Locals who renewed health insurance in ‘13 now face inevitable

They could put off the inevitable for only so long.

Now, locals who renewed health insurance in 2013 to delay complying with mandates in the Affordable Care Act are feeling the effects of the law.

We’ve written in the past about the potential for big premium increases among small groups and individuals who renewed their plans in December. On Oct. 1, those folks began getting their actual renewal rates. And for most of them, it isn’t pretty.

“People who have pre-ACA plans are getting clobbered with higher rates and higher exposure” to out-of-pocket costs, said Pat Casale of brokerage firm Pat Casale &Associates.

The reason premiums are on the rise is because the federal government mandates new requirements in all insurance plans sold after Jan 1. Some of that is good news for consumers: Insurers no longer can put lifetime dollar limits on policy payouts, and some preventive services are now free.

The thing is, those perks cost consumers — sometimes a lot. And insurers are building those costs into their premiums.

Bill Wright of Chamber Insurance Benefits estimated that 75 percent to 80 percent of his firm’s early renewals are seeing premium gains today, with almost half of those clients seeing premium spikes of at least 50 percent. That includes “many, many” clients who will pay more than double their current premiums, he said.

Small companies with younger, healthier workforces are hit especially hard, because the law limits the premium breaks people can get for being young and healthy.

But talking about premiums alone is a “very incomplete analysis,” said Kirstine Sorenson of Casale &Associates.

That’s because consumers’ out-of-pocket costs in deductibles and copays are spiking as well. Where premiums are up 50 percent, out-of-pocket expenses might soar 200 percent, Sorenson said. Some consumers are paying $250 a month in premiums for plans with $5,000 deductibles, compared with $100 a month for a $5,000 deductible before the Affordable Care Act.

“People are seeing increases on the internal parts of their plan that are magnifying their higher costs,” Sorenson said.

What’s more, insurers have added a fourth tier to pharmaceuticals coverage, Wright said. Now, drugs that used to cost $60 a month might cost as much as $250 a month.

Employers are dealing with the cost increases in several ways.

Some are making employees pick up more of the tab. A company that traditionally paid 75 percent of workers’ premiums might now cover just half of the cost, Wright said.

Others are moving employees out of group plans and into individual coverage. Still others are cutting their coverage tier, dropping from a richer gold or platinum plan that pays 80 percent to 90 percent of costs into a silver or bronze plan that pays just 60 percent or 70 percent of covered expenses.

One thing hardly anybody seems to be doing: Dropping coverage altogether.

“But keep in mind we’re only 13 days into this renewal cycle,” Wright said. “I think that decision is one a lot of people will be contemplating between now and the last day of November. They have a very hard decision to make about whether they can afford a rate increase, whether they can still afford to provide group coverage or whether they’ll have to reduce benefits because of increased costs brought about by the ACA.”

■ Patricia of Las Vegas read our Oct. 12 report on how to buy coverage in the upcoming open-enrollment session, and she had additional questions. Patricia wanted to know if Nevada Health Link’s switch to the federal healthcare.gov system might be a problem if appeals courts rule that federal tax credits are only for states with state-run exchanges.

“My bottom line question is: Is it safe for someone with a pre-existing condition to drop a grandfathered plan and enroll in the ACA? Will Nevada ACA plans still exist even if the lawsuit (limiting federal tax credits) is successful?”

You won’t have much choice soon, Patricia, because grandfathered plans are in the process of disappearing. You will need to switch to an ACA-compliant plan eventually, as we noted above.

Now, as to the subsidy: Even though Nevada is using the federal marketplace, it is considered a state-run exchange because we’ve kept control over the plans offered and how administration of the marketplace is funded. So you’re safe.

Also, Patricia, no insurer can rate, underwrite or deny you a plan based on your pre-existing condition, whether you buy on or off of the exchange.