Interested in Obamacare, but afraid the premiums will be expensive? Here’s some great news. Obamacare, a common name for Affordable Care Act (ACA) plans available through the Health Insurance Marketplace, are very affordable—96% of people who enrolled through HealthSherpa during the 2021 Open Enrollment have qualified for financial help. High quality health insurance is affordable and accessible thanks to a number of guaranteed cost-saving measures.
In 2020, the second-lowest cost Silver, also known as a Benchmark, Marketplace plan cost $462/mo for an individual. That amount dropped to $452/mo in 2021.
But because Obamacare plans have generous income-based subsidies, the sticker price doesn’t tell the full story. 96% of all HealthSherpa enrollees qualified for some kind of subsidy, on average saving over $650/month, making the average monthly premiums only $51/month.
And almost 20% of all HealthSherpa users accessed fully subsidized, $0/month plans.
What Obamacare costs will depend on your age, location, household size, and income. If you use tobacco products, your monthly premiums will cost more. The type of plan (and metal-level of plan) you choose from the Marketplace will also impact cost.
These are the only factors that are allowed to influence costs—the Affordable Care Act mandated that plans could not charge more based on gender.
You can learn more about what individual Marketplace premiums have looked like by metal tier and by state over the past few years here.
If you make between 100 and 400 percent of the Federal Poverty Level, you’ll be eligible for subsidies for your Marketplace insurance. This means you will get additional savings that reduce your monthly premium amounts for your Obamacare plan. There are two types of health insurance subsidies: premium tax credits and cost-sharing reductions.
Premium tax credits help make Marketplace insurance more affordable. You can have this credit applied monthly to reduce your monthly premium costs. Or, you can opt to have this amount credited back to you at the end of the year in full when you complete your annual tax return. The amount a person receives in premium tax credits depends on their annual income and household size. You can use a premium tax credit for any metal-tier Marketplace plan.
Cost-sharing reductions are “extra savings” that apply only to those who enroll in a Silver-tier plan. These extra savings lower the amount a person has to pay for deductibles, copayments, and coinsurance. If you qualify for cost-sharing reductions, you’ll also have a lower out-of-pocket maximum.
In 2019, the Kaiser Family Foundation found there was an average annual deductible of $6,258 for Bronze Marketplace plans. That same year saw average annual deductibles of $4,375 for Silver plans and $1,335 for Gold plans. Platinum plans had average annual deductibles of $48. Each of these are for plans that had combined medical and prescription drug deductibles.
The average annual medical deductibles for plans with separate medical and prescription drug deductibles in 2019 were $5,977 for a Bronze plan, $4,043 for a Silver plan, $1,581 for a Gold plan and $365 for a Platinum plan.
Combined medical and prescription drug deductible-plans also had these annual out-of-pocket maximums in 2019: $7,374 for Bronze plans, $5,885 for Silver plans, $2,200 for Gold plans, and $1073 for Platinum plans.
Keep in mind that all Marketplace plans are grouped into one of four of these metal tiers: Bronze, Silver, Gold and Platinum. Plans are assigned to each of these groups based on what’s known as their “actuarial value.” “Actuarial value” is just another way of describing the average amount that a given plan covers for healthcare for a typical group of enrollees. Bronze plans have an actuarial value of 60%. For Silver plans, the actuarial value is 70%. The actuarial value for Gold plans is 80% and for Platinum plans is 90%. In simplest terms, the higher the actuarial value, the higher your monthly premiums will be. However, should you find yourself needing a great deal of medical care in a given medical year, those higher premiums will result in more cost-savings, as your plan will pay out and cover more of your healthcare costs.
Grab our guide to metal tiers here to learn more.
When you shop the Marketplace through HealthCare.gov or HealthSherpa, you’ll have the ability to instantly see if you qualify for savings. These subsidies and cost-savings measures help make Obamacare affordable and accessible for Americans looking for quality healthcare, regardless of the status of any employer-provided benefits.
You can shop for plans and see how much of a subsidy you qualify for with HealthSherpa.