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Why lower Marketplace rates could still mean higher costs for members in 2019

If you’re one of the Tennesseans who buy health coverage for yourself – rather than through your job, or TennCare or Medicare – you know it’s almost time to begin shopping for a 2019 health plan.

You’ve probably heard that we’re reducing our rates for these plans next year, with an average decrease of 14.8% compared to 2018 rates.

We’re glad we can offer lower rates next year. And if you do not receive any federal tax credits (premium subsidies) to help pay for your coverage, you will see lower monthly costs.

But it’s more complicated for people who do receive premium subsidies.

Due to the way the federal government sets these subsidies, many members who have zero dollar or low-cost premiums today may actually see an increase in their monthly costs next year. The fact that a decrease in rates can result in an increase in what consumers may pay points to the complex rules of the ACA Marketplace.

I’ll explain how the math works for some consumers.

The short explanation is that your subsidy amount may drop by more than the amount your premium goes down. That means the amount you pay after premium subsidies may be higher in 2019.

Even though we're lowering rates for individual plans, subsidized members may see higher costs.

First, we need to understand how the federal government sets subsidy levels.

When the ACA was established, it set the maximum percentage of a person’s income that should go toward paying for their health coverage. Using 2018 rules, an individual earning $30,150 (2.5 times the federal poverty limit) should spend no more than 8.1%, or $203.51 per month.

Next, the government looks at how much health insurance actually costs in that person’s region – specifically the second-lowest priced Silver plan on the Marketplace. For example in 2018, the second-lowest Silver plan in Tennessee’s West region costs $767.90 per month for a 30-year old individual.

The government sets the subsidy by subtracting the most a person or family should pay, based on their income, from the price of the second-lowest Silver plan.

Based on local rates and her income level, a 30-year old in Jackson would get a $564.39 subsidy each month to help pay for her coverage, and she could apply that amount to any plan. Many people choose the least expensive silver plan available, or a Bronze plan, to make the most of their subsidy.

In 2018, the least expensive Silver plan she could buy cost $585.81. By applying her subsidy to that plan, she would have ended up paying a $21.42 monthly premium.

Now, let’s look at how lower rates will affect her monthly costs in 2019.

Our least expensive 2019 Silver plan in Jackson will cost $516.33 per month and the second least expensive plan will cost $670.27 per month.

If her 2019 income stays at about the same level, her subsidy will be $461.73 per month, a decrease of $102.66. That means her cost for the least expensive plan will go up to $54.60 per month – a $33 increase.

What should you do if you’re shopping for a 2019 individual plan?

Plan rates vary from region to region. There are new insurers offering plans in some areas. And individuals’ income levels can change from year to year. That means these complicated dynamics will play out differently for each potential Marketplace shopper.

Open enrollment begins Nov. 1 and runs through Dec. 15.

If you have a BlueCross plan through the Marketplace, you will receive a letter with information on a recommended plan for 2019. These letters include subsidy estimates based on 2018 figures, so you should visit to update your application and see how much financial help you qualify for in 2019. 

If you need help selecting a plan, you can contact our sales team at 888-995-7786, a certified application counselor, an enrollment assistor, or a licensed broker or agent.

About Kelly Paulk, Vice President, Product Strategy and Individual Markets

A photo of the authorKelly oversees product strategy for employer group and individual customer markets, provides leadership to operations, sales and strategic marketing areas and serves as the point person for regulatory, compliance and audit processes for the individual product line.

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