The cost of health insurance is determined by several factors, including age, smoking status, plan metal tier, benefit design and household income. Thanks to Obamacare subsidies, plans are now more accessible for people of all income levels.
The law also provides consumers with numerous safeguards, such as coverage for preexisting conditions and preventive services without out-of-pocket costs. These provisions help keep healthcare costs down so more Americans can access quality care at reasonable costs.
1. Subsidies
The Affordable Care Act (ACA) offers subsidies that help lower the cost of health insurance premiums for low-income Americans. Subsidies can range anywhere from zero to hundreds of dollars each month for individuals and families.
Your subsidy amount depends on the cost-sharing reduction (CSR) for the benchmark Silver plan in your area and your household income. You may even qualify for no-cost-sharing plans that have no CSR at all.
Subsidies are an integral part of the Affordable Care Act, helping insure more than 30 million people. Unfortunately, they can be costly if you don’t qualify, so it’s essential to comprehend their workings and how they affect your premium costs.
2. Taxes
Under Obamacare, nearly all Americans and small businesses are eligible for tax credits and other forms of cost assistance. Unfortunately, certain taxes are also levied against members of the healthcare industry and high-income individuals.
Individual mandate taxes on those without health insurance require them to pay an income tax penalty of $95 (in 2014, increasing with family size) up to 2.5 percent of their income or the cost of a bronze level Obamacare plan, whichever is greater. This tax poses a major burden on low and middle-income households.
Another major source of federal tax revenue comes from taxes levied against large employers who fail to offer coverage to all full-time employees. This penalty tax, assessed per employee, discourages many employers from hiring more staff, leading to an estimated 250,000 job losses.
3. Cost-sharing
Cost-sharing charges refer to any portion of a medical bill that an individual pays out-of-pocket when receiving services. They may take the form of deductibles, copayments and coinsurance.
Insurance plans negotiate rates with physicians, hospitals and other health care providers who participate in their network. These amounts are then used to calculate how much an enrollee owes on their bills.
The Affordable Care Act offers federal subsidies to help people reduce their out-of-pocket healthcare expenses. These subsidies are available to those who qualify for a premium tax credit and whose household incomes range from 100% to 250% of the federal poverty level (FPL).
4. Employer mandate
Under the employer mandate, employers with 50 or more full-time employees (and their equivalents) are required to offer affordable health coverage to their workers or face a penalty. Smaller firms may be more severely affected than larger ones by this requirement.
Employers who fail to offer health coverage to a majority of their full-time employees face an annual penalty of $2,000 per employee (excluding the first 30). If any employees enroll in coverage through a marketplace provider, the employer is subject to another penalty equaling $3,000 per employee who receives a premium tax credit.
Furthermore, the law sets a minimum actuarial value for employer-sponsored coverage: at least 60%. Furthermore, this coverage must be affordable to most workers and meet other criteria as well.
5. Pre-existing conditions
The Affordable Care Act (ACA) prohibits insurance companies from denying you coverage or charging more money due to your health condition. They must also provide essential benefits without adding on extra costs.
A preexisting condition is a medical issue that existed prior to your health insurance coverage starting. This could include pregnancy, heart conditions or cancer diagnoses.
The Affordable Care Act (ACA) safeguards people with pre-existing conditions by making it simpler to obtain and afford health insurance. Most group and individual plans purchased through the Marketplace must cover these conditions.
