Yesterday evening, Minnesota Governor Mark Dayton signed into law a bill granting a 25 percent premium reduction to individuals buying insurance through the individual health market in Minnesota in 2017, who are not receiving a federal income tax subsidy. While some details are still sketchy, here is our initial understanding of how this will work:
This premium relief will be available to every Minnesotan not receiving a federal subsidy who purchased their coverage in the individual market. The individual market is where you buy health insurance when you are not insured through your employer, through Medicare or through a state sponsored health plan (Minnesota Care or Medical Assistance). Approximately five percent of Minnesotans are insured in the individual market.
The 25 percent reduction will reduce the amount you are billed each month. For example, if your premium is $1000 per month, the insurance company will only bill you for $750. Or on $200 premium, your bill will be reduced to $150. The state of Minnesota will reimburse your insurance company for the difference.
Unfortunately, you won't see this reduction until your March or April invoice. The good news is that the reduction will be retroactive once it kicks in. This means that if your premium is $1000 a month in January through March, in April you will receive an extra $750 credit, reducing your April bill to zero. Starting then in May, you would pay your new reduced amount of $750 a month. Likewise, if you pay $200 a month for January through March, nothing will be due in April and you will pay $150 starting in May.
Unlike the federal tax subsidy which requires you to buy your insurance through MNsure, this premium reduction is available when you buy your insurance from us - so you can avoid the hassles of MNsure! Also, there are no income minimums or maximums to qualify for relief.
Please note this premium reduction is for 2017 only, to provide time for reforms to be adopted in hopes of improving the individual health insurance system for 2018. Also, please be aware that you cannot receive both a federal subsidy and also this state-paid premium reduction.
One side-note is that there is a cap on how much the state of Minnesota can pay under this relief program. The state of Minnesota will determine in July whether there are enough funds to cover a full 25 percent reduction for the entire year. If not, they will reduce the percentage of relief from 25 percent to a lower percentage for the final four months of the year.
Many Minnesotans may have been waiting to see if the relief would occur before buying insurance for 2017, simply because they can't afford the sky-high premiums. If this is your situation, it is very important for you to be aware that open enrollment ends Wednesday, February 8. If you don't apply for coverage by this date, you will be locked out for the end of the year (except in the case of a qualifying life events and certain other exemptions). Click here to get started - so we can help you before time runs out.
Ken Cobb is owner of Pine Country Insurance and has been active in the insurance industry for over 15 years. Meet Ken.
Coverage descriptions found in this blog are summaries provided for general educational purposes and cannot fully detail the terms, conditions, limitations or exclusions of a specific insurance policy. Please read your policy carefully.