This article was last updated on February 19
[2016 updates] 2016 health insurance premiums under the state and federal health care system (Affordable Care Act) are rising. No doubt about that. The question is by how much. Recent reports and have a broad range (from 6% to 15%) as health insurance companies have started submitting requests to the regulator (insurance commissions) for big price increases in 2016. The graphic below from the Kaiser Family Foundation has a summary of premium price increase
[2015 update] With the Affordable Care Act (ACA), also known as Obamacare, now entering its second year here are some 2015 changes you will see and need to plan for:
- The cap on contributions to health flexible spending accounts (FSAs) will be adjusted to $2,550 from $2,5000 in 2014
- For families and individuals, the out-of-pocket expenses limit will increase slightly to $6,600 for an individual and $13,200 for families. In addition, maximum deductibles for small group plans will be $2,050 for an individual and $4,100 for families
- 2015 penalties for lack of qualified health coverage will be significantly higher than 2014. You can see this article for a detailed look at the Obamacare penalties and exemptions, but in a nut shell:
- The penalty for failure to maintain minimum essential coverage for individuals in 2015 will be the greater of $325 or 2 percent of income. This is a 300%+ jump from the 2014 penalty of $95, or 1 percent of income. For families, the penalty is the greater of $975 or 2 percent of income. This compares to the $285 in 2014. The rationale for the steep penalty increases over 2014 levels is that the law was new last year and lots of people did not understand it. No such luck in 2015, and next year in 2016 the penalty doubles again.
- Employers with greater than 80 employees (was 50 last year) also get hit with higher penalties. Employers failing to offer minimum essential coverage to their employees for any month is $2,080 times the number of qualifying full-time employees during such month. The penalty on employers who offer coverage but have employees who qualify for premium tax credits is $3,120 times the number of individuals to which an applicable premium tax credit or cost-sharing reduction is allowed or paid.
- Health Insurance Premiums. Insurance companies must submit their plan offerings and 2015 premium rates (based on tier of plan) to the Marketplace (health exchanges) later this year . Because each state has different deadlines for these submissions, increases in premiums – and decreases, in some cases – will continue to trickle in throughout 2014. With this in mind, many Americans will want to keep a close watch for information for their respective state. But premium increases will vary quite considerably across states. For example in California which is probably the most expansive user of Obamacare through its state health exchange, the average premium increase would be just 4.2 percent. However in Florida some insurers are reporting 17 percent or more increases in their premiums. The map below, by Price Waterhouse Cooper, shows average premium increases in the states that have released partial or total information (I will continue to update)
- The 2015 Open Enrollment period for those individuals who are eligible to enroll in a Qualified 2015 Health Plan (via the Marketplace) is November 15, 2014–February 15, 2015. Individuals may also qualify for Special Enrollment Periods outside of Open Enrollment if they experience certain events
- Per the Treasury Department’s fact sheet on 2015 affordable care updates, small business’ will also see some significant updates next year. The employer responsibility provision will generally apply to larger firms with 100 or more full-time employees starting in 2015 and employers with 50 or more full-time employees starting in 2016. To avoid a payment for failing to offer health coverage, employers need to offer coverage to 70 percent of their full-time employees in 2015 and 95 percent in 2016 and beyond, helping employers that, for example, may offer coverage to employees with 35 or more hours, but not yet to that fraction of their employees who work 30 to 34 hours.
- Employers can determine whether they had at least 100 full-time or full-time equivalent employees in the previous year by reference to a period of at least six consecutive months, instead of a full year
- Employers with plan years that do not start on January 1 will be able to begin compliance with employer responsibility at the start of their plan years in 2015 rather than on January 1, 2015
Further, A lot of people who are not enrolled in a state exchange health care plan under Obamacare, but rather through a private or employer plan, are probably most worried about health insurance premium increases as a result of the new affordable care act mandates on insurers. So stay tuned because we are likely to continue see more changes in the month ahead.