What will be the Cost of Health Marketplace Plans?

The actual costs of Health Marketplace plans are yet unknown. The prices will be available on October 1, 2013 when the Health Insurance Marketplace will be open. In the meantime, the private insurance companies decide which plans to offer and the cost of each plan. Nevertheless, there is plenty of information about the future cost of health plans available today. Read below.

Obamacare and the Costs of Health Marketplace Plans

Here is what we may expect from the Affordable Care Act (Obamacare):

  • For many people the coverage will be more comprehensive and, therefore, more costly than what we have currently. The fact that no coverage can be denied anymore because of pre-existing conditions is also the cause of the rise in costs.
  • Younger and healthier people will more likely to experience the premium increase.  Because the premium rate for older people must be no more than three times the premium rate for younger people for the same plan, you may see a more modest increase (and often even decrease) for older and less healthy consumers.
  • There will be no difference in premiums for men and women.

Variety of Plans and Costs

There are four benefit tiers of Qualified Health Plans; namely, Bronze (60%), Silver (70%), Gold (80%), and Platinum (90%). The percentage associated with each plan is its actuarial value.  Actuarial value is the average amount of financial coverage that the plan offers to its policyholders. The Bronze plan has the lowest premium and the highest out-of-pocket expenses. The Platinum has the highest premium and the lowest out-of-pocket expenses. Others will fall between the two plans.

All Qualified Health Plans include the same list of Essential Health Benefits.

Lower Costs on Monthly Premiums and Cost-Sharing Subsidies

Depending on your income, you may qualify for lower costs on monthly premiums and cost-sharing subsidies. Marketplace prices will show any cost savings to which you are entitled.  Remember, the only way to get cost savings is by applying through the Health Insurance Marketplace.

Monthly Premiums

For individuals with income between 100% and 400% of the Federal Poverty Level (FPL), there is a tax credit available called the Advance Premium Tax Credit. This tax credit can be applied immediately to lower the cost of your monthly premium. (Individuals with income below 138% of the FPL are entitled to Medicaid, as long as the state supports it. Individuals with income above 400% of the FPL are not entitled to the subsidy). The subsidy is based on the Silver Plan.

For example, in 2013 the FPL for a family of four is $23,550. Therefore, people with income between $23,550 and $94,200 will be entitled to lower monthly premiums. Naturally, premium reduction will be much more substantial for people with 100% FPL than for people with 400% FPL.

Cost-Sharing Subsidies

Cost-sharing subsidies are available for people with incomes up to 250 percent of the FPL ($58,875 for a family of four in 2013). They can substantially reduce out-of-pocket expenses such as deductibles, copayments and coinsurance.

How to Estimate Your Income

In order to see whether you are qualified for lower costs on monthly premiums and out-of-pocket subsidies, you need to estimate your income. Use the 2013 Adjusted Gross Income (AGI) and apply to it any changes you expect in 2014. Alternatively, you may add the following items for all people in your household:

  • wages
  • salaries
  • tips
  • net income from any self-employment or business
  • unemployment compensation
  • social security payments

Actually, the Modified Adjusted Gross Income (MAGI) is used on the Marketplace application rather than Adjusted Gross Income (AGI). Modified Adjusted Gross Income is Adjusted Gross Income plus the following items:

  • any tax-exempt Social Security
  • interest
  • foreign income

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