With ACA implementation well under way and the new Health Insurance Exchanges poised to open on Oct. 1st of this year many individuals are asking “What will the ACA cost you in terms of insurance?”

Certainly there is no one size fits all answer to this questions.  Insurance availability, coverage, and cost will largely be based on income, whether your employer has a plan you can participate in, and other factors.  However there are some general rules of thumb, as to what kind of coverage you can get and what it will cost.

If I have insurance through my employer can I keep it?

the answer to this is yes.  If you are currently covered through your employer, you can keep your coverage and not opt into the State Health Insurance Exchanges.  However, if the insurance offered by your employer is too costly (more than 8% of your pre-tax income) you will be allowed to shop on the Insurance Exchanges for more affordable coverage.  Coverage that is currently in place is supposed to remain an option should you choose to keep it, however, pricing and coverage details (such as who is covered and what is covered) may be changing.  In some states rates for insurance have gone down, but in other states, rates for private health insurance are predicted to increase.  At the beginning of Oct. if you have insurance through your employer, you will want to verify that the coverage and rates will remain the same, or look into alternative options.  Another thing to consider is the coverage of families and dependents.

UPS Recently dropped coverage for 15,000 spouses of workers who could get coverage somewhere else, this is a trend that we will see continuing into 2014

In fact, UPS has stated that up to 35% of companies will be making the same kind of cuts and adjustments in response to the Affordable Care Act.  If you have insurance through your employer and plan to keep it, you will want to ask the following questions:

• Will there be any changes to my policy regarding coverage specifics?
• Will there be any changes to my policy in regard to premiums, co-pays, and deductibles?
• Will there be any changes to my policy in relation to who can be covered (spouses)?

What if I don’t Have Any Insurance? Is It True That The ACA Will Cost You More?

If you don’t currently have insurance you will now be able to buy insurance for the Health Insurance Marketplace.  If you are below the 400% poverty level you could qualify for cost saving assistance in order to purchase insurance.  One of the best tools out there to calculate the prospective cost for insurance is the Subsidy Calculator provided by Kaiser Family Foundation.  Let’s take a look at some examples of what insurance could cost families:

Example 1: Family of Four with a pre-tax annual income of 88,000

For this example, we are using two adults who are in their thirties and non smokers with two children.  According to the subsidy calculator this family will be spending $11,064.00.  Since this family is at 374% of the poverty level they will qualify for a tax credit subsidy of $2,704.00 which will mean that they will spend $8,360.00 per year ($696.00 per month), or 9.5% of their income on healthcare.

Example 2: One Adult and Two Children with a pre-tax annual income of 60,000

For this example we have used a family consisting of one adult in their thirties, non tobacco user, and two dependent children.  According to the subsidy calculator this family will be spending $7,499.00 per year on healthcare.  Since this family is at 255% of the poverty level they would qualify for a tax credit of $2,535.oo which will be used to help offset cost and will end up paying $4,913.00 ($409.00 per month), or 8.19% of their total income for healthcare.

Example 3: Family of Four with a pre-tax annual income of 45,000

For this example, we are using two adults who are in their thirties and non smokers with two children.  According to the subsidy calculator this family will be spending $11,064.00.  Since this family is at 191% of the poverty level they will qualify for a tax credit  subsidy of $8,414.00 which will mean that they will spend $2,650.00 per year ($220.00), or 5.89% of their income on healthcare.

What The ACA Will Cost You?

Why Are These Examples Troubling?

Do you have a better understanding gof what the ACA will cost you? What may strike you as troubling is the fact that although each of these families did qualify for some kind of subsidy, they will still be legally obligated to put a significant amount of their income toward healthcare.  Our first example has a family of four, with two children, two adults, required to pay $696.00 per month for healthcare.  Since calculations are done on pre-tax income the problem will be even worse for those who are self employed or contractors.  Despite the offset savings from subsidies, many families will find that they are now legally obligated to have insurance (or go without and pay a fine), but unfortunately, even with subsidy assistance the monthly amount for healthcare will be out of reach for many.  

Those in the middle class will be hit particularly hard.  For instance, a family of four with an income of $100,000.00 per year will not qualify for any kind of assistance, with premium prices expected to cost $11,064.00 per year and eat up 11.06% of their annual income.  This equates to a family that will be required to pay $922.00 per month, or become uninsured and face a penalty (1% of their annual income).  While a family which is making $100,000 per year does not meet any of the requirements to qualify for assistance from subsidies for the purchase of insurance, they would certainly not be considered by most to be wealthy, but rather solidly middle class.  There is much conjecture out there regarding the ACA, but several experts have voiced concern that the Affordable Care Act will only work to ensure millions of those who meet certain poverty levels at the expense of millions of middle class families who will receive no assistance and be priced out to the market.

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