Why your wallet may have to open wider for health insurance
As the government shutdown continues, Democrats are holding the line and demanding an extension of subsidies for people who rely on the Affordable Care Act for their health insurance.
And while people are bracing for increased health care costs, an analysis found that what health insurers on ACA Marketplaces are charging for coverage is set to increase next year. That amount is set to rise even more if pandemic-era enhanced subsidies are allowed to expire when 2025 ends unless Congress acts, according to KFF, a nonpartisan and nonprofit sources that provides facts and analysis on policy uses and public programs.
Those subsidies allowed more people to be eligible for the ACA.
“These enhanced premium tax credits did two things. They both increased the amount of tax credit for people who were previously eligible for the original formulation under the Affordable Care Act, but they also increased eligibility to those who are more middle income,” Matt McGough, a policy analyst for KFF, said.
He said for a family of four with an income of $125,000 a year, this would translate into payments more than twice what they’re contributing this year, which “will certainly be significant for a lot of people’s wallets.”
Actual amounts depend on several factors, including location, family size and income.
“Over the last few years. People have expected their health coverage to be a little bit cheaper. These enhanced premium tax credits have over doubled enrollment in the Affordable Care Act or Obamacare marketplaces — up to 24 million people this year. So, more people than ever are going to be seeing their health coverage cost increase,” McGough said.
But Joel White, president of the Council for Affordable Health Coverage, said most health insurance consumers will pay more whether they are obtaining it through the ACA or not.
“Regardless of the fate of the enhanced tax credits, I think most consumers will see probably higher premiums this year,” White said. It’s a result of rising health care costs.
“The cost of hospitals, doctors, drugs, primarily drive up those premiums. And then enhanced tax credits expiring have a more minimal impact. It’s about a third of the cost increase. Really it’s the cost of services that’s driving up those premiums.”
But White said the foundational credits will remain, even if the enhanced subsidies expire.
“The underlying credits that are available to people with incomes four times the poverty level and below are staying in place. Regardless of what Congress does, those subsidies that are going to pick up about 86% of the cost of the premium remain,” White said.
For that reason, White added that shopping around to find the best price is important.
And McGough said some customers may only see their payment amounts increase “by a dollar or two” each month. Again, depending on location, family size and income level.
McGough said during Open Enrollment, “Always shop for a lower cost option. See if there’s a plan that works for you and your family that is at a lower price. This could include going down to a bronze metal to your plan.”
Choosing such plans could lower the monthly premium but will increase other costs, from the deductible, out of pocket limit and co-payments for visits to the doctor.