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Wednesday, Sept. 18, 2013

Understanding Obamacare: Insurance You Can Afford

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Question: How does the Affordable Care Act ensure that insurance plans are affordable?

Answer: The Affordable Care Act has a variety of ways to make sure that everyone has access to affordable coverage. First, the law prohibits insurance companies from price gouging people with pre-existing conditions, older consumers and women. The law also provides for more transparency and accountability from insurance companies. When consumers can truly compare apples to apples, companies will compete for customers with better products and better prices.

Obamacare also offers tax credits or subsidies based on an individual’s or family’s income. The role of these tax credits is to make sure that no matter one’s income, health coverage will only be a small percent of their yearly income. Who qualifies? Anyone who makes $45,960 as an individual, or $94,200 as a family of four, in 2013 dollars.  

That will become clearer after Oct. 1, when consumers will be able to view their insurance options on the new marketplace and will see if they qualify for a tax credit to bring down the cost of their health coverage. Insurance policies will fall into bronze, silver, gold or platinum plans based on their quality and cost.

The Obamacare tax credits are immediately reflected in the price consumers pay, not an end-of-the-year rebate. The Kaiser Family Foundation reports that nearly half of consumers on the new health insurance marketplaces will receive tax credits, which will on average reduce the sticker price of a family plan at the silver level by 32% (or $2,672). The subsidies would reduce the cost of a bronze plan by 77%.

Obamacare’s combination of greater insurance policy transparency, non-discriminatory pricing, increased competition in the insurance market and tax credits will ensure everyone has the freedom to pursue the American Dream and not be constrained by health care.

—Kevin Kane, Citizen Action of Wisconsin

The Shepherd Express and Citizen Action of Wisconsin will answer questions about the Affordable Care Act in weeks leading up to its implementation. Got a question? Email editor@shepex.com.

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