Shopping for health insurance can trigger an incredible amount of stress and frustration. You have to deal with a wide variety of complex terms, as well as stay on top of the rapid changes written into healthcare legislation by the United States Congress. If you are in the market for health insurance, you probably have many questions to help you clarify the Affordable Care Act (ACA). Passed in 2010 and signed into law by President Obama, the ACA expanded health insurance options for millions of Americans.
One of the most common questions concerning the ACA is how much does health insurance cost? Although there is not a well-defined answer, you should learn about the factors that influence how much you pay for health insurance under the ACA.
What Factors Contribute to the Cost of Health Insurance?
Your monthly or annual premium is the amount of money you pay to purchase a health insurance policy. The value of your health insurance premium depends on several factors. The deductible, which is your out-of-pocket expense for medical care, plays a significant role in determining the cost of ACA health insurance. Health insurance companies allow policyholders to select a deductible that stays in effect for a designated period, which is typically 12 months. The higher your annual deductible, the lower your monthly or annual premium.
However, raising your deductible to reduce the cost of your monthly or annual premium comes with some risk. If you have to undergo a costly surgery, a higher deductible means you have to pay more out-of-pocket for the surgery. Policyholders that are younger and in good health are the best candidates to purchase a health insurance policy with a high annual deductible. Other out-of-pocket expenses for policies purchased under the ACA include copayments and coinsurance. A copayment, which is also called a copy, is a fixed amount of money that you pay after reaching the limit of your deductible. Coinsurance represents a percentage of the cost you have to pay for a covered health procedure.
Here are several other factors that determine the cost of an ACA health insurance plan:
- Family size
- The county where you live
- Household income
- Type of plan (Tiers)
- Subsidies and/or tax credits
How do Tiers Influence the Cost of ACA Health Insurance?
Participating in the ACA marketplace is a bit different than purchasing a health insurance policy on your own or through an employer’s network. ACA health insurance breaks down into four tiers, with each tier having an impact on how much you pay for health insurance. The Bronze ACA tier offers the lowest monthly premiums, but you have to pay more out-of-pocket to receive healthcare services. Silver offers the second-lowest monthly premium and gold offers the third-lowest monthly premium. If you choose a platinum ACA health insurance plan, you can expect to pay the highest premium for an ACA health insurance plan while paying the lowest amount of money for out-of-pocket expenses.
What Does the Data Say About the Cost Associated with an ACA Health Insurance Plan?
How much you pay for an ACA health insurance policy depends on which plan you choose. Detailed research conducted by the Kaiser Family Foundation (KFF) revealed several average annual costs. According to the KFF, a national analysis of marketplace plans for a 40-year-old policyholder discovered the average annual premium for a silver plan in 2022 is $438. The average annual premium for this type of plan does not account for subsidies.
The ACA underwent significant changes in 2021 because of the negative financial impact the COVID-19 pandemic had on the American economy. Under the American Rescue Plan Act of 2021, qualified Americans receive financial assistance to help defray the cost of an ACA health insurance plan. The much-needed financial assistance means four out of five Americans should find a health insurance policy that costs no more than $10 a month.
Revamping the ACA to account for the negative economic impact of the COVID-10 pandemic includes fully recovering the cost of any tier health insurance plan if an American generates income that is no more than 150 percent of the federal poverty level. Receiving a subsidy, which is also referred to as a tax credit, is based on your estimated income for one year of coverage.
Save Money By Comparing Health Insurance Plans
The ACA has evolved since 2010 when the United States Congress passed the historically significant health insurance law. Accessing the care that is provided by an ACA health insurance policy typically requires both upfront costs in the form of premiums and out-of-pocket costs that are associated with an annual deductible. The amount of the deductible chosen depends on your age, as well as the status of your health.
You also might qualify for a subsidy, if you meet the financial criteria established by the changes made to the ACA in 2021.
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