Financial Friday: How much will your new Health Insurance cost?

Happy Friday everyone.  Did you know that everyone was getting free health insurance starting next year?  Of course not because that isn’t happening.  While there will be certain people that will pay less, there will be a lot of people who will pay significantly more even if you are eligible for a subsidy.  So how does this subsidy thing work?  The government has set maximum health insurance premiums people will have to pay under this new system for major medical health insurance under the healthcare exchanges setup by the government.  There will be 4 levels of plans available on the public exchanges: Bronze, Silver, Gold and Platinum.  The amount of subsidy you will receive will be based on the Silver level plan.  In the table below, it shows how much you can expect to pay for the silver plan (the 2nd lowest) depending on your income level and the size of your family.  Unfortunately, the numbers in the table are 2009 dollars so the amounts are not current and underestimated.  My example below will show how this is different in my case.

Let’s take my family for example.  I pay for insurance in the individual market.  I just received a rate increase which is about $470 a month or $5640 a year for my 4 person family.  The amount a silver policy will cost is estimated to be is $12,718/yr before taking any subsidy into account.  After the subsidy at the highest income level (about 94,000/yr) and still receive a subsidy, the cost will be 8930/yr.  If I lower my estimated income to 65,000/yr, the cost would be $5723/yr which is very similar to my current policy.  My current policy is much closer to the actuarial value (to be defined at another time) of the Bronze plan and would cost me 10,531/yr, 6753/yr and $3546/yr, respective to the examples above.

So, depending on your income, you may pay significantly more or possibly less than what you are paying right now for insurance.   With that said, the cost of insurance will go up by over 80%.  It may not cost you over 80% more if you receive a subsidy, but the cost, which includes the subsidy and your payment, will.

Where am I getting this information?  Here is the link where you can enter in your own info to determine what your yearly cost will be in 2014 for major medical coverage.  http://kff.org/interactive/subsidy-calculator/

Things will change.  In fact, my estimates have changed a bit (gone up) in the last 2 weeks as KFF makes changes as the estimates change.  As always, please call me if you have any questions about your health insurance and/or the Affordable Care Act.

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