Bend over, folks.  It's that time again.....

Bend over, folks. It’s that time again…..

Last week, I wrote about how my health insurance premiums will effectively double under the Affordable Care Act.  And, although I’m happy that more people will be covered under the new healthcare law, I’m less than thrilled with the added expense.  But, before I get to all that, let me explain how much I am paying now and how that will change in the near future.  (These premiums were quoted for my family of four, two 34 year-olds and two children in Indiana)

 

 

My Current Plan:

  • Anthem with an $11,000 deductible
  • covers 100% after the deductible is met
  • $377 per month

Cheapest ACA Plan:

  • Anthem plan with a $10,000 deductible
  • covers 60% after deductible is met with an out-of-pocket max of $12,700
  • $738 per month

Obamacare News: An Incentive to Earn Less

One of the biggest problems with the Affordable Care Act is that it actually creates an incentive for people to earn less.  According to healthcare.gov, subsidies are available for families making up to 400% of the poverty level, which equates to  $45,960 for individuals and $94,200 for families of four.  We don’t qualify for a subsidy, which isn’t a problem.  However, this is how it would look if we did qualify for a subsidy.

  • If we made 94K, we would get a $2,670 subsidy.
  • If we made 65K, we would get a $5,878 subsidy.
  • If we made 50K, we would get a $8,235 subsidy.

(Use this calculator to figure out if your family is available for a subsidy.  And if so, how much.)

Why is this a problem?

I know that nobody wants to hear me complain about how my healthcare costs are going to go up.  Because I can afford it.  Because I make more than $94,000 per year, which is apparently the new cut-off for the fabulously rich.  (I’m eating caviar as I write this, by the way.)  But, what if we made only $50,000?  How would the new healthcare law affect us?  Let’s take a look:

Here are a few of the options that were available to us, including the cheapest and most expensive:

Anthem Bronze Access Direct (the cheapest plan available)

  • Premium: $738.83 per month
  • Deductible: $10,000
  • Maximum Out-of-pocket: $12,700

MD Wise Marketplace

  • Premium: $901.42 per month
  • Deductible: $7,000
  • Maximum Out-of-Pocket: $12,700

MD Wise Marketplace Gold

  • Premium: $1,222.53 per month
  • Deductible: $2,100
  • Maximum Out-of-Pocket: $6,000

Anthem Gold Access

  • Premium: $1335.26
  • Deductible: $2,000
  • Maximum Out-of-Pocket: $4,500

So, accounting for a subsidy of $8,235, this is how much we would pay for each plan if we made $50,000 per year:

  • Pay $630.96 per year/$52.58 per month for a plan with a $10,000 deductible and $12,700 maximum out-of-pocket
  • Pay $2,582.04 per year/$215.17 per month for a plan with a $7,000 deductible and $12,700 maximum out-of-pocket
  • Pay $ 6,435.36 per year/$536.28 per month for a plan with a $2,100 deductible and a $6,000 maximum out-of-pocket
  • Pay $7,788.12 per year/$649.01 per month for a plan with a $2,000 deductible and $4,500 maximum out-of-pocket

As you can see, the plans that are currently available might be cost prohibitive for many families making $50,000 per year.  The least expensive plan looks nice, of course, as long as no one got sick….ever.  How many families making $50,000 can afford a $10,000 deductible each year?  I mean, a family making $50,000 per year with an effective tax rate of 15% brings home an average of $3,542 per month.  So, hitting their deductible would mean losing three months of their annual take-home pay.  Is that sustainable?  And, of course, the more expensive plans have lower deductibles that are much more reasonable.  However, can a family making $50,000 per year afford to pay $649.01 per month….just for the privilege of being covered?  Some, maybe.  Most, probably not.

***Update, there are also some cost-sharing subsidies for low-income individuals.  Using this calculator, the family earning $50,000 might get between $1,700 and $2,400 to help pay their deductible and out-of-pocket costs.  However, this is only available for silver plans, and would not apply to the low-cost bronze plan I used in this example. 

From Kaiser Health News:

“Cost-sharing reductions will be applied automatically for consumers who qualify based on their income, but only if they buy a silver-level plan, considered the benchmark under the law.”

Obamacare News: A Dream Scenario for the Rich

But, wait.  It gets worse.  Much, much worse.

According to Kaiser Health News, income, not assets, will be used to determine subsidies in the new healthcare exchanges, creating a dream scenario for those who live off of investment income.  Basically, a wealthy individual who lives solely of off dividends or other non-taxable investments, like a Roth IRA, may be able to get free or drastically subsidized healthcare premiums through the Affordable Care Act.  And who pays for this?  We all do. Furthermore, asset tests may not be used to determine Medicaid eligibility either, according to FamiliesUSA.org.

“Beginning in 2014, states may use asset tests only for determining Medicaid eligibility for individuals who are eligible because of other aid or assistance, elderly individuals, medically needy individuals, and individuals who are eligible for Medicare cost-sharing.”

What is your take on the Affordable Care Act?  How is the new law going to impact your family?