Covered California, the state’s Affordable Care Act health insurance exchange, said last week that its premiums will balloon by a statewide average of 13.2 percent next year — more than triple the about 4 percent increases in each of the previous two years.
But the average rate hike doesn’t tell the full story for individual consumers. Health plan prices vary across the state and within regions. How much you’ll pay depends on a variety of factors: where you live, how much money you make, what level of coverage you want and which insurer you choose.
Keep in mind that these premium increases affect only a fraction of insured Californians — not the majority, who get their coverage through work or a government program such as Medicare or Medi-Cal.
Here are some key questions and answers to help you better understand what this announcement means for you:
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Q: When do these premium hikes take effect?
A: They start in January for 2017 policies.
Q: Are all Covered California plans going up 13.2 percent?
A: No. California is divided into 19 pricing regions, and not all 11 plans participating in the exchange next year will be offered in each region. Your options will depend partly on where you live and what plans are available in your area.
In some regions, the rate increase is higher than the statewide average. In others, it’s lower.
Within regions, rate hikes vary by insurer. For instance, in the greater Sacramento area, rates will rise an average of 13.4 percent overall. However, rate increases within the region range from an average 5.8 percent for a Kaiser Permanente plan to 23.1 percent for a Blue Shield of California plan.
Anthem Blue Cross and Blue Shield of California account for the highest rate increases statewide, Covered California Executive Director Peter Lee said. Blue Shield said its average hike was 19.9 percent, the biggest among all insurers participating in the exchange. Anthem is in second place, with an average increase of 17.2 percent.
Q: Where are the biggest increases and what accounts for them?
A: The biggest rate hike will be in the region that includes Monterey, San Benito and Santa Cruz counties, coming in at a whopping 28.6 percent. Covered California premiums in Northeast Los Angeles County will rise an average of 16.4 percent. Exchange enrollees in San Luis Obispo, Santa Barbara and Ventura counties will see a 15.8 percent average increase. San Francisco rates are increasing an average of 14.8 percent.
Lee attributed the statewide increase to several factors, including the rising cost of health care, in particular the steep jump in specialty drug prices. In Monterey, Santa Cruz and San Benito counties, limited competition among hospitals, higher hospital prices and limited managed care have driven health care costs up, said Amy Palmer, Covered California’s director of communications.
Q: Will I be able to keep the same plan I have this year?
A: It depends on where you live. United HealthCare, after just one year of limited participation in Covered California, is pulling out in 2017.
Other plans — including Oscar, Molina and Kaiser Permanente — are expanding into some regions.
But even if you can keep your plan, a rate hike could put it out of your financial reach.
To find a better price, more Covered California enrollees will have to switch plans, which means they could lose their current doctors. Lee said about 80 percent of Covered California consumers will be able to pay less than they do now or cap their rate increases at 5 percent if they shop around and buy the lowest-cost plan at their current benefit level.
Q: If the premium on my plan rises by 10 percent, does that mean I’m going to have to pay 10 percent more out of my pocket than I did this year?
A: Not necessarily.
About 90 percent of Covered California enrollees receive tax credits that help defray the cost of their premiums.
As premiums rise, so do tax credits, which means that, all things being equal, the tax credits will absorb at least some of the rate hike.
Consumers are eligible for sliding-scale tax credits if they make between 138 percent and 400 percent of the Federal Poverty Level. This year, that’s between $16,394 and $47,520 for an individual and $27,820 and $80,640 for a family of three. The more money you make, the smaller the tax credit you receive.
Remember, the size of your tax credit may vary from year to year as a result of changes in your income, age or family size.
“It is a complex calculation based on a lot of factors,” Palmer said.
Q: When can I shop for my 2017 coverage?
A: Open enrollment for individual and family plans begins Nov. 1 and ends Jan. 31, 2017. These dates apply to plans purchased through Covered California or the open market.
But you won’t be able to research your specific situation until the fall. Because Covered California is revamping its online shopping tool, which offers personalized searches, it won’t be available and updated for 2017 health plans until early October, Palmer said.
If you already have a Covered California plan, you will receive a notice from Covered California in October explaining how much your current plan’s premium will change and what your tax credits — if any — will be for next year. If your plan is being offered again next year, you can keep the same plan at the new rate or switch plans during open enrollment.
If you want to get a general idea of average rate increases across the state, check out Covered California’s 2017 rate plan booklet.