The Washington Health Benefit Exchange, which operates the state’s insurance marketplace, Washington Healthplanfinder, is urging renewing Qualified Health Plan customers to carefully review their 2016 eligibility for tax credits that are used to reduce the monthly premium cost for health insurance coverage.
The federally provided tax credit is designed to help offset the cost of health insurance premiums and is only available through the Exchange. Those with household income under 400 percent of the federal poverty level – $97,000 for a family of four – qualify for assistance based on a sliding scale. The price of the second lowest cost silver or “benchmark” plan offered through Washington Healthplanfinder is used to calculate the tax credit.
Last year customers received on average a monthly tax credit of more than $207.
“Premium prices change every year, including the second lowest cost silver plan. This means that the tax credits that are available will change as well,” said Pam MacEwan, CEO of the Exchange. “It is important that customers consider these changes when shopping for coverage to ensure that they are leveraging their tax credit to find the health plan that best fits their needs and budget.”
Because health plan rates for the second lowest cost silver plans are declining in most Washington counties, the tax credit for 2016 could actually decrease for many enrollees who are renewing their coverage in 2016.Customer’s premium amounts – and their tax credit – will vary based on the selected insurance plan, their age, annual household income, how many people are being covered, and where they live.
For 2016, the Office of the Insurance Commissioner approved 3.9 percent rate increase on health insurance plans after a review. Last year, the approved rate change was 1.5 percent.
MacEwan also provided examples of how tax credits available through the Exchange can help bring down premium costs for individuals and families.
Lower prices means lower tax credits:
A 40-year-old in King County had a tax credit of $145 per month in 2015 to help pay the premium cost of his chosen plan. Because King County’s benchmark plan price is a lower cost in 2016 (and benchmark plans in each county help calculate premium tax credit amounts), the individual’s 2016 tax credit would be reduced in 2016 to $125 per month.
Shopping for a plan might save money:
That same 40-year-old enrolled in the lowest cost silver plan in 2015, at $250 per month ($105 per month after the tax subsidy). In 2016, that same plan is no longer the lowest cost silver plan. If he stays in the same plan as last year, his premium would increase by $5 to $255 per month.
But, because his monthly tax credit decreased due to the benchmark plan price being lower, his tax subsidy will decrease by $20. His $5 premium increase coupled with his $20 reduction in tax credits makes this individual’s premium, after tax credits, $130 per month in 2016 – an overall rate increase of 24 percent.
If the 40-year-old instead chooses the new lowest cost silver plan for 2016, which is $245 per month, he can use his tax subsidy of $125 per month to bring the overall premium, after tax credit, down to $120 per month in 2016.
Premiums have changed:
A 40-year-old purchasing a silver plan could see a rate increase on average of 6 percent, from $301 per month in 2015 (before tax subsidies) to $318 per month in 2016 (before tax subsidies). These rate changes vary depending on which part of the state the individual resides.
The 2016 Open Enrollment period began Nov. 1, 2015 and runs through Jan. 31, 2016. Coverage purchased before Dec. 23, 2015 will start on Jan. 1, 2016. Customers need to pay their premium directly to their insurance company for coverage to be effectuated.
More information, including a list of second lowest cost premiums per county, is available atwww.wahbexchange.org/wp-content/uploads/2015/11/QHP_Renewals_2016_Shopping.pdf.
In 2014 qualifying Washington Healthplanfinder customers received $330 million in federal tax credits to help pay for premiums and over $54 million in cost-sharing reductions to lower costs of hospital and doctor visits.
Since going live on Oct. 1, 2013, 1.5 million people – one out of every five Washingtonians – have usedWashington Healthplanfinder to secure health insurance coverage at low or no cost. A recent Gallup Survey found that the state’s uninsured rate has dropped more from 16.8 percent to 6.4 percent since the opening of the Exchange – the fifth highest such decline in the nation.
