Americans are diligently shopping for ACA plans with just a few days left for the open enrollment period to end. The biggest concern for the people is the cost of health insurance, which primarily depends on five factors, age, income, family, size, location, and the type of plan they choose. Besides these factors, the price of these plans may also vary due to the subsidies that the Affordable Care Act provides for middle-income individuals, families, and small businesses. The Affordable Care Act also expands free Medicaid for low-income households and taxes higher-income businesses that don’t provide health benefits to their employees.
The cost of the ACA plans primarily depends on the category of the plan chosen by the people, as all the ACA plans fall into one of four categories and offer the same ten essential health benefits. The four categories of the ACA plans include:
The Bronze category of ACA plans have the lowest premiums of all metallic categories but pay only 60% of the health care cost incurred by the individuals. Thus, individuals who don’t have many health issues and who don’t expect a lot of medical bills should opt for this plan. This category of the plan is best for individuals whose main objective is to financially protect themselves from the high cost of a serious illness or injury by paying a modest premium. Individuals will have to pay for much of their regular medical care, though the plans pay for the preventive care irrespective of whether the deductible is met or not. In 2020, the national average premium of the Bronze plan for a single is $448 per month and for a family is $1,041 per month.
Silver plans have higher premiums compared to the Bronze plans and pay 70% of the covered medical costs. Individuals who can afford a slightly higher premium should opt for a Silver plan, as 70% of their healthcare cost will be covered. In 2020, the national average Silver plan premium for a single is $483 per month and for a family, it is $1,212 per month.
A Gold plan is perfect for individuals who are willing to pay a higher monthly premium to get more healthcare coverage from their insurer. A Gold plan is ideal for individuals who require frequent or extensive medical care, as 80% of the healthcare costs will be covered by their insurers. Gold plans have higher premiums than Silver and Bronze plans and pay for more medical care expenses. In 2020, the national average premium of the Gold plan for a single is $569 and for a family is $1,437 per month.
Platinum plans have the highest monthly premium compared to other categories of plans and offer more coverage for ongoing health care. A Platinum plan is a good choice for individuals who need to frequently visit doctors for serious health issues and can afford high monthly premiums. The average Platinum plan premium in 2020 for an individual is $732 per month for a family is $1,610 per month.
The plans in each metal-category allow people to compare premiums, deductibles, copays, and annual out-of-pocket maximums. There is a lot of variations even within the plans of the same category. People should know that may end up paying more for their medical expenses with a plan having the lowest premium and highest deductible if they become sick compared to a health plan with a higher premium but lower deductible. Therefore, while estimating the actual health care costs, people should try to obtain a health plan that helps them to reduce the total cost of the plan.
Besides the metal-category, the second aspect on which the cost of health insurance depends is the individual’s age. Health insurance carriers are allowed to charge higher monthly premiums for older people, however, they are restricted to charge more than thrice the premium amount for younger individuals. The third aspect that affects the cost of health insurance is the place where people live. The cost of health insurance is higher in some cities compared to others. The fourth aspect that affects the price of health insurance is a person’s income and the fifth aspect affecting the price of the health insurance is the size of family.
Some of the Other Factors that Impact Health Insurance Costs
The health insurance cost is determined by certain factors set by law, though states can limit the degree to which these factors can affect the price. For instance, states like New York and California don’t allow health insurers to differ plan costs based on people’s tobacco use habits. However, some of the factors that affect health insurance costs include:
The cost of a health insurance plan is set according to an individual’s age, and the price of the plan increases as the individual gets older. The cost of the health plan for children up to the age of 14 will cost a flat rate but from the age of 15, the price of the health insurance plan starts increasing annually.
Place of living
health insurance carriers set the price of the health insurance plans based on the state and county where applicants live. Thus, the price of health insurance plans varies from one area to another. For instance, a residence of Miami-Dade County in Florida may pay a lower price for the same policy than a resident of Jackson County.
Smoking or Using Tobacco
Individuals who smoke or use tobacco may pay up to 50% higher prices for health insurance plans compared to people who don’t smoke and use tobacco. Though, the maximum increase in price is determined by the state.
The Number of people insured under the plan
The cost of a health insurance plan is also determined based on the number of people covered under the plan. For instance, the cost of the monthly premium of a health insurance plan for a family of four, with two adults and two children will be much higher than the monthly premium of the plan of an individual.
Subsidy for Low-Income Individuals
Individuals earning 400% or less of the federal poverty level will receive a subsidy from the government. People need to understand how the subsidy works. If a single individual is earning $47,520, which is nearly 400% of the poverty level then that person won’t pay more than 9.78% or $4,647.46 of his/her income a year, for the second-lowest Silver plan. The subsidy amount is the cost of the plan minus $4,647.46. Thus, if the cost of the is $5,000, then the subsidy will be $352.44.4. The subsidies amount for the ACA plans are based on the cost of the second-lowest Silver plan. So the subsidy amount will remain the same, irrespective of the plan individuals buy.
How Much the Health Insurance will Cost for Individuals of different Income Groups?
Individuals earning Less than $16,753 or less than $34,638 for a family of four
Individuals earning Less than $16,753 or less than $34,638 for a family of four
If a person income is 138% or less of the federal poverty level, then he or she qualifies for expanded Medicaid and ACA plans will be available at zero costs. However, if an individual lives in a state that has not expanded Medicaid and so unable to obtain this plan, then he/she won’t have to pay the tax for not having health insurance, and if he doesn’t pay taxes due to extremely low income then he will be exempted from the tax. The person will be eligible to apply for the health insurance on the exchange and that person won’t pay more than 2.06% of his income for a Silver Plan.
Individuals earning less than $48,560 or less than $100,400 for a family of four
If a person income is under 400% of the poverty level, then he doesn’t have to pay more than 9.78% of his income for the Silver Plan. The subsidy amount for this person will be the cost of the second lowest Silver Plan minus 9.78% of his income.
Individuals not having health insurance or who is planning to didn’t have insurance
If a person remains uninsured for three months or more, then he will owe an additional 2.5% of his adjusted gross income as income tax. However, the Trump Administration has directed the Internal Revenue Service to ignore this requirement and not assess the tax and it has been repealed in 2019. Even though individuals don’t have to pay the tax, still they should have at least catastrophic plan because the average emergency room visit is $1,389.10.
Individuals having Health Insurance
The health insurance costs stay the same but still individuals having health plan may obtain a better ACA health plan for lower costs. The health insurance cost are rising on average 3%-4% a year despite of the availability of the ACA plans, so the health insurance companies are increasing their price to cover their profit margins. Thus, the health insurance cost will continue to rise.
Individuals earning more than $200,000 or married couples earning $250,000
Individuals making more than $200,000 a year or married couples earning $250,000 are required to pay the following additional investment taxes:
Average Health Insurance Price by Plan-Type
The price of the health insurance plans also depends upon the type of the health plan and the type of network the plan uses. For instance, HMO plans are most restrictive in terms of doctors members can see and what they must do to see them. This allows health insurers to save on member’s cost of care and thus they provide HMO plans on lower monthly premiums. The average monthly premium of all types of individual plans for 2021 for a 40-year-old applicant are shown in the table given below:
|Plan Type||2021 Monthly Premium|
The Average Health Insurance Cost for 2021 in all the States
The table given below shows the average rate of individual health plan in all the states of the U.S. that a 40-year-old would pay in the year 2021.
|State||2021 Average Cost of Health Plan|