Where can I go for help understanding how the
health reform law will affect me?
If you have questions
about how the health reform law will affect you and your insurance options,
please go to Healthcare.gov, or contact their Help
Center if you have questions that cannot be answered on their website.
You can also contact your state’s Consumer Assistance Program, Exchange, or Medicaid
office with questions about eligibility and enrollment. The Kaiser Family
Foundation is unable to provide individual advice on your insurance options.
Does the calculator provide definitive
estimates of what people will pay under the health reform law?
No. The calculator is
intended to illustrate how families in varying circumstances may be affected by
the tax credits and limits on age rating included in the law. Premiums will
vary from region to region and based on assumptions insurers make in setting
premiums. In addition to what people would pay in premiums, they would also
have out-of-pocket expenses for cost sharing (e.g., deductibles and
coinsurance), which in some cases would be subsidized based on income. In
addition, there are many other factors that could increase or decrease how much
people pay, including efforts to make the health care system more efficient and
additional revenue measures to finance the federal cost of reform.
How do premium subsidies work?
People purchasing
coverage on their own will be eligible for government subsidies (through a tax
credit) towards their health insurance premiums based on income. Subsidies will
be provided to people with family income between 100% and 400% of the federal
poverty level. The most that these families buying subsidized coverage in an
exchange will pay towards a health insurance premium will range from 2.0% of
income at 100% of poverty to 9.5% of income at 400% of poverty, with amounts at
specific income levels specified in a table in the law. Subsidies are tied to a
benchmark level of coverage based on actuarial value. And, subsidies will only
be available to those purchasing coverage through the exchanges, which includes
people who do not have access to alternative insurance (such as Medicaid and
affordable employer coverage). When an exchange determines that a person is
eligible for a tax credit based on expected income, and that person enrolls in
coverage, subsidies will be paid directly to insurers to lower the cost of
premiums (and in some cases cost sharing). For more information, click here.
What is included in household income? How do I
know what to enter for my income?
The calculator allows
users to enter household income in terms of 2014 dollars or as a percent of the
federal poverty level. Household income includes incomes of the taxpayer,
spouse, and dependents. In determining eligibility for exchange subsidies,
income will be based on your attestation of your expected income in 2014 and
will be verified by the exchange with documentation from your most recent tax
return, with consideration of reasonable changes you expect. Exchanges will
calculate enrollees’ household incomes using Modified Adjusted Gross Income, or
MAGI. The MAGI calculation includes such income sources as wages, salary,
foreign income, interest, dividends, and Social Security. MAGI calculation does
not include income from gifts, inheritance, and Survivors Benefits, and some
other income sources are partially excluded. More information on MAGI is
available here.
What is the poverty level?
The federal poverty level
varies by family size. In 2013, it is $11,490 for a single adult and $23,550
for a family of 4.
How does Medicaid relate to exchange
subsidies?
Currently, Medicaid
eligibility varies substantially by state, and is generally limited to certain
categories of people (e.g., children, parents, people who are disabled, and
people age 65 or older). Under health reform, states have the option to expand
Medicaid eligibility to all people with incomes below 138% of the poverty
level. The calculator notes when people would be eligible for Medicaid under expansion,
and when they would be eligible for exchange subsidies if their state does not
expand Medicaid. More information on state decisions regarding Medicaid
expansion is available here. In other cases, people may be Medicaid-eligible based on their
state’s eligibility requirements. As Medicaid eligibility varies from state to
state, please contact your state’s Medicaid office with eligibility and
enrollment questions.
How do premiums vary by age and health status?
Before the health law
goes into effect in 2014, people buying coverage on their own generally face
medical underwriting, meaning that they can be turned down for coverage or
charged a higher premium based on their health status. Under the reform law,
insurers are prohibited from denying coverage or charging higher premiums based
on health status. Beginning in 2014, the reform law also limits the degree to
which premiums may vary by age , with the premium for a 64 year old being
no more than three times that of a 21 year old. This means that premiums for
older people may be lower than under the status quo while premiums for younger
people may be higher. Under proposed regulations by Health and Human
Services (HHS), children under age 21 have slightly lower premiums and families
with more than three children under the age of 21 will only be charged premiums
for three children.
