Everyone Is Looking for Cheap Health Insurance
By far the most frequent request by Texas consumers for health insurance is that the coverage be cheap. When asking for cheap health insurance, the consumer is not considering the outcome of “cheap” insurance results in cut-rate insurance with limited benefits, restrictive provider networks and useless benefits. What the Texas consumer is asking for is insurance that provides benefit rich benefits at a competitive premium. The term cheap only refers to the price, not the coverage.
The Texas health insurance market is very competitive, with a favorable regulatory climate, over 50 plans from which to choose and 3 to 5 large carriers depending on your city. The Affordable Care Act (ACA) has increased the options for Texas consumers and, depending on the individual’s household income, may be able to fulfill the requirement for cheap or cost competitive health insurance.
Beginning with the October 1, 2013 initial enrollment period and effective January 1, 2014, Texas consumers, who qualify based on household income levels as defined in the legislation, will be eligible for premium assistance, known as subsidies. The federal government provided premium subsidies in order to expand coverage and reduce the effect of increased premiums resulting from provisions such as guaranteed issue, no preexisting condition waiting periods and the addition of the essential benefits. Those individuals who meet income requirements according to the Federal Poverty Level (FPL) will qualify for premium subsidies and financial assistance for out-of-pocket expenses.
Federal Poverty Guidelines Determine Subsidy
In order to be eligible for the subsidies and assistance with out-of-pocket expenses, an individual or family’s gross income will be compared to the federal poverty level (FPL). The level of assistance will be determined by the percentage of gross income to the FPL as determined by number of family members. For example, in 2021 the FPL will be $12,760 for a one-person household and rises by $4,480 for each additional family member. The FPL for a four-person family is $26,200. The FPL benchmark will be adjusted for inflation each year.
Subsidies will be available according to ACA rules for individuals and families with incomes ranging from 100% to 400% of the FPL. Assistance will also be available for out-of-pocket expenses for those with incomes ranging from 100% to 250% of the FPL. Examples of out-of-pocket costs for which assistance will be provided are copays and deductibles that would typically be the responsibility of the policyholder.
|Persons in Family/Household||Federal Poverty Level (Low)||Federal Poverty Level (High)|
Access to Cheap Coverage from the Health Insurance Marketplace
The health insurance marketplace, developed and operated by the federal government in Texas, will be the source of cheap insurance for consumers, referred to as “On Marketplace”. The marketplace will offer plans that qualify for premium assistance if eligibility requirements are met. The Texas marketplace will offer three levels of coverage that qualify for a premium subsidy, referred to as metallic plans titled, Gold, Silver and Bronze. All plans will include the essential benefits as mandated by ACA. The premium will vary depending on the plan’s actuarial value, which is the percentage of costs each plan will cover. For example, Gold plans will have an actuarial value of 80% which means the plan will cover 80% of healthcare costs, and the remaining 20% will be the responsibility of the insured. Silver plans will provide an actuarial value of 70% and bronze 60%.
As a Texas consumer’s income increases, the amount of premium assistance or subsidy is reduced and eventually eliminated depending on household income. The percentage of premium paid by the insured will be tied directly to the individual’s actual income as a percentage of the FPL. For example, individuals and families with incomes at 133% of the FPL will be required to pay 2% of their income toward the health insurance premium.
The following is a list of FPL percentages and the percentage of income that the policyholder must pay for health insurance premium.
|Income Level||Annual Premium Not To Exceed Percentage of Income|
|Up to 133% FPL||2% of income|
|133 to 150% FPL||3 to 4% of income|
|150% to 200% FPL||4 to 6.3% of income|
|200 to 250% FPL||6.3% to 8.05% of income|
|250 to 300% of FPL||8.05% to 9.5% of income|
|300% to 400% FPL||9.5% of income|
To illustrate the health insurance premium cost for plans in an exchange, assume a family of three had an income of $57,270. The FPL for this family would be $19,090 so their income places them at 300% of the FPL. The family would be required to pay 9.5% of their income or $5,440 towards the premium cost of the plan. Using the silver plan premium of $12,000 as the benchmark, the premium paid by the family would be $5,440 and the remaining $6,560 would be paid as a subsidy. The family can purchase any plan available from the exchange, excluding the bronze plan, and the premium difference between the premium cost and the $5,440 would be made up by the subsidy.
Cheap health insurance will be available for those who qualify based on family income. Even though premiums are expected to rise dramatically in 2021 and beyond, a large percentage of the increased premium will be offset by the premium subsidy. For those individuals seeking cheap health insurance, the plans offered in the Texas health insurance marketplace may be able to provide excellent benefits with a premium subsidy to deliver cheap health insurance.
STATESIDE CAN HELP!
Stateside Insurance Services, since 2003, has focused on providing comprehensive health insurance information, responsive customer service and expert industry knowledge for Texas consumers. Stateside has annually been recognized by health insurance carriers and the Health Insurance Marketplace as a Top Producer in Texas.
Whether the health insurance policy is for an individual, family, small business or supplemental Medicare coverage, Stateside dedicates the time, and our deep industry expertise, to ensure our clients have identified the best health insurance plan for their specific needs. Stateside is available to answer any general questions regarding your coverage options, can provide a subsidy determination, and even assist in creating and submitting online applications for ACA compliant plans during an Open Enrollment or throughout Special Enrollment periods.
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