About half the people who now buy their own health insurance– and potentially would face higher premiums next year under President Barack Obama’s health care law– would qualify for federal tax credits to offset rate shock, according to a new private study.
Many other people, however, earn too much money to be eligible for help, and could end up paying more.
The estimate, being released Wednesday by the nonpartisan Kaiser Family Foundation, tries to answer one of the biggest remaining questions about the impact of Obama’s law on American families: Will consumers wince – or even balk – when they see the premiums for the new plans?
The study found that 48 percent of families currently buying their own coverage would be eligible for tax credits next year, averaging $5,548 per family, or 66 percent of the average cost of a benchmark “silver” policy offered through new state insurance markets.
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People can enroll starting Oct. 1, and coverage becomes effective Jan. 1. Most people currently covered by employer plans are not affected.
The law is likely to increase the sticker price for individually purchased coverage next year for several reasons:
• Insurers will have to cover people with pre-existing medical conditions, whose needs are costlier to provide for.
• Policies must provide certain standard benefits, including prescription drugs, mental health and substance abuse treatment and rehabilitative services.
• Policyholders’ annual out-of-pocket costs will be capped.
So far, premiums reported by a number of individual states have been coming in lower than initially projected by the Congressional Budget Office. But they are higher – according to industry and consultants – than what people now typically pay for individual plans, which tend to be bare-bones coverage.
However, the law also will pump in billions of dollars in federal tax credits to help the uninsured pay premiums – and ease cost increases for many who are currently buying the skimpy individual policies. The money will go directly to the insurance plan, and policyholders will pay the difference – a discounted sticker price, in effect.
Those making between 100-400 percent of the federal poverty level – between $11,500 and $46,000 for an individual and $23,550 and $94,200 for a family of four – are eligible for some level of help. Families on the low end of the scale will pay 2 percent of their income for a benchmark plan, while those on the upper end will pay 9.5 percent.