Tax formula may change state residents’ health insurance costs

SEATTLE — Those who signed up for insurance during the first year of health care reform may think they can avoid open enrollment this fall, but that may not be the best choice because of a tax credit formula in the federal law.

Since federal subsidies are based on a formula that reflects the cost of certain insurance plans, and those costs have actually gone down for 2015, some people will see the amount the federal government contributes toward their insurance go down as well.

But not all insurance premiums are going down, so this decrease in federal subsidies will effectively raise insurance costs for about 22,000 people in 27 counties in Washington state, according to Michael Marchand, spokesman for Washington Healthplanfinder.

The exchange is sending out letters to everyone who signed up for insurance last year, telling them what their costs will be if they keep their current plan. It’s up to them if they want to revisit the exchange during the open enrollment period, Nov. 15 through Feb. 15.

Marchand encourages people to carefully read those letters and then to go online to shop around and see if they can get a better deal by buying one of the new plans available to Washington residents for 2015.

“That calculation is in the law. It’s not really anything we could have changed” Marchand said.

The change in subsidies is actually good news, he argued. It means the exchange is reducing premium costs because of increased competition, he said.

“The Affordable Care Act is doing what it is supposed to do,” Marchand said.

Seventy-five percent of 164,000 Washington residents who bought private insurance through the exchange during the last open enrollment period received some kind of tax credit.

People whose income has changed and families with new babies should also revisit the exchange to see if those changes have affected their insurance costs and subsidies.