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Aug 28 2013

Biggest money saver in Obamacare

We talked a little bit about what an exchange is and how they will be used for enrollment into a healthcare policy after Jan 1, when the main parts of the Affordable Care Act kick in. There’s two important differences between those policies to come on the exchanges and those available now at private insurance companies. The first, they’ll be required to cover a lot more than they do now. We’ll talk more about that in future articles. What I want to show here is an actual calculator that can estimate what you would pay for one of those future policies as a function of your income. There’s a huge money saver embedded in this.

If you open the Kaiser Family Foundation page here, you should land on a premium calculator asking for estimated income and other criteria. Let’s use one person, no children, 51 years-old, making only $12,000 a year. As a non smoker the total premium would be $5629, but the out of pocket premium paid by the insured would only be $240 a year or twenty bucks a month. Which equals 2% of household income and covers 4% of the overall premium

The ACA covers the rest of that $5629 with a tax credit. The tax credit is advance-able, which means the insurance company you choose gets it right away or files for it somehow, point being your premium is reduced to twenty bucks a month or $240/yr from the get go. Again, keep in mind the coverage here is good, this is a real policy with copays and no riders for lifetime caps or preexisting conditions. There is some mention of caps alright; but the cap is on how the max you have to pay out of pocket, a typical cap would be about $1500 – $5000/yr, you won’t pay more than that for the entire year no matter how many procedures or copays (And I think premium might count but not sure). So as best I can tell, you could be 51 years-old and diagnosed with raging cancer on Dec 31, go online Jan 1, and sign up for a real policy that will really cover your cancer and anything else, for 20 bucks a month, and even including copays and deducts you would not exceed roughly $2250 for the entire year.

But notice, if that 51 year-old smokes, their out of pocket portion rises to $3054, which equals 25.45% of household income and covers 36% of the overall premium of $8443. That’s still good compared to what’s out there now — considering what you would get for that premium it’s beyond good, it’s healthcare Unobtanium — but $251 a month might not be so affordable for that worker making 12k. A premium of $240/yr on the other hand, is quite affordable. People my age and many ages will sign up for that, I think, if they know where to go and what to do.

If the Kaiser tool is accurate, and if I’m using it and reading it correctly, the biggest money saver for low income workers to get real health insurance, by leaps and bounds, will be to stop using tobacco. Tell your friends.

7 comments

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  1. 1
    Robert B.

    I wonder if e-cigarettes, with their smaller health risks, would count as “smoking”? I suspect not, since the fine print favors the phrase “uses tobacco,” rather than “uses nicotine.”

    In any case, the exchange and associated subsidies are “too late” for me, since I was lucky enough to get a job last year that offers insurance. I’ll still be able to go on the exchange, I suppose, but I’m not eligible for subsidies there so it probably won’t be worth it. The subsidies are coming through my job, which is what’s allowing such a small employer (less than twenty people on the payroll, many part time) to offer such a nice plan. I’m glad the parts of the program that help everyone else (and would have helped me a year ago) are finally coming through soon.

    Of course, the Republicans have made it abundantly clear that if they take back the government, Obamacare is out with yesterday’s trash. I wonder how that would fly with their low-income constituents after they’ve had two years to start relying on it?

  2. 2
    Randomfactor

    Wonder what the penalty would be for lying about not using tobacco? Since the reward appears to be so great…

  3. 3
    badgersdaughter

    What would make sense is if they offered smoking cessation for nothing. My husband, a recent immigrant from the UK, successfully stopped smoking a year ago because of a program offered by the NHS. Without patches, and regular checkups to get them and provide accountability, he could not have succeeded. His compliance is not perfect (he is still dependent on nicotine lozenges) and his cravings can be extreme, but he is doing very well, all things considered. I’m proud of him. But I know he couldn’t have done it if he hadn’t had access to such a program.

  4. 4
    Stephen "DarkSyde" Andrew

    That is a good idea Badger. I believe there will be some rebates or cost reduction available via wellness programs. These programs usually kick in at the individual policy level and my understanding is some policies will have them and some will not.

    All — I’m putting together a series of posts on this with organizing graphics for essays on Sunday Kos. If anyone knows an admin or doc office manager with some education on the ACA, I would love to correspond with them. My email is in the About the Author description on the left margin of this site.

  5. 5
    Hairy Chris, blah blah blah etc

    Randomfactor, I’d assume that if you were caught your insurance would be immediately revoked and you’d be fully liable for the costs.

    Not sure if this will also be criminal, or whether the provider would be able to sue you civilly. If it’s treated like benefits in the UK you can be criminally prosecuted for lying on an application and be liable for repaying anything overpaid.

  6. 6
    Trebuchet

    Silly, everyone knows the biggest savings from Obamacare will come from murdering old people. Meanwhile, I start on Medicare in a couple of days so I don’t think the ACA actually effects me that much!

  7. 7
    Stephen "DarkSyde" Andrew

    One of the most up in the air things is the Medicaid expansion portion of the ACA. Which provides the insured who is making below official poverty wages — less than ~$12000 — with Medicare basically. There’s a lot of room for red states to delay that and muck it all up even when it’s live.

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