For a third straight year, health insurance costs have decreased, driving the uninsured rate to historic lows. Furthermore, federal subsidies remain in place through 2021 to help lower income individuals afford their plan; these subsidies will continue helping cover these costs until 2023.
The cost of a health insurance plan varies by region, age, family size and the type of assistance you qualify for based on your income. Most Americans who receive assistance can obtain coverage at or below $100 a month.
Premiums
Premiums for individual market health insurance plans can vary significantly due to plan designs (scope of covered benefits, levels of patient cost sharing and panels of participating providers), customer buying decisions and other elements. They may even change over time due to customer turnover, new product introductions, changes in consumer demographics or other causes.
Unfortunately, we can’t accurately assess the impact of the Affordable Care Act on premiums in the individual market until we take into account all these effects. Fortunately, data on actual coverage costs allows us to compare those amounts with what customers would have paid if no changes had been made by Congress had they not implemented the ACA.
The premium subsidy design in the marketplaces has a major effect on how consumers are affected by benchmark premium increases. On average, older subsidy-eligible individuals experienced lower after-subsidy premiums for bronze and silver plans as benchmark premiums rose; whereas younger consumers experienced higher after-subsidy costs when benchmark premiums went up.
Subsidies
Subsidies are an integral element of the Affordable Care Act (ACA), helping to reduce health insurance premiums. They come in two forms: premium tax credits and cost-sharing reduction subsidies.
Premium tax credits are a popular form of subsidy that helps lower health insurance premiums. Eligible enrollees can receive up to 8.5% of their income as a credit, helping reduce their health insurance expenses.
Cost sharing reductions reduce out-of-pocket expenses for enrollees by lowering their deductibles and copayments. These subsidies are available to individuals with income between 100% and 250% of the federal poverty level.
Subsidies were originally extended for two years as part of the 2021 coronavirus relief bill, and are expected to remain in place through 2025. However, Republicans have recently proposed cutting these subsidies in half.
Taxes
The Affordable Care Act (ACA) introduces new taxes on both individuals and businesses to fund healthcare reform. These provisions aim to reduce the cost of health insurance for Americans by offering incentives to purchase coverage.
One such tax is the “Cadillac tax,” which levies an excise tax on high-cost insurance plans. This regressive tax burdens low-income people more than its higher-income counterparts.
Another tax to be aware of is the “Net Investment Income Tax” (NIT), which applies to upper-income individuals and trusts with net investment income over a certain amount. This tax applies to modified adjusted gross income over $200,000 for singles, $250,000 for married couples filing jointly, or $125,000 for married individuals filing separately.
Other tax provisions include the employer mandate, which requires employers to offer health coverage or face a fine; and small business tax credits which subsidize group insurance premiums for small companies. All of these new policies will impact businesses over the coming years as they learn how to comply with them.
Out-of-pocket expenses
The Affordable Care Act offers a premium tax credit to assist with out-of-pocket expenses for people enrolled in health insurance plans purchased through the Marketplace. These credits are available to individuals and families earning up to 400% of the federal poverty level who meet income eligibility criteria.
Out-of-pocket expenses include copays, deductibles and coinsurance (the percentage of the bill that remains after you meet your deductible). The tax credit reduces enrollees’ monthly payments for all types of health plans offered on the Marketplace regardless of metal level or whether they qualify for cost sharing reductions based on income.
Out-of-pocket maximums are an important factor when it comes to the cost of health coverage. They determine how much you may pay for a year’s worth of in-network services and any out-of-pocket expenses that arise.
