrolled. BCBSAZ has experienced the same trend among new enrollees in Arizona. For example, the average medical claims for a BCBSAZ individual member before the ACA was $267 per month. Today the average is $659 per month. Specifically, there are higher rates of diseases and more emergency room visits.
6. When will the increase take affect?
For those with grandfathered plans, a majority of members will see a rate change on Oct. 1, 2016.
Rate increases for individuals who have ACA plans take effect Jan. 1, 2017.
Members will be notified at least 60 days before their plan renews. For Grandfathered plans, members can expect to receive a mailing in July. ACA plan members can expect to receive information in September.
7. Does the rate increase affect any other plans offered by BCBSAZ?
The proposed rate increases do not affect employer, federal or Medicare or individual Grandmothered plans.
8. Will BCBSAZ offer coverage in Arizona’s rural counties?
Our desire is to offer individual plans to Arizonans in 2017, particularly in the rural areas. That is why BCBSAZ continues to evaluate the rural markets, the amount of services members need and the financial health of the individual and family plans we offer. We anticipate making an announcement soon.