Karen Padgett was hoping it was a typo. The letter from Premera Blue Cross Blue Shield of Alaska outlined a new health insurance plan for 2017 nearly three times the monthly cost of her old one.
On the old plan, the premium cost for the entire Padgett family — two adults and two children — was $969 a month, Padgett said. The new plan: $2,862 a month.
"Even though your current coverage isn't being offered in your area next year, we have found another plan you may like," Padgett read from the Sept. 29 boilerplate letter, chuckling.
Padgett and her husband are self-employed financial advisers in Anchorage. According to numbers from the Alaska Division of Insurance, they were among 1,853 Alaskans slated to lose their transitional plans, which have so far been grandfathered in the Affordable Care Act system.
The letter informed Padgett that Premera was now phasing out her transitional plan.
But on Thursday, Premera announced a change of course — those plans will remain intact for one more year.
Padgett said she was shocked and amazed by the news. "It is such a relief, too, just to think, that saves us $18,000 next year," she said.
Transitional plans like the Padgetts' are remnants of the period between 2010 — after the ACA was signed — to 2014, when the individual mandate went into effect. The "grandmothered" plans, as they are called by insurers, didn't meet all the requirements of the new health care law, but individual states were allowed to continue them for a few years.
The law dictates, however, that those plans cease by Dec. 31, 2017. Initially, Premera had planned to phase them out at the end of 2016. The state insurance division understood the decision, Director Lori Wing-Heier said, given the costs associated with administering both grandmothered, and new ACA-compliant, plans.
Now, Alaskans who have already received letters like Padgett's will get two more, Wing-Heier said — one rescinding the change, and another updating the costs of their current plans, sometime in late November or early December, she said. People won't have to do anything in order to stay on their current plan.
Premera's decision comes following outcry from consumers. After the letters went out, the division started getting calls, Wing-Heier said. Alaskans losing their old coverage were facing new plans two to three times as expensive as their old ones, she said.
"I don't think we anticipated the difference in premium," Wing-Heier said Thursday. "Then when, you know, this all unfolded, we certainly understood and were sympathetic to the consumer dilemma."
For the Padgetts, it was a jump from $11,600 a year to more than $34,000. They were placed on a "bronze" level plan, the lowest coverage level available on the individual market.
"We've had back-and-forth conversation based on all the feedback we've received," Premera spokesperson Melanie Coon said of the company and the state division. "We came to an agreement that it is probably best to extend the plans another year."
Those premiums will have an increase, but less than what it would have been, Coon said. The exact amount wasn't yet known, as certain benefits — including full maternity and contraceptive care — must now be included in the transitional plans.
Next year, there is no option to extend the plans, and consumers may face the same problem.
"That's real life, that's the (ACA) premiums," Wing-Heier said.
The Padgetts earn too much to qualify for federal subsidies, which many Alaskans use to greatly reduce their monthly premium costs. And it's unknown how many other people who will lose their transitional plans in 2017 may qualify, Wing-Heier said.
But many can expect some sort of financial help from the federal government if they apply for plans on the individual market next year. For individual Alaskans making between $14,850 and $59,360 in 2016 — or more, depending on the number of people in the household — some level of subsidy will apply to their plans.
An August analysis from the U.S. Department of Health and Human Services found that 79 percent of Alaskans on the market in 2016 had premiums of $100 or less, thanks to subsidies.
After receiving the letter, Padgett started looking at a health care sharing ministry — not technically insurance, but which functions in a similar way and satisfies the ACA.
Now, she thinks their family will likely stay on Premera's plan, but she's not 100 percent sure.
If she qualified for health care sharing ministries, her costs will drop to $500 a month for her family. But it's not all-inclusive: Only relatively healthy people qualify for this type of cost-sharing program.