Obamacare and you: How much does Obamacare cost?
How much does Obamacare cost? That鈥檚 one of the most common questions average Americans have about the president鈥檚 signature health-care reform effort.
Many know that the Affordable Care Act (Obamacare鈥檚 official name) offers government cash to help many people buy insurance. But how much are the subsidies? Who gets them? If you don鈥檛 qualify for this help, is it possible you might have to pay more for health policies under the new law?
We鈥檒l try to answer these questions in plain language as best we can.
First, you鈥檝e got to figure out if you need or qualify for Obamacare at all. It鈥檚 offered through new state exchanges, which are virtual stores where you can shop for policies. Anyone can browse, but the exchanges are intended for people who buy their own insurance on the open market. It鈥檚 also meant for those who don鈥檛 have insurance now because their job doesn鈥檛 offer it, or because they can鈥檛 afford it.
If you get health coverage through your job, Obamacare is probably not for you, unless you work for a business with fewer than 50 employees.
The cost to you for Obamacare depends on a number of things. First is what sort of policy you buy. Insurers are required to offer different levels of products. Their cheapest 鈥渂ronze鈥� plans are supposed to cover 60 percent of your health costs. 鈥淪ilver鈥� plans cover 70 percent. 鈥淕old鈥� plans cover 80 percent, and 鈥減latinum鈥� 90 percent.
Also, plans that cover a family are more expensive than those that cover a couple, or an individual.
Second, the cost to you will depend on where you live. Insurance will be more expensive in some states, even some counties, than in others. Partly this is because of the prices of doctors, hospitals, and so forth in your area. Partly it鈥檚 the result of the level of competition between insurers, which varies a lot.
In Wyoming, for instance, only two companies offer plans through the state exchange. Costs of health-insurance policies are higher there than in neighboring Nebraska, where more companies are vying for residents鈥� business.
Third, your cost will depend on how much money you make. You鈥檒l be entitled to government subsidies if you earn up to 400 percent of the federal poverty level. For an individual, that鈥檚 $45,960 a year. For a family of four, it is $94,200.
Your assets, such as your house or car, don鈥檛 matter here. It鈥檚 all about income.
How big will those subsidies be? They鈥檙e based on a sliding scale. Obamacare caps the percentage of income that those eligible pay for their health insurance.聽
Those who make 100 percent of the federal poverty level aren鈥檛 supposed to spend more than 2 percent of their income on a health policy. Those who make 200 percent aren鈥檛 supposed to spend more than a bit more than 6 percent of their earnings on insurance.
For incomes that are 300 percent of the poverty level, you鈥檙e supposed to spend about 8 percent on Obamacare. If you make 400 percent of the poverty level, the cap is 9.5 percent.
The government takes the second-cheapest 鈥渟ilver鈥� plan offered in your area as a benchmark for determining your subsidy. For those eligible, their subsidies will equal the cost of that plan, minus the money they contribute up to their percentage cap. They can use that subsidy to buy any of the metallic plans.
Confused? We鈥檒l run a couple of examples through the Kaiser Family Foundation鈥檚 excellent .
Let鈥檚 say you鈥檙e the head of a family of four that lives in Dallas, with an income of $85,000 a year. The feds will give you a subsidy of $287 annually. You鈥檇 pay $8,075 toward the second-cheapest 鈥渟ilver鈥� plan for your area. Assuming you get paid twice a month, that鈥檚 $336 per pay period.
Or say you鈥檙e a couple in San Francisco. Your combined income is $50,000 a year. The US government subsidy for you would be $2,322. Between the two of you, you鈥檇 be laying out $198 each biweekly pay period for 鈥渟ilver鈥� health coverage.
Finally, we鈥檒l estimate the case of a single parent living in Maine鈥檚 rural Aroostook County, with an income of $18,000. The government subsidy in this case would be $5,644 per year. The parent would pay $15 for "silver plan" health insurance, every two weeks.
We鈥檒l close with a couple of additional important points. If you make less than 100 percent of the poverty level, you could be eligible for Medicaid. Not all states are expanding Medicaid under Obamacare, however, so your eligibility will vary according to where you live.
If you make more than four times the poverty level, you鈥檒l be paying for insurance on your own. Generally speaking, younger and healthier people will pay more under the Obamacare system than they would have in the past. Older and less-healthy people will pay less.
