Unless you qualify for an exception, beginning in 2014, the new law will require you to obtain a health insurance plan. For the first two years, state governments will have the power to dictate most of the benefits the plans must include. Beyond that point, the benefits will probably be mandated under federal law. In all likelihood, this new mandatory coverage will be more extensive and more costly than the insurance you currently have. The typical coverage in 2016, for example, will average about $5,800 (individual) and $15,200 (for a family of four), according to the Congressional Budget Office.
Your Share of the Cost in the Exchange
The out-of-pocket premium you pay will be no more than 3 percent if your income is at the poverty level (currently $14,404 for an individual and $29,327 for a family of four), rising to 9.5 percent of income at 400 percent of poverty (currently $43,320 for an individual and $88,200 for a family). However, if you earn above that level, you may have to pay the full premium yourself. Your subsidy will be based on income from up to two years earlier, based on your income tax return. If it is later discovered that you received a larger subsidy than you are qualified for, you will have to reimburse the government for a portion of the subsidy received in error.
Your Share of the Premium at Work
If your income is less than 400 percent of poverty, your share of the premium will be limited to no more than 9.5 percent of your income. Otherwise, the insurance will be judged to be unaffordable, and you will be entitled to subsidized insurance in a health insurance exchange. There is a big difference between the limits in the exchange and the limits at work, however. In the exchange, your share of the premium will be kept low by a refundable tax credit—a gift from the government that will pay the remaining premium expenses. But, in general, there will be no new subsidies for employer coverage. So if your employer is required to reduce the amount of the premium you pay at work, the extra cost to your employer will have to be made up by reducing other compensation (cash wages and other benefits). In the exchange, someone else (the government) pays to keep your premium low, but at work it’s likely that you will pay.
- Many individuals may choose health plans that are less comprehensive than the average plans sold in the exchange. The CBO estimates the minimum (bronze) plan sold in the exchange will cost individuals between $4,500 and $5,000 (family plans from $12,000 to $12,500). See “Premiums for Bronze Plan—Letter to Honorable Olympia Snowe,” Congressional Budget Office, January 11, 2010, http://www.cbo.gov/publication/41891. The actual cost will vary by plan design, region, and age of applicant.