Tax credits could help cover the cost of plans purchased by Summit County residents on Colorado’s health insurance marketplace Connect for Health Colorado.
Under the Affordable Care Act, often called “Obamacare,” states were required to establish geographic rating areas for coverage. Summit County residents, located in Rating Area 11, are paying higher health insurance rates for equal plans purchased in neighboring counties.
However, the Colorado Center on Law and Policy (CCLP) recently conducted an analysis that showed after tax credits, many insurance plans in the county might end up even lower than those in Denver. Tax credits are intended to be paid directly to insurance companies, lowering each individual’s or family’s monthly premium.
Kyle Brown, CCLP senior health policy analyst, said the debate surrounding high insurance premiums has so far lacked information about the cost after financial assistance is applied.
“In Summit County, the cost of providing care, like a hospital visit, is a lot higher than in other parts of the state,” Brown said. “There are less options and competition, so those high premiums are driven by underlying high health care costs.”
The amount of tax credit is unique to every individual who goes into the marketplace and shops, Brown said. The subsidies are based mainly on income level, but also which plans are available in different areas. The tax credits are available to help people purchase bronze, silver, gold and platinum plans, but cannot be used to purchase catastrophic coverage for younger adults. Brown said income and demographic information suggests thousands of people in Summit and Garfield counties may be eligible for tax credits.
“No one is denying the fact that rates in Summit County can be 60 to 70 percent higher than the rest of the state,” he said. “We just found tax credits can significantly lower cost of coverage to the point where some people could be paying less than if they lived in Denver.”
Brown said more than 10,000 people in Summit County fall into an income bracket where they would potentially be eligible for tax credits — 37 percent of the county. However, Sarah Vraine, Summit Community Care Clinic CEO, said for some Summit County residents, even with the tax credits, the high premiums will remain unaffordable.
“Premiums are still two or three times higher than other places in the state,” she said. “We still have the highest rating of cost.”
According to the CCLP, Coloradans in households with incomes between 138 and 400 percent of the federal poverty level (FPL) — $15,857 to $45,960 for an individual — who do not have access to affordable coverage through an employer, or elsewhere such as Medicare, are eligible for tax credits to help purchase health insurance through Connect for Health Colorado.
Vraine said the new law also changed who is eligible for Medicaid, the public insurance based on income, not age.
“It’s a big deal for people who have been uninsured,” she said. “This is another huge benefit to those who are eligible, and people don’t know the qualifications have changed.”
The higher rates in Summit County have gotten the attention of the Board of County Commissioners and U.S. Congressman Jared Polis, who has been working with Colorado Division of Insurance commissioner Marguerite Salazar to find solutions to the higher costs.
“There’s still a lot of misinformation about the new health reform law and what’s available to folks,” Brown said. “We were concerned about the way the conversation was going in Summit — we wanted to make sure folks knew about this [tax credit] option before they got discouraged and thought it was unaffordable without trying.”
For example, a 40-year-old individual in Summit County purchasing a bronze level plan from the Rocky Mountain Health Plans Statewide PPO would pay a minimum of $427.80 per month, compared to $339.18 for the same plan in Boulder and $296.41 for Denver.
However, the CCLP analysis found a 40-year-old nonsmoker living in Denver who makes approximately $23,000 per year will receive a $129 per month tax credit, while the same individual living in Summit County will receive a $363 per month tax credit. A 64-year-old nonsmoker in Summit County with an income of nearly $23,000 per year will receive more than triple the tax credit of a similar 27-year-old.
Vincent Plymell, communications manager for the Colorado Division of Insurance, said geographic location also plays a part, and that the tax credits are proportional to the cost of coverage in an area.
“It’s not always going to apply to everybody, but affordability is important,” he said. “People working in the service industry in the mountain region, in hotels or resorts, aren’t making a lot and those high premiums won’t be affordable, but this was anticipated by the law.”
The size of an individual’s or family’s tax credit is equal to the cost of the premium for the second-lowest cost silver plan available, minus the individual’s or family’s required contribution. The required contribution ranges from 3 percent of income to 9.5 percent of income.
“It’s hard to know who exactly would be eligible, because of the different factors,” Brown said. “But the impact of tax credits is so key.”
People who choose plans that are less expensive than the second lowest cost silver plan available, such as a bronze plan, will pay less than the required contribution. Those who choose more expensive plans, such as a gold or platinum plan, will pay their required contribution plus the difference in price between the second lowest cost silver plan and the chosen.
Last Wednesday, Dec. 4, a record number of 1,090 people signed up for private health insurance on Connect for Health Colorado. Coloradans must sign up before the Dec. 23 deadline for Jan. 1, 2014, coverage. Missing that deadline will mean waiting until March 31, 2014. But according to the Denver Post, that high volume has also led to waiting times in the call queue of 25 minutes or more.
The CCLP said even for older individuals, the average premiums for silver and bronze plans after tax credits remain lower in Summit, even at higher income levels. For example, silver and bronze plans are less expensive for a 40-year-old nonsmoker in Summit and Garfield counties until that individual makes more than $34,470 per year — 300 percent FPL. In addition, nearly 4,000 Summit residents between ages 18 and 34 may qualify for tax credits.
The Connect for Health Customer Service Center is open 7 a.m. to 8 p.m. Mondays through Saturdays. The toll-free number is 1-855-PLANS-4-YOU (855-752-6749). To accommodate more customers, the Customer Service Center will be open from 9 a.m. to 6 p.m. for the next two Sundays, Dec. 15 and 22).
“No one is denying the fact that rates in Summit County can be 60 to 70 percent higher than the rest of the state. We just found tax credits can significantly lower cost of coverage to the point where some people could be paying less than if they lived in Denver.”
CCLP senior health policy analyst