Note to Readers: A longer version of this post appeared yesterday on HealthInsurance.org.
Up until now, when Obamacare’s supporters and reform’s opponents squabbled over what insurance will cost in 2014, they had to rely on estimates and national averages. But now we have real numbers.
Eleven states have announced the rates that insurers will be charging in their Exchanges-marketplaces where individuals who don’t have employer-sponsored coverage can shop for their own insurance.
Subsidies Will Be Based On the Cost Of A Silver Plan Where You Live,
Middle-income as well as low-income people buying coverage in the Exchanges will be eligible for government subsidies that will come in the form of tax credits. Anyone earning between 100 and 400 percent of the federal poverty level (FPL) (now $11,490 to $45,960 for a single person, and up to $126, 360 for a family of six) will qualify.
Most people who are forced to buy their own insurance earn less than 400% of FPL. More affluent Americans usually work for companies that offer comprehensive coverage.
The graph below shows average Silver plan rates in the eleven states that have disclosed premiums. (Note that these are only state averages. Premiums vary widely within a state: In some cities and counties silver plan rates will be much lower, even before you apply the subsidy.
Ignore headlines telling you that Obamacare has hiked premiums. Fear-mongers are comparing rates for comprehensive coverage that will be sold in the Exchanges where insurers will be regulated to the rates insurers now charge for skimpy “junk insurance” that is barely worth the paper it is written on. These “Swiss Cheese policies” are filled with holes that you don’t discover until you become sick and fall through one of them.
Now that we have solid information about Silver plan premiums, anyone living in California, Colorado District of Columbia,New Mexico New York Ohio Oregon Rhode Island Vermont , Virginia or Washington can calculate his subsidy by using the price of the benchmark silver plan as his reference point.
Even if you don’t live in one of these states, the announced rates and the examples below will give you an idea of the range of prices and the size of the subsidies Washington will be handing out.
What Exactly Is A “Silver Plan”?
In the Exchanges, insurers will be selling Bronze, Silver, Gold and Platinum plans. All must cover the ten benefits that Congress decided are “essential” (outpatient care, emergency services, hospitalization, maternity and newborn care, mental health and substance abuse disorder services, behavioral health treatment, prescription drugs, rehabilitative services, laboratory services, preventative care and pediatric services, including oral and vision care for children.)
All plans also must offer free preventive care, and they cannot refuse to cover you or charge you more because you suffer from a pre-existing condition.
The only major difference between the four tiers is that Platinum and Gold plans will require less cost-sharing in the form of co-pays and deductibles, though their premiums will be higher. Bronze and Silver plans, on the other hand, will boast lower premiums, with higher co-pays and deductibles—up to a maximum of $6340. After that, the insurer pays the bills..
|Individual Income As Percentage of Federal Poverty Line (FPL)||Your out-of-pocket liability will be reduced by|
|100-200% ($11,490 -$22,980)||Two-thirds|
|200-300% ($22,980- $34,470||One-half|
|300-400% ($34,470- $45,960)||One-third|
Who Is Eligible For a Subsidy?
If your employer offers “affordable comprehensive” insurance you will not be able to buy coverage in the Exchanges. You already are receiving a subsidy from your boss. The Exchanges will be open only to the self-employed, the unemployed, and employees who work for a company that does not offer affordable health benefits.
How To Calculate the Size Of Your Subsidy In Four Easy Steps
The size of your subsidy will be based on your income, the number of people in your household, and the price of the benchmark Silver plan in the town or county where you live.
1) Use the table below to find out whether your income and household size make you eligible. For instance, as the table indicates, a family of three with joint income up to $78,120 and a family of five reporting income of up to $110,280 can expect to receive a tax credit.
|Percent of Federal Poverty Level (FPL)|
|For each additional person, add||$4,020||$5,347||$6,030||$8,040||$12,060||$16,080|
2) Find out how much the Affordable Care Act expects you to contribute to the cost of your insurance by consulting Table 2 below . (If you decide not to buy insurance, you won’t have to make a contribution, but you will have to pay a penalty that begins at $95 in 2014.)
TABLE 2: If You Earn Your Expected Contribution Is
|Up to 133% of FPL||2% of your income|
|133%-150% of FPL||3%-4% of your income|
|150%-200% of FPL||4%-6.3% of your income|
|200%-250% of FPL||6.3%-8.05% of your income|
|250%-300% of FPL||8.05%-9.5% of your income|
|300%-400% of FPL||9.5% of your income|
The subsidy will make up the difference between the amount an individual is expected to contribute (based on income) and the actual cost of that silver plan in the city where you live.
3) Contact your state exchange to find out how much a benchmark Silver plan will cost in the area where you live. (Some of that information is already available online. See the links to individual states at the end of the longer version of this post on HealthInsurance.org
4) Subtract the amount that you are expected to contribute (see Table 2) from the cost of your benchmark silver plan. For instance, let’s say your silver plan costs $3000 a year, and you are expected to contribute $1000. You will receive a subsidy of $2,000
For specific examples of costs and subsidies, based on hard data from states that have announced premiums for individual towns and counties, see the longer version of this post on HealthInsurance org. Please come back here to comment.