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How Much Of A Subsidy Will You Get In Obamacare? Here’s An Estimate

By Julie Appleby

August 14th, 2013, 5:44 AM

If you buy your own health insurance, you’ve no doubt heard that subsidies will be available next year to help pay the premiums.

But will you get a subsidy and how much?

Researchers at the Kaiser Family Foundation have a report out Wednesday that provides some insight.

Based on their analysis, about 48 percent of adults currently purchasing coverage for themselves will be eligible for subsidies next year – and those subsidies will average $5,548 per family. (KHN is an editorially independent program of the foundation.)

Because that figure is an average, some families will get more and some will receive less when they enroll through new online marketplaces, which open Oct. 1.

“Generally, younger people will get less because the amounts tend to follow the age curve,” said Gary Claxton, a vice president at the foundation. “Single buyers will get a smaller credit, in general, than families.”

Under the health law, people earning more than 400 percent of the federal poverty level – about $46,000 for a single person or $94,000 for a family of four — won’t be eligible for a subsidy at all.  Those offered affordable and comprehensive coverage through their employers – or those on government health programs like Medicaid – are also not eligible for a subsidy. The researchers did not include those groups – people eligible for Medicaid or job coverage – in their analysis.

How far will the subsidy go toward buying coverage?  That depends on a number of factors, including age, where one lives and what type of policy one selects.

Still, the analysis provides some clues. Using Congressional Budget Office information, the foundation researchers estimated the annual premium for an individual 40-year-old will average $3,857 nationally. Based on that estimate, the analysis pegged the average cost of family coverage for those who have coverage now and are expected to buy next year at $8,250.

So, the estimated average subsidy of $5,548 would cover 67 percent of the cost of the average family plan.

Individuals and families could choose lower premium plans, but in no case will the subsidy be greater than the amount of the premium.

Subsidies, provided as tax credits, will be given on a sliding scale based on household income and are less generous as income rises.  People who get a subsidy must still contribute to their health insurance premiums. For example, those on the lowest end of the income scale will pay 2 percent of their household income toward the premium, while those at the higher end will pay 9.5 percent. The subsidy makes up the difference between what the family pays and the price of the second lowest cost silver plan available. Bronze, silver, gold and platinum plans will be offered.

“For the vast majority of families, $5,000 is incredibly helpful,” said Sabrina Corlette, project director at the Health Policy Institute at Georgetown University, which was not involved with the study. But “that $5,000 is not reflective of what an individual family might get. Unfortunately, the generosity of subsidies drops off pretty dramatically after about 250 percent of the federal poverty level.” (About $28,000 for an individual.)

23 Responses to “How Much Of A Subsidy Will You Get In Obamacare? Here’s An Estimate”

  1. Jackie says:

    Remember that its not only what you pay in premiums each month whether on your own or through an employer but also the maximum out of pocket expense which keeps going up. So if you are paying let’s say 5K a year out of pocket for premiums and one family member breaks a bone or needs their gallbladder out you will also have on average about 5K of out of pocket expense, so that’s a minimum of 10K. A typical family who makes 50K a year will still have to decide whether to pay the rent/mortgage, utilities, groceries, and all the other insurance we are required to have. This is not affordable.

  2. RJ says:

    What this article doesn’t mention is that if premiums for plans are less than a certain percent of income then you don’t get a subsidy. The subsidy is based a preset maximum that you will have to pay towards health insurance premiums. Anything over that preset amount is the subsidy. Those percentages are quite high and assume premiums will be much higher than they are today.

  3. Kenneth says:

    Worry, worry, worry, worry! Did you ever think that, just like Social Security, just like Medicare, Obamacare may work out just fine? None of these social programs are perfect, but the work and they are needed. Give Obamacare a chance and tell Chicken Little Republicans that the sky is not falling.

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