It will cost between 2% and 9.5% of your income – after cost assistance – when you get Obamacare. Essentially, if you belong to the low-to-middle income class and search for coverage using the health insurance marketplace, then you can avail of cost assistance.
When the first open enrollment period for Obamacare started, the average premium of a plan was $82 due to cost assistance. In fact, one in six Americans can get a plan on the marketplace for $100 or less. Also, in 2015, 87% of people who chose their plans on the marketplace received financial assistance.
The cost assistance afforded to you depends on how much you make. Basically, it includes premium tax credits (meant to lower monthly premiums) and cost-sharing reduction subsidies which reduce out-of-pocket costs, including co-pays, co-insurance, deductibles and out-of-pocket maximums.
All in all, health insurance companies determine how much you spend on Obamacare on certain factors such as location, family size and income, age and what type of plan you chose.
Obamacare: Plan Types
You can choose from four different plan types when you get Obamacare through the marketplace. There’s Bronze, Silver, Gold and Platinum. Given that they are named after metals, their value depends on which metal they are named after. Basically, a Gold plan is better than a Bronze one while the Platinum plan is the highest standard. Also, the better the plan gets, the higher the premium but the out-of-pocket costs get lower as well.
These are the cheapest plans. Employer plans as well as non-catastrophic marketplace plans should at least provide plans with bronze value. The most basic benefits, as well as a limited network of doctors and hospitals are provided in a Bronze Plan.
Given that only 60% of medical costs are covered by this plan, it is better suited for those who don’t intend to use a lot of medical services. A lot of Americans who earn a low income qualify for this kind of plan. However, it doesn’t qualify a buyer for cost-sharing reduction subsidies.
These plans are called “the marketplace standard” because your premium cap becomes lower the lesser you make. Buying this plan won’t cost you more than 9.5% of your income if you earn less than 400% of the federal poverty level (FPL). Although the premiums with this kind of plan are higher than those of a Bronze one, it does pay 70% of your medical costs.
This plan makes good sense for individuals and families who can access marketplace subsidies, particularly CSR subsidies.
A Gold Plan costs more than a Bronze or Silver, but it does come with benefits such as lower deductibles and better out-of-pocket cost-sharing coverage. As such, people don’t need to be concerned about costs when their family needs a certain level of care.
This kind of plan covers 80% of medical costs, and as mentioned earlier, comes with higher premiums. That said, it is a better choice for those who cannot get CSR subsidies but need the low deductible and the rich networks provided by such a plan.
This is the highest-level plan and it offers the lowest out-of-pocket costs but does have the highest monthly premiums. Overall, this plan covers 90% of your medical expenses. As such, this plan is best suited for those who have a chronic health condition.
Basically, the Platinum Plan is geared towards those who want the best coverage possible for them and for their family. It is a smart plan to choose when either you or your family members are most likely to avail of costly health services.
The Catastrophic Coverage
If you are under 30 or are qualified for hardship exemptions, then you can avail of a catastrophic coverage. Basically, this kind of plans covers the minimum health benefits as well as a very limited network. What happens is that your out-of-pocket costs will be significantly higher as will your deductible.
However, the plan does protect you in case you run into a worst case scenario. With Obamacare, you need to pay up in case you don’t have health coverage. But with this kind of plan, you can avoid that situation altogether. Then again, if you get this type of plan, most of your medical costs will definitely be out-of-pocket.
Other Factors that Determine Obamacare Costs
Apart from the type of plan you choose, there are other factors that determine how much Obamacare will cost you.
The older you are, the higher health insurance companies can charge you for premiums. Then again, these companies can’t charge you three times what they charge younger people.
Where you live is a factor in how much you pay for Obamacare. Why is that the case? Cost of living, which includes health care, varies depending in which area you call home.
Income & Family Size
Earning 400% or less of the FPL entitles you to a subsidy. This simply means that you won’t pay more than 9.5% of your income. So if you earn $46,680, you won’t pay more than $4,435 each year for Obamacare. Your subsidy is the cost of the plan deducted from $4,435. For example, a plan worth $5,000 will get you a $565 subsidy.
Getting the Best Plan
To get the best plan for you, make sure you understand the following:
- your estimated income
- your medical needs and costs for the next year
- the doctors you’ll need and the drugs you need to take
- how much you can pay in an emergency
The Bottom Line
There are different factors that determine how much you will have to pay for Obamacare. There are four different kinds of plans which are named after the most popular metals (Bronze, Silver, Gold and Platinum) and each vary in the quality that they offer. So you have to carefully look at what each provides before you make a decision.
The best time to calculate costs is during open enrollment. But since that’s only available for a few months in a year, those who are still planning on getting Obamacare can make use of Obamacare cost calculators like the one provided by the Kaiser Foundation.