Save money on your Obamacare health insurance coverage. The combination of the new federal tax subsidy and properly enrolling in the right plan, will provide quality medical benefits at the cheapest available price. You no longer have to meet underwriting guidelines to qualify, and affordable healthcare enrollment is easier than ever to obtain.
Free Subsidy Money
Understanding the Federal Government Marketplace subsidy and how to use it, is a great place to start. To qualify, your household income must be between 100% and 400% of the Federal Poverty Level. OK. So What are the magic numbers?
The graphic below (courtesy of CAHBA) shows the different income levels that will earn financial aid. For example, a household with four family members and an income above $95,000 will not qualify. However, a five-member household can earn about $110,000.
Even though this aid is classified as a tax credit, the actual money is deducted directly from your health insurance premium. Therefore, you do not have to wait to file your taxes in order to receive reimbursement. If you over-estimate your income when calculating the subsidy, the following year, an adjustment will be made. Likewise, if you underestimate the subsidy, a credit will be given.
Since all household members are considered, regardless if they are applying for coverage, obviously the larger the family, the bigger the subsidy will be. So if one spouse is retired and already receiving social security benefits (and Medicare), or they are covered under a group plan, it still benefits you when determining how much money you will receive.
Also, if you declare children as dependents on your tax return, even if they are over the age of 18 and not a full-time student, it will increase the amount of your "free money." However, income that your children earn may have to be counted in the subsidy calculation. Of course, typically, the amount of money they make is easily offset by your tax credit reimbursement.
The Hidden Silver Plan Gem
The Silver plan is one of four "Metal" policies available when you choose coverage. The others are Platinum, Gold and Bronze. A special "Catastrophic" option is available for persons under age 30. Any company that wants to participate in the Marketplace must offer consumers at least one Silver and Gold plan.
From an actuarial standpoint, Silver plans are expected to pay about 70% of your anticipated medical expenses. The remaining 30% consists of the deductible, copays, and coinsurance. Often the deductible is in the $3,500-$4,500 range and maximum family out-of-pocket expenses can be as much as $12,600 for a family.
But here's the "hidden gem." The Silver option is the only Metal policy with "cost-sharing." If your household income is below 250% of the Federal Poverty Level, than you can drastically reduce the deductible and copays. Here's an example:
Suppose you lived in Indianapolis and your family consisted of two adults in their late 40s and two teenagers. The household income was $47,000 and pre-existing conditions prevented you from qualifying for coverage prior to 2014. And you could not afford to pay a large deductible (such as $5,000) if you had a major claim.
The Anthem Silver Direct Access cbaa plan usually costs approximately $1,300 per month with a $3,500 deductible. But the subsidy "cost sharing" reduces the deductible down to $800 and the premium to only $344 per month. That's a savings of more than $11,000 per year and the deductible drops by more than 70%. If the income increases to $57,000, the subsidy is still more than $10,000 and the deductible also reduces.
Bronze Metal Plan Options
Bronze Exchange policies are often the least expensive policy you can purchase, unless your low income can qualify for a "catastrophic" plan. Why are Bronze options the cheapest? Because, actuarially, it is calculated that you will have to pay approximately 40% of your medical expenses out of your own pocket. Thus, as opposed to the 30% (Silver), 20% (Gold) or 10% (Platinum) contracts, your risk is higher.
But what if you had no serious medical issues and you were unlikely to incur enough expenses to even meet a smaller deductible such as $1,500 or $2,500. Of course, you would select a higher deductible (perhaps $3,500, $5,000 or higher), and pocket the savings. If a serious medical condition developed, each Open Enrollment you can choose to switch to a different policy, that may be more cost-effective in covering your new expenses.
That's the concept of the Bronze Metal plans. Your worst-case scenario is $6,350 of medical expenses (that's the law) that you are unlikely to incur. Therefore, why pay for benefits that you probably will not utilize? And since this type of plan is likely thousands of dollars less in premiums (family plans), you can pocket the difference as a reward for your good health.
In many states, the expansion of Medicaid has created many opportunities for low-income families to qualify for free healthcare benefits. The threshold for determining who qualifies (and who is denied) has changed, and Medicaid enrollments have increased in every state. Actual expansion and liberalization of eligibility guidelines has taken place in about 30 states.
The states that have not expanded (yet) would like to transfer the matching Medicaid funds so their state residents can purchase coverage through the Exchanges. It's not a bad idea, assuming the benefits provided equal or exceed coverage that would have normally been furnished. And since more doctors, specialists and hospitals would be made available, network coverage would increase.
Often, individuals or couples in their 50s and 60s will surprisingly qualify. It's also possible that the following year, your income may change, and you will be able to buy subsidized coverage through Exchanges. Since it's a fluid process, it's important to review choices before Open Enrollment each year.
Temporary medical plans are the least expensive type of coverage offered by the large reputable companies. They are typically used when there is a short-term gap in benefits. Often, these gaps are a result of job loss, graduating college and waiting for employment to begin, seasonal layoff from work, job termination or waiting for Medicare coverage to start.
Although extremely cheap, these policies are not Affordable Care Act-compliant, and therefore do not include all 10 required "essential health benefits." You can keep your policy for up to 12 months, but the benefits-paid cap is often between $250,000 and $1 million, and a deductible applies to all claims Pre-existing conditions are not covered. Young adults often use temporary coverage (details here), because of the low premiums.
But the rates are very affordable! Listed below are monthly rates for a UnitedHealthcare short-term (Value option) policy for 45 year-old male living in Columbus, Ohio. Naturally, prices are predominately based on age and zip code.
$56 -- $5,000 Deductible
$69 -- $2,500 Deductible
$91 -- $1,500 Deductible
$106 -- $1,000 Deductible
Short-term policies are often approved within 12-24 hours of the application submission and are quickly underwritten. Quite simply, there are about six medical questions (along with a few administrative questions). If you are able to answer all questions "no," you will be approved. Other major companies that offer competitive rates besides UnitedHealthcare include Blue Cross, Assurant, Companion Life, IHC Group, and HCC Life.
The cheapest Health Insurance Exchange rates will save you hundreds, or perhaps thousands of dollars, compared to more expensive plans you may currently have.Get your free quotes, compare quality plans and save!