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Study Sheds Light on Insurance Affordablility Under ACA
08/14/2013   Reported By: Patty B. Wight

A new analysis by the Kaiser Family Foundation gives consumers a glimpse of just how affordable health insurance will be when the new online marketplaces open in October under the Affordable Care Act. While Maine insurance companies have released information about proposed insurance plans and rates, the remaining question is: What kind of tax credits are available, and for whom? As Patty Wight reports, the Kaiser analysis finds that half of those who currently buy their own insurance will receive financial help.

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If you need to buy insurance on the individual market come this fall, your premium will be based on a number of different factors, such as your age, where you live and what kind of coverage you want. The kind of tax credit you may be eligible for also depends on multiple factors. But according to the Kaiser analysis, you can be sure of one thing.

"Well, I think the take-away is that there will be help for most people," says Karen Pollitz, a senior fellow at the Kaiser Family Foundation. "So whatever the published prices are, chances are you won't have to pay the full price."

Pollitz says nearly half of families who currently buy their own health insurance will be eligible for about a $5,500 tax credit. So, if you buy a new marketplace insurance plan that costs about $8,000 - which Kaiser determined is an average insurance plan option - that $5,500 credit covers 66 percent of your premium.

Here's another way to look at how the tax credits will work. Say you're a 20-something fast food worker, "making right around minimum wage - around $14,000 a year," Pollitz says. "You'll probably only pay $20-$25 a month for your health insurance premium."

If you're a 20-something construction worker making $40,000 a year, you'll probably pay around $250 a month. Pollitz says the price is higher if you're older - say, in your 50s. "So someone my age would probably only pay about 300 bucks a month," she says.

But exactly who is eligible for the tax credits? Anyone who makes between 100 percent and 400 percent of the federal poverty level. That's about $11,000 to $46,000 for an individual, and $24,000 to $94,000 for a family of four.

"It really is good news," says Joe Ditre, executive director of Consumers for Affordable Health Care.

Ditre says in Maine, about 35,000 people buy individual insurance coverage. Half of them won't get tax credits because their incomes are too high, and they may ultimately pay higher premiums. But Ditre says those consumers will still get a better overall deal because many are currently under-insured and pay high deductibles - $10,000, $15,000, even $20,000 out of pocket before their insurance coverage kicks in.

"For the vast majority of them, providing them with a lower deductible, even though at a slightly higher premium, is better than having to pay all of that money out of pocket up front," Ditre says.

And as required under the Affordable Care Act, insurance coverage will be better, says Ditre. "For example, these plans will cover preventative care, they'll cover mental health and substance abuse, they'll cover prescription drugs," he says. "They're richer plans - they're better plans."

Karen Pollitz of Kaiser says, for a long time, individual insurance has been the dysfunctional member of the insurance family because it's been the only source of unsubsidized health insurance. These tax credits, she says, represent a fundamental shift in the system, "in the same way that people who have job-based coverage get help today - you know, their employers pay a big chunk of the premium for them, or people who are over 65 get help because the taxpayer pays a lot of their Medicare costs."

While the affordability of insurance still depends on a lot of variables, Pollitz says at least having coverage will prevent people from going completely broke should a catastrophic illness occur.

To find out what insurance on the individual market might cost you if you're a potential customer, you can find out using the Kaiser Family Foundation's subsidy calculator.

The Maine Bureau of Insurance is also planning several public information sessions about the online exchanges and the Affordable Care Act. The first one is scheduled for Thursday evening in Portland. View the bureau's full schedule of sessions.




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