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Small Business Employee Benefits and HR Blog

Average Health Insurance Cost for Subsidized Policyholders Less Drastic

It seems as though you can’t turn on the news without listening to chatter aboutAverage Health Insurance Cost for Subsidized Policyholders Less Drastic rising health-care costs. It’s true: The average health insurance cost has increased steadily for the past 17 years, but it turns out the news isn’t bleak for everyone. Those who qualify for subsidies are far less likely to experience drastic price hikes—they may even see a decrease in premiums.

Analysis of Average Health Insurance Cost on Subsidies

Consultants at McKinsey & Co. recently analyzed how price increases are affecting various groups of people purchasing plans through the Affordable Care Act (ACA) Marketplace. They found that cost increases are most heavily affecting the 15 percent of Marketplace shoppers who pay the full price of premiums.

As for the majority of Marketplace enrollees, the average health insurance cost increases are offset by the rising subsidies. Those on silver-level plans with income less than 300 percent of the federal poverty level are most likely to experience a decrease in cost—though not by a significant amount (perhaps a few dollars per month). Households making between 300 and 400 percent of the federal poverty level are likely to see their silver plans increase by about $7.55.

Taking Advantage of the Tax Credits

Many Marketplace buyers who are willing to shop around discover that they are able to find a cheaper plan. This might mean switching carriers, but it could also mean choosing a different plan from the same carrier, such as one with a higher deductible. People who qualify for premium tax credits are the most likely to benefit from doing so.

Those who are currently uninsured or underinsured should be sure to review plans carefully and take possible subsidies into account. With the tax credit, the sticker shock of a better health plan may not be quite so alarming.

Open Enrollment Deadlines

Open enrollment ends on January 31, 2017. While it’s too late to sign up for a plan to begin on February 1 (that deadline was January 15), it’s not too late to lock down 2017 coverage. As long as you’ve selected a plan by January 31, your coverage is guaranteed through December 1. Your plan will go into effect on March 1. Check out the federal Marketplace or go through our partner Stride Health to see what your options are.

Conclusion

While average health insurance costs are increasing across the board, those who qualify for premium tax credits (or subsidies) are less likely to experience drastic price hikes. Shopping around during open enrollment can help you save money on your 2017 health coverage. Remember to make your selection by January 31 for coverage starting March 1.

The Comprehensive Guide to the Small Business HRA

How is the increase in the average health insurance cost affecting you? Let us know in the comments below.