With states preparing to open health insurance exchanges this year, you may be wondering, “Will my health care costs go up under Obamacare?”
It’s too early to know what affect the exchanges, established by the Affordable Care Act, will have on premiums. The average cost will vary by state.
The exchanges are expected to encourage competition among insurers, which may help to drive down prices. However, many of the people seeking coverage on the exchanges will be older and sicker, which will increase costs for insurers by 32 percent, according to a report from the Society of Actuaries, a professional organization of actuaries. As a result, insurers could increase the premiums they charge to consumers.
“We can expect mixed results on the reform bill’s goals of expanding coverage and reducing costs,” says Kristi Bohn, consulting health staff fellow at the Society of Actuaries.
How Obamacare will affect how much you pay
Here’s a breakdown of what to expect for certain groups of people:
The unemployed: If you lose your job, you may be eligible for COBRA, which allows you to keep your existing group coverage for 18 months. COBRA coverage may cost less than what you would pay for the same coverage on the individual market. However, you may find a plan with a lower monthly premium on the individual market, if you look for one with a high deductible and fewer benefits.
If you’re unemployed, you should find out whether you’re eligible for Medicaid, based on income level and other requirements regarding residency, immigration status and documentation of U.S. citizenship. The Affordable Care Act expanded Medicaid eligibility to Americans whose income is 133 percent of the federal poverty level or less. That would be $15,281 for a single person in 2013.
However, the U.S. Supreme Court ruled that states could refuse to expand Medicaid eligibility to this level. So far, at least 19 states planning to expand their Medicaid eligibility and 11 are leaning against expansion, according to the Center on Budget and Policy Priorities.
Young people: Under the Affordable Care Act, young adults who don’t have health benefits at work can remain on their parents’ plan until age 26. The parents’ coverage in an employer’s group plan probably will be less expensive than what the young adult could buy on the individual market, since the employer pays part of the premium for the parents’ plan.
The elderly: For individual coverage,insurerscan charge higher premiums based on age, since older people tend to need more medical care than younger people. You become eligible for Medicare at age 65 if you or your spouse worked for at least 10 years in Medicare-covered employment and you are a citizen or permanent resident of the United States.
The monthly premium for Medicare Part B increased slightly (about $5 to $13, depending on income) in 2013, compared to 2012. The deductible for Medicare Part B is $147 this year, or $7 more than 2012. In the future, the premiums and deductibles in Medicare are likely to rise as the overall costs of the program grow due to the country’s aging population.
Single people: Marital status usually doesn’t impacthealth insurance costs. However, it may impact eligibility for tax deductions, tax credits and Medicaid. States base their Medicaid eligibility rules on the household income as a percentage of the federal poverty level, which is $11,490 for a single person and $23,550 for a family of four this year, in most states.There are no advantages designated specifically for single people.
Savings on individual health care plans?
In the past, buying an individual health plan has been costly, sometimes costing more than a thousand dollars per month. Women and anyone with a preexisting medical condition often end up paying the highest premiums. Starting on Oct. 1, 2013, Americans can shop for coverage on a health insurance exchange and compare prices. The exchanges will monitor premium increases and can exclude an insurer if its annual premium increase is too high (each state decides what increases it will permit). Starting on Jan. 1, 2014, insurers won’t be allowed to deny coverage or charge someone a higher rate because of gender or preexisting conditions.
After you buy a plan on an exchange, you can get a tax credit if your household income is between 100 percent and 400 percent of the federal poverty level and you are not eligible for other affordable coverage. In 2013, the federal poverty level in all states (excluding Hawaii and Alaska) is $11,490 for a single person. You also may qualify for a plan with a lower deductible or lower copayments.
Also, depending on how insurers spend your premium dollars, you could be entitled to a rebate. Under the Affordable Care Act, insurers must spend at least 80 percent of the collected premiums on health care services and quality improvement. If insurers don’t meet these standards because their administrative costs or profits are too high, they must provide rebates to customers.
And you can also influence how much you pay for health care. Preventive care and healthy habits, like not smoking, may lower your medical costs in the future. Also, many preventive care services including mammograms and Type 2 diabetes screenings will be covered by the Affordable Care Act at no additional cost to you.