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Health insurance jargon and vocabulary can be confusing. With open enrollment for individual plans coming up soon (Nov. 1, 2018 - Jan. 15, 2019) and with many employer plans also conducting their open enrollment during the fall, the Division of Insurance is highlighting a few key terms and phrases that are important to understanding critical distinctions in the health insurance markets. This is not a complete list of health insurance vocabulary - you can find more terms on the Health Insurance Glossary page - but instead it's a small list of important terms to help people understand health insurance for 2019. And if you have more questions about health insurance and the meaning of what your insurance company or insurance broker sent you or told you, please contact the Division's Consumer Services Team - 303-894-7490 / 800-930-3745 / DORA_Insurance@state.co.us.
During the week of Oct. 1, 2018, watch this space for new terms as we lead-up to the release of the final, approved individual and small group plans and premiums for 2019 on Thursday, Oct. 4, 2018.
Individual Health Insurance
Individual health insurance is health insurance that you purchase on your own, not through an employer. It can be purchased for one person or for that one person and family members.
Individual health insurance can only be purchased during the annual open enrollment period for individual plans. Here in Colorado, that open enrollment period is Nov. 1 - January 15. Outside of that period, people can only buy individual insurance if they experience a life event, such as marriage, birth, death or a loss of an employer’s coverage. Such a life event makes them eligible for a special enrollment period.
Individual health insurance plans can be purchased through Colorado’s health exchange, Connect for Health Colorado (called on-exchange plans) or through an insurance broker/agent or from the insurance company directly (called off-exchange plans). For those who qualify for premium subsidies to help lower the cost of health insurance (also called Advance Premium Tax Credits or APTC) - people with household incomes at or less than 4x the federal poverty level - know that the subsidies are only available when buying on-exchange plans. About 8 - 9% of Coloradans buy their health insurance through the individual market.
Employer-Based Health Insurance
Employer-based health insurance is insurance that is provided by an employer, often part of a package of benefits that can include other insurance and services. The employer may pay part of the premiums. It can be large-group insurance (100 or more employees) or small-group insurance (99 or fewer employees). Typically, employees will choose from insurance plans chosen by the employer. According to the Colorado Health Institute, 49% of Coloradans get their health insurance from an employer.
For people buying individual health insurance plans, they can purchase either on-exchange or off-exchange plans.
On-Exchange Health Plans
The exchange refers to a state’s health exchange. In our state, that is Connect for Health Colorado. Connect for Health Colorado is an individual health plan, one-stop online marketplace, where consumers can compare the various plans from the various companies offering coverage in their area. It is the only place where Coloradans can apply for premium subsidies, also known as Advance Premium Tax Credits or APTC, as well as Cost-Sharing Reductions (CSRs), to help reduce the cost of insurance. It includes a customer support network of Customer Service Representatives, Health Coverage Guides and licensed brokers to help Coloradans find the best health plan for their needs.
Off-Exchange Health Plans
Off-exchange means individual health plans NOT purchased through Connect for Health Colorado. These plans would be purchased either directly from a health insurance company (though its website or its agents) or from insurance brokers / agents. Premium subsidies and CSRs are not available for plans purchased off-exchange.
Generally, all on-exchange plans have an off-exchange equivalent. However, health insurance companies are allowed to offer off-exchange only plans that do not have an on-exchange equivalent.
Before we define “silver loading,” we first have to provide some background that will help to explain this term.
Cost Sharing Reductions (CSRs)
CSRs are subsidies that help people to reduce their copayments and deductibles (their share of the costs) when they get healthcare. They are available to people with annual incomes below 2.5 times the federal poverty level, and who purchase an on-exchange, silver-level, individual plan (not bronze, not gold, not platinum).
Who pays for CSRs?
While CSRs are written into the Affordable Care Act, and are law, they are directly paid for by the health insurance companies. But, the federal government reimbursed the companies for CSRs, until...
Decision to take away CSR funding for 2018
Late in 2017, just ahead of the open enrollment for individual plans for 2018, President Trump took away the federal funding for Cost Sharing Reductions for the 2018 plan year. But, as CSRs are part of the law, they were still required to be offered by the health insurance companies as part of silver-level individual health plans. That meant the health insurance companies bore the cost of the CSRs. And those costs would be passed on to consumers in the premiums.
How did the Colorado DOI respond?
The Division had anticipated that the President might take away CSR funding, and had required the health insurance companies to provide a second set of premium requests that reflected their increased costs due to the loss of CSR funding. And the DOI required that the extra costs (or “load”) be spread across all metal levels (bronze, silver, gold and platinum) for all the individual plans a company sold. For the 2018 plans, the loss of the CSR funding led to a much higher increase for all individual plans.
Silver Loading for 2019 health plans
For 2019, rather than spread the higher costs for the loss of CSR funding across all metal tiers, the DOI required insurance companies to place that load only on silver-level plans that are sold on the exchange. Why? Because CSRs are only available to people who buy silver plans on the exchange (Connect for Health Colorado) with incomes below 2.5 times the federal poverty level. So the extra costs, or load, due to the funding of CSRs being taken away, are placed on the silver plans - silver loading.
What does this mean to enrollees in individual plans for 2019?
Overall, on-exchange silver plans (silver plans sold through Connect for Health Colorado) will have higher premium increases than other plans. However, because the subsidies for health insurance for people who are at or under four times the federal poverty level (also called advance premium tax credits,or APTC) go up as premiums go up, consumers who qualify for the subsidies will be shielded from the increases due to silver loading.
What about people who don’t qualify for subsidies for their individual health insurance premiums?
Folks that have too high of a household income to qualify for a premium subsidy SHOULD NOT look to the on-exchange silver plans. Instead, if they prefer to shop through Connect for Health Colorado, they should look at bronze or gold plans, as those plans will have much more modest increases. If people do some comparison shopping, they may even see their premiums go down from 2018, and some could even get to a $0 premium plan.
Or if people prefer a silver-level plan, they can look off-exchange, as the Division required the health insurance companies to establish “substantially similar silver” plans (or SSS plans) to be sold off-exchange. These are plans that are almost identical to their on-exchange silver counterparts, but that do not have the silver load added to the premiums. These plans would have to be purchased through an insurance broker/agent or directly from the insurance company.