MNsure premiums increase along with tax credits

Premiums are on the rise for individuals and families who buy health insurance through the state's MNsure exchange — and so are the tax credits that can provide savings.

The state Commerce Department announced this month that average premiums for statewide carriers selling individual health insurance through MNsure and the "off-exchange" market will jump next year by anywhere from 7 to 11% depending on the company.

The good news, state officials say, is that more people in the market will qualify for tax credits that discount those premium costs if they buy coverage through MNsure. The state's health insurance exchange is a government-run system where anyone can shop for benefits from a variety of private health insurers. In Minnesota, federal subsidies apply only to coverage sold through MNsure.

"Given the number of things that can factor into the final rate that a consumer pays, it's even more important for those folks to shop and compare their enrollment options to make sure they're getting the best rate possible," Nate Clark, MNsure's chief executive, said in an interview.

About 3% of state residents, or 163,000 people, purchase individual market health plans, which are sold to self-employed people and those who don't get health benefits from an employer.

On Oct. 1, the state Commerce Department approved average rate increases in the individual market for 2022 on coverage sold by UCare (11.33%), HealthPartners (9.52%), Medica (8.96%), Blue Cross and Blue Shield of Minnesota (7.39%) and PreferredOne (7.10%).

Premiums are increasing by 4.31% at Quartz, a carrier that operates only in southeast Minnesota, but the year-over-year comparison is complicated because the insurer is eliminating plans covering more than 15% of its enrollees.

Monthly costs in the individual market vary by age and geography, making generalizations difficult. And for those who qualify, tax credits in a county typically expand in tandem with premiums.

For example, in Hennepin County, a 40-year-old buying the second lowest-cost health plan with "silver" or midlevel benefits will see a nearly 3% increase, from $279.14 to $286.33 per month.

In Blue Earth County, which includes part of Mankato, the benchmark plan for someone the same age will increase by about 11% from $379.87 to $420.61.

MNsure published several scenarios, however, showing how tax credits can deliver significant savings for individual consumers in those counties. Overall, the state says that Minnesota residents will receive an estimated $283 million in tax credits next year, up about 13% from the approximately $250 million in tax credits they are receiving in 2021.

Premium increases are driven by the expectation that the cost of caring for patients will increase in the year ahead, regulators say. Another factor is the continued scaling back of a state-funded reinsurance program, begun in 2018, that has helped stabilize rates in the individual market.

The state's individual insurance market finally seems to be returning to a more typical pricing cycle after a turbulent five-year period of spiking premiums followed by significant discounts, regulators said.

"It's sort of back into something that looks a little more normal after the correction," Grace Arnold, the state's Commerce commissioner, said in an interview.

The rate increases apply to coverage sold through MNsure, where about 107,000 people buy individual health plans. Those who buy health plans directly from health insurance companies or through brokers, about 56,000 Minnesotans, will see the increases, too.

It's difficult to say exactly how many consumers in the individual market actually will pay the full premium increases next year because more people likely are eligible for tax credits that lower the cost of insurance purchased via MNsure.

Right now, about 6 in 10 people who buy on the exchange are tapping tax credits as they pay for coverage each month. There could be other MNsure users, however, who tap the subsidies later when they file their taxes.

Federal stimulus legislation passed this year called the American Rescue Plan Act allows many consumers with incomes above 400% of the federal poverty line — $51,040 for an individual and $104,800 for a family of four — to newly qualify for tax credits.

The Commerce Department said it is likely that "a significant number" of Minnesotans will now qualify for tax credits who did not receive benefits before. Also, the law means some are paying a smaller share of income in premiums.

"Compared to last January, a family who purchases insurance through MNsure in 2022 will save an average of $684 a year on health insurance thanks to the American Rescue Plan," Clark said in a statement.

One goal for the exchange in the coming months, Clark said, is to convince more consumers to use the MNsure program to see if they are eligible. Open enrollment at MNsure will be extended three weeks this year, running from Nov. 1 through Jan. 15.