Some background. Today when a person buys a plan in the Individual and Small Group medical insurance market it is not unusual for the premium for a 62 year old to be five times higher than for someone age 22. One change in Federal health reform is to restrict the maximum difference for the 62 vs the 22 to no more than three times.
So to answer the question. If today’s plan coverage were to continue and these new age based rules where applied the rates for someone say close to 60 would come down and the rate for individuals in their 20s and 30s would go up quite a bit. However, the plan coverage we have today will be changing! All plans in the Individual and Small Group market will have to cover the 10 essential health benefit required in federal health reform along with meeting limits on how much the plan has to pay and how much an individual will have to pay.
Let’s look at how premiums will be developed beginning January 1, 2014. For illustration I will use a family where the Father is 52 and the Mother is 48. They have several children:
Find out what's happening in Grotonwith free, real-time updates from Patch.
Child One is age 23 and in College. Child Two, 21 is also in College. Child Three is age 19 and in high school as is Child Four at 17 and Child Five at 15. Child Six is age 7 and a late arrival to the family!
Starting January 1, 2014:
Find out what's happening in Grotonwith free, real-time updates from Patch.
● In a situation where just Mother and Dad were covered under Plan abc the premium will no longer be based on Dad’s age as now, whether covered on a small group plan or under an individual plan. There will no longer be male and female premium amounts and each age will have a separate rate. Thus, in this situation the two amounts are added to get Mom and Dad’s monthly premium for Plan abc.
● In a situation where Mom and Dad are going to cover themselves and just Child One and Child Two each will be charged Plan abc’s rate for their age. BTW, the premium for someone age 21, 22, 23, & 24 will be the same. Thus, these two amounts will be added to Mom and Dad’s premium.
● In a situation where the couple wants to cover themselves and just Child Three, Four, Five, and Six, shown above, there are special rules for children age 20 and under. The Plan abc premium for Three, Four, and Five will each be .635 of the amount for someone age 21. These three amounts will be added to Mom and Dad’s premium.
● What about Child Six above? There is no additional cost if a family has Child Four or more if they are all age 20 or under.
The new year by year rates, which each medical insurance plan will have, start at age 21. This is the base rate and considered to be a Factor of one. Starting at 25 the factor will increase for each age until age 64, which will be a Factor of 3. Thus, the amount for the person 64 will be three times higher than someone age 21.
Specific premiums here in Connecticut were finalized in the last couple days. In general we will see:
● Individual plans continuing to be less expensive than small group plans.
● Not a lot of difference (generally) in the premium charged by different health insurance companies for the same plan.
● A variation in premium based on location, as it now does, with Fairfield County tending to be the most expensive. The three health insurance companies will use a different variation. Premiums here in New London County may be higher for certain companies than in some other counties
Federal health reform also brings us a new place for Individuals and small employers to go online, review plans from different companies, select one, and enroll for coverage. It is called a Health Insurance Marketplace and here in Connecticut it will operate under the name Access Health CT. The details on how much of the application and enrollment process will initially be fully automated are still in the to be determined pile.
The Access Health CT online marketplace is the only place where a person can apply and perhaps, based on their income, receive a premium discount. You can learn more about it here. http://www.accesshealthct.com/
The companies currently selling medical insurance plans in Connecticut’s individual and small group “outside” market will continue to offer plans. Individuals may have options in the “outside market” in addition to what is offered “inside” Access Health CT.
John C Parker, RHU, LTCP
