Study: Half in Individual Market Will Qualify for ACA Subsidies in 2014

Nearly half of all U.S. residents who currently purchase their own health insurance will be eligible for federal subsidies to offset the cost of buying coverage through the Affordable Care Act's health insurance exchanges in 2014, according to a study released Wednesday by the Kaiser Family Foundation, Kaiser Health News' "Capsules" reports (Appleby, "Capsules," Kaiser Health News, 8/14).

Background

Under the ACA, U.S. residents with annual incomes between 100% and 400% 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 federal subsidies to help offset the cost of purchasing coverage on the exchanges (Alonso-Zaldivar, AP/Sacramento Bee, 8/14). Subsidies will not be available to those offered affordable and comprehensive coverage through their employers or those on government health programs, such as Medicaid ("Capsules," Kaiser Health News, 8/14).

Study Details

For the study, KFF researchers used the Congressional Budget Office's estimate of an average premium for the second-lowest cost silver plan available through the exchanges in 2016 (CQ HealthBeat, 8/14). The researchers did not include those groups that are ineligible for subsidies in their estimates.

The analysis found that about 48% of U.S. residents who currently purchase coverage in the individual market will be eligible for subsidies in 2014 ("Capsules," Kaiser Health News, 8/14). The researchers estimated that federal subsidies for individuals would average $2,672, covering an average of 32% of the costs of a silver plan on the exchange.  For families, subsidies would average $5,548 and cover 66% of the premium costs for such a plan (CQ HealthBeat, 8/14).

The researchers also estimated that the national benchmark premium for a 40-year-old individual in 2014 will average $3,857 annually, while the average cost of family coverage will be $8,250.

However, the authors cautioned that it is difficult to determine exactly how much U.S. residents will be paying for coverage through the exchanges because subsidy amounts will vary based on several factors, including:

  • Age;
  • Income;
  • Place of residence; and
  • The type of policy chosen.

For example, subsidies will be provided on a sliding scale based on household income. Those on the lowest end of the income scale will be responsible for just 2% of their household income toward the premium, while those with higher incomes will pay 9.5%. According to "Capsules," no subsidy will be greater than the amount of the premium ("Capsules," Kaiser Health News, 8/14).

Further, the authors wrote, "Premiums before and after the law goes into effect are not necessarily comparable as health plans in the new marketplaces will be required to cover a broader range of services than are found in many current individual market policies."

They added that the health needs of those insured also will likely affect premium prices because insurers no longer will be able to deny coverage to individuals with pre-existing conditions, resulting in a pool with more costly health conditions (CQ HealthBeat, 8/14). 


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