How To Calculate Your Health Insurance Premium Under Obama Care

obamacareIn less than three months, Obama Care takes effect.  What does this mean for you?

It may mean an increase in a premium, a decrease, or a penalty if you refuse to purchase insurance.

You may recall that the intention of Obama Care was to federally mandate every individual to pay into a national health care network so as to increase the access to affordable health care for every individual residing in, or is a citizen of, the United States.

This all sounds, good, but the Patient Protection and Affordable Care Plan (“ACA” also known as Obama Care) led to a heated political debate.  Many said this was a socialist campaign where the hard-working would end up paying for the non-contributing members of society.  The ACA is a daunting nearly 1,000 pages long.

Supreme Court Upholds Law Because of the “Tax”

The debate over the constitutionality of requiring individuals to purchase insurance was taken to the Supreme Court of the United States (“SCOTUS”).  SCOTUS upheld Obama Care under the Commerce Clause of the U.S. Constitution.   It was found that imposing a “tax” on individuals and employers of 50+ employees who neglect to buy insurance is within the power of the federal government.

The penalty for individuals ranges from $95-$750 per year; for employers, it may be up to $2,000/employee per year.

Some small businesses said they will reduce their staff or employees’ hours to avoid the insurance requirement or penalty.  The federal government announced earlier this month that it will postpone the enactment of the employer penalty by a year.

Health Insurance Plan Marketplaces

Obama Care mandates each state to provide an “online shopping exchange” of various insurance plans for its residents.  The exchange is essentially a marketplace of Qualified Health Plans (QHPs) that the state must pre-approve before it can be placed on the exchange.  Some qualifying criteria include marketing, choice of providers, plan networks and essential benefits offerings.

The plan levels are like the Olympic medals: Bronze, Silver, and Gold, and a fourth added — Platinum levels.  Each health insurance plan level must offer minimum core benefits, such as:  such as coverage for prescription drugs, maternity and newborn care, lab services, emergency services and preventive and wellness care.   The plans can not deny coverage or charge higher premiums for pre-existing conditions.

Premium Decrease, Or Increase?

Generally, premiums will be lower for bronze and silver plans, but there will be higher deductibles and co-payments.

Some media outlets are reporting their average premiums for their state plans.  Today The New York Times reported that Obama Care will decrease health insurance premiums by 50% for its residents.

In Washington State, a “healthplanfinder” event yesterday raised awareness of its plans. Potentially 1 million uninsured Washington state residents can get health insurance by signing up and qualifying for a tax exemption based on a poverty level, or some other exemption.  The exemptions are determined by a special health insurance calculator.  The calculator was created by the University of Berkley and considers a number of factors, including age, income, household size and Medicaid eligibility:

Here are some sample calculations:

  • Married, middle-aged couple with a combined income of $85,000 and two young children will qualify for an estimated $476 monthly tax credit, leading to a “Silver” plan premium of $633 for their entire family.
  • Single, twenty-something year old professional earning $60,000 annually with no dependents does not qualify for a tax credit and should pay a $289 silver premium.
  • 60-year old earning $45,000/year, single with no dependents qualifies for a $426 tax exemption, leading to a “Silver” plan premium of $356.

There are some for-profit companies that are assisting consumers in selecting a QHP.  One such company is GetInsured.

Overall Benefits to Obama Care

Healthy, young, uninsured individuals will be mandated to buy insurance or pay a penalty.  Some individuals or families may not qualify for tax exemptions.  Some may pay a higher premium than they are now.  However, the overall impact of this law arguably benefits everyone in the big picture:

For More Information

Disclaimer: This page is intended for general information purposes only and should not be construed as legal advice or legal opinions on any specific facts or circumstances. An attorney-client relationship is not created or continued.

Copyright 2013 The Filutowski Law Firm, PLLC.