Answer Part 1: Your income falls just enough above the Federal Poverty Line to not qualify you for any sort of financial assistance.
Answer Part 2: Your premium now reflects the fact Insurance Companies can no longer say “No.”
The Affordable Care Act is, unfortunately, a misleading name for many.
A great majority of customers I speak with are shocked when I show them Obamacare premiums for their families. If they’re lucky, their income falls just enough above the Federal Poverty Level (FPL) to qualify for premium and/or out of pocket assistance.
But for many, it doesn’t. They make a decent income (not filthy rich mind you), but just enough above the FPL to NOT qualify for any sort of financial assistance. And that’s really the tragedy, in my opinion. Not only could they not afford it before, but they really can’t afford it now, when premiums are typically higher.
So, that gets us to the fundamental question: Why are Obamacare Insurance premiums actually higher in many instances? Why is it more costly for many?
Here’s just a few reasons:
- Health insurance companies can no longer say no to anyone who applies.
- Health insurance companies are extremely limited in how much premium can be charged based on age and smoking status.
- There are many types of services now mandated, where before they were excluded.
- There are a variety of fees now added to the premium- these fees are what’s helping finance Obamacare.
The foundation of any type of insurance is underwriting. Underwriting simply means the insurance company looks at a risk and based on what they see and how it falls in comparison to pre-established guidelines, they determine the premium that should be charged. When you can no longer do that and have to take everyone, then they know that they’ll be paying claims right off the bat and rate stability has gone out the window.
The above points are explained in greater detail in my prior post Obamacare Basics Part 1- What It Means for You, so take a read to get the basics.
Here’s premiums for me pre and post-Obamacare that will really illustrate “affordability” or lack thereof
What you’ll see are two quotes for me. The plans I’m comparing are pretty similar in structure, although not exactly the same. It just doesn’t exist. The three most important items you’ll want to pay attention to are the deductible, out of pocket amount and premium. The company is the same- Anthem Blue Cross and Blue Shield.
A note: There is no out-of-pocket for this plan. The deductible is it.
Notes: Deductible is higher ($3,000). Out of pocket is higher ($3,750). Note the additional fees mentioned earlier. About $20 worth (in case it’s hard to read). Obamacare mandates a lot of fees to the insurance companies. These fees are obviously passed on to the consumer. This is an Off-Exchange plan as well. I don’t qualify for financial assistance so there’s no reason to seek out an exchange plan. An earlier post “On-Exchange or Off-Exchange? How to Choose the Right Obamacare Plan” will help guide you as to which is the best choice for you.
. Here’s what I’ve learned in the past few months. The quotes I provide above just help cement the lessons.
- “Affordability” is a relative term.
- The Affordable Care Act is really designed to help the people at the bottom of the income spectrum. Making too much money for Medicaid, but just above the Federal Poverty Level (FPL).
- Those at the lower end of the spectrum may qualify for no or low-premium, no or low-deductible plans, which helps meet the administration’s objective of getting people insured.
- The further away from the FPL you are, the less help you’ll get.
- So those “in the middle” of the income spectrum who struggled with premiums before will probably have the same struggles. And when premiums are more than before, the struggles will be magnified.