What’s Happening with Premiums. Now that there is more complete claims history from previous Open Enrollments, insurance companies are better able to determine their premiums. In addition to more complete claims data, carriers are requesting higher premiums to shore up the weak financial performance resulting from the prior enrollment periods.
Subsidies: Premium CPR. To make health insurance more affordable and to increase enrollment by providing a financial incentive to secure coverage, the federal government introduced premium subsidies as a key component of the Affordable Care Act (ACA). The goal of the subsidies is to help people who cannot access affordable coverage from employers or the private insurance market.
Subsidies: How to Qualify. Subsidies reduce the premium cost for health insurance coverage offered within the health insurance exchanges. Individuals and families who meet defined income requirements will be able to receive premium subsidies and financial assistance for out-of-pocket expenses. To be eligible, 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 the number of family members. The FPL benchmark is adjusted for inflation each year.
For example, the FPL for the 2021 Open Enrollment will be $12,760 for a one-person household. This amount increases by $4,480 for each additional family member. So, the Federal Poverty Level for a four-person family is $26,200. Subsidies will be available according to ACA rules for individuals and families with incomes ranging from 100% to 400% of the FPL.
ACA Plans & Premiums. Three levels of coverage are offered within the exchange: gold, silver, and bronze. Each plan has a different actuarial value, which is the percentage of costs each plan will cover. For example, gold plans will cover 80% of healthcare costs, with the remaining 20% being the insured’s responsibility, silver plans 70% and bronze plans 60% with the remaining amount being the insured’s responsibility
The premium for the silver plan establishes the level at which subsidies will be accessed. Since healthcare costs vary from state to state, silver premiums will also vary depending on the state. The percentage of premium paid by the insured will be tied directly to the individual’s actual income as a percentage of the Federal Poverty Level. For example, individuals and families with incomes at 150% of the FPL will be required to pay no more than 4.7% of their income toward the health insurance premium.
Here is a list of FPL percentages and the percentage of income the policyholder must pay in health insurance premium:
|Income Level||Annual Premium Not to Exceed % of Income|
|100& to 150% FPL||2.1% to 4.7% of Modified Adjust Gross Income|
|150% to 200% FPL||4.7% to 6.5% of Modified Adjusted Gross Income|
|200% to 250% FPL||6.5% to 8.4% of Modified Adjusted Gross Income|
|250% to 400% of FPL||8.4% to 10.2% of Modified Adjusted Gross Income|
Let us take a “real life” example. Assume a family of three had an income of $43,000. Their Federal Poverty Level would be $21,720 which puts their income at 200% of the FPL. So, they would pay a premium not to exceed 6.5% of their modified adjusted gross income – or an annual premium of $2,795. Using the second lowest cost silver plan annual premium of $14,200 in their city as the benchmark, the family would be eligible for a $11,425 annual subsidy or $952 per month and would pay the remaining $2,795. Now, the family is not limited to the second lowest cost silver plan. They can purchase any plan available on the exchange. Their $11,425 of eligible subsidy would stay the same, which they would use to reduce their annual premium cost. If the family selected a Bronze plan with a monthly premium less than $955 per month, the subsidy would pay the entire cost of the premium and no payment would be required by the family.
In addition to assistance with premiums, there’s financial support for such out-of-pocket expenses as deductibles and out-of-pocket maximums for individuals and families with incomes below 250% of the FPL. To qualify, the individual or family will be required to purchase at least a silver plan within the exchange.
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.
By using the Telephone Appointment System, clients can take advantage of scheduling a health insurance discussion when convenient for their schedule. During Open Enrollment phone appointment availability is expanded to include extended hours and weekends.