How will health insurance premiums be calculated in 2014, under Affordable Care Act (ACA)?
A policy’s premium is the monthly fee paid to the insurance carrier for health insurance coverage.
In pre-ACA policies, insurance carriers can charge differing premiums based upon many factors including, most notably, a person’s age and current health status. Today, the premium paid by someone with a medical condition is typically much higher than that of someone with no known medical problems.
Under ACA, starting January 1, 2014, premiums can vary based only on the following:
- age (note: insurers can charge an older person no more than three times what they would charge a younger person for the same policy)
- where a person lives
- whether or not a person smokes
In addition, under ACA,
- coverage cannot be denied for pre-existing medical conditions
- coverage cannot be priced higher for someone who is overweight
- coverage cannot be priced higher for someone in poor health
It is important to note that this discussion is only about PREMIUMS, not total cost of health care. Typically, you can get a lower monthly premium by increasing the amount you will pay for your care at the time you visit the doctor, emergency room, hospital, clinic, or other medical provider. This is known as cost-sharing and comes in the form of deductibles, co-pays, and co-insurance.
Under ACA, the degree of cost-sharing for a particular policy determines its “level”. Plans will be classified into four standard levels: bronze, silver, gold, and platinum. Plans in the gold and platinum tiers will have lower deductibles — and higher premiums — than those in the bronze and silver tiers.
As you can imagine, then, looking only at the monthly premium when choosing a health insurance policy is probably not a good idea! Be sure you fully understand the provisions of the coverage so you can decide the right balance for you, given your particular situation.
In addition, depending on your income level and household size, buying health insurance on your state’s exchange may entitle you to a subsidy, which could lower your premium considerably.
Let us know, by phone or email, if we can be of assistance to you as you select your coverage for 2014 — on or off the exchange, with or without a subsidy.