How do premiums vary by location?
As under the status quo,
the health reform law permits premiums to vary by geographic area, reflecting
the fact that the cost of living and health care expenses vary significantly by
location. As shown
here, average health insurance premiums vary quite a bit by state,
with the lowest family premium in a state at about 17% below the national
average and the highest at about 11% above the average. Premiums also vary by
location within states, so the range across communities nationwide is larger
than the statewide averages suggest. Premiums in the calculator are based on
estimates of average premiums nationwide. Therefore, actual premiums may be
higher or lower, depending on where you live.
How do premiums vary by tobacco usage?
Currently, insurers in
many states charge higher premiums (in the form of a surcharge) for enrollees
who use tobacco. The health reform law allows insurers to charge people who use
tobacco up to 50% more in premiums than people who do not use tobacco.
Furthermore, the law specifies that exchange subsidies cannot be used to cover
the portion of the premium that is due to a tobacco surcharge. The calculator
assumes that insurers will charge enrollees the maximum 50% surcharge, but
actual surcharges will likely vary. Under the status quo, insurers typically
charge an average of 20%. Residents of states that do not permit tobacco
surcharges (listed here) may arrive at a more accurate premium
estimate by selecting that they do not use tobacco.
What are Bronze and Silver plans?
When purchasing
subsidized exchange coverage, you can choose between four levels of coverage:
Bronze, Silver, Gold, and Platinum (in order of least to most comprehensive).
In general, more comprehensive plans have higher premiums, but also have lower
out-of-pocket costs. Bronze level coverage is the lowest level of coverage most
people are required to have under health reform; on average bronze plans cover
60 percent of enrollees’ total costs. Silver level coverage is more
comprehensive, covering on average 70 percent of enrollees’ total costs. The
most comprehensive plans are Gold and Platinum plans, which on average cover 80
and 90 percent of enrollees’ total costs, respectively. For more information,
see the question about actuarial value below.
What is actuarial value and how does it affect
premiums?
The actuarial value of a
health insurance policy is the percentage of the total covered expenses that
the plan covers, on average for a typical population. For example, a plan with
a 70% actuarial value means that consumers would on average pay 30% of the cost
of health care expenses through features like deductibles and coinsurance. The
amount that each enrollee pays will vary substantially by the amount of
services they use. The health reform law specifies a benchmark level of
coverage for the purposes of premium subsidies using actuarial values. Premium
subsidies will be tied to Silver plans, which have an actuarial value of 70%.
Additional subsidies for people making between 100 and 250% of the poverty
level limit cost sharing and raise the actuarial value of Silver plans. The
calculator also illustrates premiums and subsidies for Bronze plans, which have
an actuarial value of 60%. Bronze plans represent the minimum level of coverage
most people are required to maintain under health reform, and these plans will
have higher cost sharing on average. Regardless of the level of actuarial
value, insurers will have to cover a defined set of health care services and
cap the total amount of cost sharing required of consumers at defined levels,
but can generally otherwise vary the structure and degree of cost sharing so
long as minimum actuarial value thresholds are met.
Can premiums be compared to what people are
paying today?
Premiums cannot
necessarily be compared to what people are paying now. Most people with
insurance today have coverage through work, where the employer is paying for a
portion of the premium. The premiums and tax credits presented in the
calculator apply to people who are buying insurance on their own. The premium
calculations are consistent with estimates of premiums under reform prepared by
the Congressional Budget Office. However, in many cases coverage will be more
comprehensive and accessible than what is typically available today in the
non-group market. As a result, 2014 premiums in the calculator cannot
necessarily be compared to what people buying insurance on their own were
paying before the law. Colorado and Arizona Independent Insurance Broker
