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You Better Shop Around for Health Insurance

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You Better Shop Around for Health Insurance

Jeff Smedsrud

Updated: March 22, 2017    Published: June 5, 2015

This time, you really need to shop around when searching for a health plan during the next Open Enrollment Period, which runs November 1, 2015 to February 15, 2016.

Last year, health insurance companies offered plans that generally increased costs by 10%, and in some instances, even less. This year, it will be vastly different. Insurance companies plan to increase prices by 15% … 25% … 50% … some as high as 75% more than last year’s prices.

If you paid $500 a month for a healthcare plan this year, expect to spend at least $100 a month more in 2016 – unless you shop around, and make an informed choice – based not only on price, but the plan that best fits your medical needs.

It is true that some insurance regulators will force insurers to modify the proposed rate increases before they take effect , but most states will eventually approve the suggested price adjustments. And there may be a few states that force certain insurance carriers to back away from proposed rate hikes, which often leads to a carrier deciding to withdraw its insurance plans from a state exchange.

You can find the proposed rate increase in every state at the federal marketplace Rate Review page. It is great tool and quick way to let you get a feel for how much your current plan will increase in price.


  1. Don’t enter a carrier name — that way you see all proposed rate increases for every carrier on the exchange in your state.
  2. Enter a date range of 01/01/2016 to 01/01/2016.

If some of these rate increases don’t scare you, you must enjoy big roller coasters and horror flicks.

These adjustments reflect two years of actual claims experience — meaning the insurers now have a better understanding of how much plans are being used by their customers and how much the plans are incurring in medical expenses.

There are several things to note — and one key thing to remember:

Of note:

  1. Many of the largest proposed rate increases come from some of the largest carriers. They have the most data, and the most customers.
  2. There is a wide range in proposed price increases — from a low range of 3-5% to a high range of 70-80%.
  3. Some of the variation in prices is because certain plans have very restrictive networks.

That why you “ BETTER SHOP AROUND.”

And remember: If you receive a subsidy, the impact of rate adjustments is on the NET cost of your premium (monthly cost of your health insurance plan). The actual amount of the insurance premium, minus the amount of your subsidy is the amount you will pay. Does that mean your subsidy will go up equal in proportion to the rate increase on your health plan?

Not exactly.

Your subsidy is based on the second lowest cost Silver plan in your state (called the  ‘benchmark plan). It is possible that some small carriers with very few customers might have filed for small rate increases. The second lowest cost Silver plan for a 30 year old single woman with a $1,000 deductible might be $250 a month, an increase of 5% from last year. And it might be true that the plan you are on is raising rates by 50% (because you didn’t buy the second lowest cost Silver plan). Example: You had been paying $300 a month, but now you are being asked to pay $450 a month. If your subsidy has been $100 a month, it went up by $5 a month (5% increase for the 2nd lowest cost silver plan). But your net premium went up by $145 a month (the gross premium increase for the plan you have minus the $5 increase in your subsidy).

Of course, there is the chance you were already covered by the second lowest cost silver plan, in which case your adjustment might be minimal. And, of course, you should explore whether you want to continue with the plan you were on — even with a 50% increase. Finally, you will need to re-calculate your income: Your health insurance subsidy might have gone up or down, or been eliminated all together depending on your prior year earnings.

That’s why companies like exist — to help consumers shop, save and compare by providing tools to calculate the net cost of premium, and even the penalties for not having coverage.

In 2016, the old song is a new Top 40 hit, with a twist in the title — “Obama told me, you better shop around.”


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