Federal Subsidies and Insurance Costs

The recent news has been dominated by content regarding the status of our government along with the onset of the Affordable Care Act.  A recent article in the New York Times  breaks down what health insurance will probably cost in the 36 states where the federal government will launch/open the insurance “exchanges” or marketplaces.  This is the first time to date that this cost information has been released for the public to view.  These exchanges will provide a commerce market for the millions of uninsured Americans (except undocumented immigrants/illegal aliens) to obtain coverage.  Depending upon income levels, some of the uninsured population will be able to reduce the costs involved and purchase coverage with the aid of government subsidies.

 “Sellers” or Insurers selling plans on through these exchanges must provide consumers with a detailed set of “essential benefits” that will be provide upon purchase.   The insurers will offer four levels of plans: bronze, silver, gold and platinum.  These plans will basically have the same essential services offered, but as they increase in both level and price, the plans will obviously differ in the premiums charged and the amount of the bill that the insurance will cover for patient services.   These levels of coverage make it so that most uninsured people will have options and hopefully be able to find coverage that suits their budgets.

Some percentages provided by the article/release of information by the federal government include: bronze plans paying 60% percent of covered medical expenses; silver plans paying 70% of covered medical expenses; gold plans paying 80% of covered medical expenses; and platinum plans paying 90% of covered medical expenses.

Who qualifies for the aid of federal subsidies and what will the subsidies assist with? According to this release, a family of four with income between $23,550 and $31,400 pays 2% of that income for coverage; a family of four with income between $70,650 and $94,200 pays 9.5%.  The federal subsidies will help selected enrollees pay their premiums based on their incomes.

With these federal subsidies, it is estimated that more than half of the current uninsured population could pay less than $100 a month per person for insurance coverage. 

The costs will obviously differ state-to-state, again depending on a patient/family’s income as well as where multiple insurers will be competing for business.   In states where one or two insurers are dominant, prices will generally be lower. All together there will be a total of 53 health plans offered by 8 different insurance companies in their local areas.

Consumers have until mid-December to enroll in plans that will be effective in January 2014, and until March 31 to enroll in plans effective later in the year.


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