The rate increases requested this week by insurers on the state health care exchange are likely to cause premiums to spike, but the increases may not apply equally – or at all – to Vermonters receiving subsidies.
About 37,200, or 62 percent, of the more than 60,000 people who purchased commercial health insurance through Vermont Health Connect are receiving discounted premiums, according to figures from the Department of Vermont Health Access.
The federal government has not issued final rules for determining premium assistance for 2015, but current regulations cap what people receiving subsidies pay in monthly premiums through a tiered scale based on household income.
If the tiered income scale doesn’t change, then an increase in premium would be accompanied by a corresponding increase in subsidy.
The Affordable Care Act allows the feds to adjust the scale to account for the growth of income relative to the growth in premiums. That leaves open the possibility that premiums could go up for those receiving subsidies, but Vermont officials watching the federal rule-making process said there has been no indication whether that will happen.
If the feds choose to change the scale, Vermont will have to decide whether to make up the difference with state money or reduce the level of premium assistance it offers.
Vermonters who earn within 400 percent of the federal poverty level — an annual income of $45,960 for an individual and $94,200 for a family of four — are eligible for a premium subsidy. The state increased the amount of subsidy people can receive at all qualifying levels beyond that required under the Affordable Care Act.
The subsidy is calculated using the second lowest cost silver plan offered in a state’s exchange. A percentage of household income, based on the tiered scale, is subtracted from that plan’s premium and that becomes a credit that can be applied to the purchase of whatever plan a person selects.
In Vermont, the base premium for the silver plan was $412 in 2014. With the additional state subsidy, a person earning 150 percent of the federal poverty level, or $17,250 annually, would pay 2.5 percent of their monthly income as a premium. That’s about $35, meaning they’re receiving a monthly subsidy of $377.
If the same person chooses to purchase the standard platinum plan at the 2014 rate, they would pay $212 of that plan’s $589 monthly premium. That person would pay nothing for a premium if they selected a bronze plan.
The platinum plans have higher premiums and lower out-of-pocket costs, and scale down to bronze, with lower premiums and greater out-of-pocket costs.
If the feds leave the income scale for calculating subsidies alone, then people receiving a subsidy who purchased a plan other than the silver plan could see their premium go up, assuming state regulators approve an increase over last year’s premiums.
Green Mountain Care Board Chair Al Gobeille has said some increase is likely, though last year the regulatory body revised premium rate requests down by several percentage points.
Blue Cross Blue Shield of Vermont, which covers roughly 57,000 people in the exchange, is seeking an average 9.8 percent increase in its exchange premiums, while MVP Health Care is seeking an average 15.4 percent increase. MVP covers roughly 5,000 people through the exchange.
The board will approve the new rates by September, and the federal rules for premium assistance must be in place before those rates go into effect Jan. 1.