[…] because it provides premiums for bronze-level plans as well as the standard silver-level (subsidies are calculated based on premiums for silver plans, and premiums that have been discussed in the media thus far have been almost entirely for silver plans). Healthy individuals and families who currently opt for higher deductible plans will be the ones who see the biggest change in premiums, since the ACA generally shifts plans towards richer benefits. So while benefits will be greater in the future, premiums will be too – and families who would rather have lower premiums and higher out-of-pocket exposure will be herded onto higher-priced, richer-benefit plans. Bronze-level plans will be their obvious choice, although even those plans will have richer benefits than many of the high deductible plans that are currently available in the individual market. Families and individuals who prefer richer benefits already will find that their premium changes are not as dramatic, since they will likely end up with an ACA-compliant plan that is more similar in design to what they currently buy (they will be more likely to opt for silver or gold plans).
I’m using a family of four modeled after my own family so that I can compare premiums with what we pay now. Our current plan is $403/month for two adults (mid/late 30s) and two small children. That’s $4836 per year, and we spend an additional $540 per year on an accident supplement that would cover most of our out-of-pocket exposure if we were to have a claim because of an injury.
According to the KFF subsidy calculator, a bronze plan for our family would cost $9330/year – almost double what we pay now. The benefits would be richer than what we have now (more in line with HSA-qualified plans, which we’ve opted not to have anymore because of their higher cost), but the premiums will be significantly higher too. Of course we have to assume that even if the ACA had not passed, our premiums would continue to increase each year. Over the last several years, premiums in the individual market in Colorado have increased for most of our clients by double digits most years, so we can safely assume that we’d probably have had at least a $500/year premium increase next year anyway. But that’s not even close to the 93% increase to the bronze level premium for an ACA-compliant plan.
Those numbers don’t take subsidies into account though. The $9330 is the base price for a bronze plan for a family similar to ours. The actual amount the family will pay in premiums depends entirely on the family’s modified adjusted gross income (MAGI). Here are the premium amounts that the family would pay for a bronze plan at various income levels, assuming that they purchase their coverage through their state’s exchange and take advantage of the available subsidy:
- $40,000 annual income: Bronze plan premium = $38/year (subsidy pays $9292)
- $50,000 annual income: Bronze plan premium = $1438/year (subsidy pays $7892)
- $60,000 annual income: Bronze plan premium = $2986/year (subsidy pays $6344)
- $70,000 annual income: Bronze plan premium = $4667/year (subsidy pays $4663)
- $80,000 annual income: Bronze plan premium = $5673/year (subsidy pays $3657)
- $90,000 annual income: Bronze plan premium = $6623/year (subsidy pays $2707)
- $95,000 annual income (and above): Bronze plan premium = $9330/year, with no subsidy.
The estimated median income for FY 2013 for four-person households in the US is $74,964 (note that this is higher than the overall estimated median household income, because it’s specific to four-person households, which often include two working parents and people who are further along in their careers, as opposed to people who have just finished school and entered the workforce for the first time). And keep in mind the math[…]