This article was last updated on November 2017
The Affordable Care Act seeks to help people gain access to better and more cost-effective health insurance, a task that the new law has been steadily accomplishing for millions of Americans since the marketplaces opened in 2013. As insurers joined the health insurance exchange sites and started offering more plans, prices dropped in many areas while competition soared. That was then, a pleasant distant memory. Fast forward to today, and many carriers have exited the exchanges and competition has decreased dramatically. In some counties within the United States, there is only one insurance carrier option available. In some states, the average premium increase is up by double digits. And nationwide, average premiums for 2018 are expected to jump by about 30 percent. See our database of 2018 Obamacare Rates for more detailed information by state.
Unfortunately, premium hikes for 2018 may leave enrollees wondering where their “affordable” coverage went.
While these significant price increases will affect many consumers, it’s important to note that subsidies will still be available to offset the cost of coverage for about 85 percent of marketplace enrollees. Don't take the sensational headlines about 70 percent price increases you see in news reports as fact. All news media reports on the extreme cases, not the averages. We strongly advise that you price available plans and if you have questions, speak only with a licensed health insurance agent who can legally provide you with information.
Update: You Can Use the Form Below To Get Actual Updated Price Estimates For 2018
Obamacare Costs In 2018 - Reasons for the Sudden Spike
Premium rates typically increase each year due to a number of factors, including inflation and enrollee participation. The problem for many insurers over the past five enrollment seasons of Obamacare has been figuring out just how much healthcare new enrollees would use. With little data available, some insurers may have undercut initial pricing.
It turns out that people who sign up for health insurance on a marketplace typically use more medical services than people with job-based insurance plans according to one Blue Cross Blue Shield licensee. This may be because many marketplace enrollees had no health insurance before the ACA took effect. As a result, they’re seeking medical services for the first time and need greater care. An upswing in hospital visits, specialty prescriptions and trips to the emergency room also contribute to price increases.
Insurance companies have to estimate each year what the cost of coverage will be from their end. In other words, they have to ask how much it will cost them to insure the beneficiary pool. Taking into account factors like health status, age, frequency of use and potential for future care, insurers must set rates that both cover their enrollees and generate a profit. Under the ACA, insurance companies have until June 1 of each year to submit proposed rate changes that top 10 percent. They submit their proposals to state or federal legislators for review.
Average Premium Increases for 2018
This year also came with some heavy political baggage as the signup season got underway, and the Trump administration has done a lot to undermine 2018 open enrollment. A summer spent waffling over healthcare law and creating mass confusion about the future of health insurance options in America, combined with direct and indirect actions by the current administration, have contributed to skyrocketing premiums -- especially for people who don’t qualify for premium subsidies on the ACA marketplaces.
The Trump administration slashed the advertising budget for this year (down to 10 percent from its original allotment); cut funding for the navigator program, which helps people understand their options and enroll; and, most significant to this discussion, decided to not reimburse insurance companies for cost-sharing reductions they allow for low-income customers.
This last point -- the refusal to make CSR payments as outlined under Obamacare -- has been a solid source of contention since President Trump took office. Legally, the administration has a right to deny these payments since they were ruled unconstitutional last year when challenged by Republicans. However, that court decision was on appeal, and the administration could have continued with the appeal. It didn’t. Instead, Trump decided not to make the payments, forcing insurers to set their rates higher than normal since they still must legally offer cost-sharing reductions to their lowest-income customers.
All that to say that health insurance costs for 2018 are higher than they might have been otherwise. Rates were likely to increase anyway due to lack of competition on the market and not enough healthy people enrolling, but key actions by the current administration certainly haven’t helped.
Obamacare created four tiers of standard major medical coverage: bronze, silver, gold and platinum. Silver plans are used as benchmarks to set cost assistance levels for people who qualify. In 2018, costs will rise across all plan types, but silver plans will see the biggest jump because these are the ones that people must buy to get cost-sharing reductions. Insurers have priced them accordingly knowing that they won’t be getting reimbursed by the government for cutting their rates.
For the 2018 plan year, bronze plans -- which have been expanded in terms of actuarial value so that lower-cost plans could be added with slightly lower levels of coverage -- will increase by about 21-22 percent depending on whether you get a standard bronze plan or one of the expanded ones. For a single, 30-year-old nonsmoker with a standard bronze plan, the average 2018 premium will be about $379 a month. The average deductible for a standard bronze plan in 2018 will be $5,861, and the out-of-pocket maximum (the most you’ll pay for covered medical expenses in the plan year) averages to $6,953.
The news is worse for people with silver plans, especially those who don’t qualify for cost-saving subsidies. Silver plans will increase by over 30 percent in 2018. A single, 30-year-old nonsmoker will pay nearly $478 a month for silver-level coverage next year. Deductibles are also increasing for silver plans, by about 13 percent. That same person with a silver plan would face a deductible of about $4,033 and a yearly out-of-pocket cap of about $6,863 for 2018.
While premium rates are increasing across all tiers for 2018, gold plans will see the lowest increase at about 17 percent. Our single, 30-year-old nonsmoker will pay about $545 a month for gold-level coverage in 2018. The average deductible for gold plans next year is $1,320 with an annual out-of-pocket maximum of $5,878.
Platinum plans, which aren’t offered consistently on the marketplace and are the most expensive when it comes to premiums, cover the most in terms of cost sharing. For 2018, platinum plans will see an increase of about 23 percent. A single, 30-year-old nonsmoker can expect to pay around $682 a month for platinum coverage with a $286 deductible and an annual out-of-pocket cap of $2,269.
Subsidized vs. Private Plans
Most consumers won’t be affected by the higher rates since about 85 percent of people who enroll in a marketplace plan receive subsidies to offset the cost of premiums. Subsidized plans aren’t exempt from price increases, but the tax credits that make these plans affordable should keep them affordable for most people. The real issue will be for people who buy insurance directly through a carrier and don’t qualify for subsidies.
Keeping Costs in Check
Companies must submit rate changes by June 1 every year, but state and federal legislators have a chance to review, modify and deny requests that they feel are unjustified. Insurance commissioners can’t price an insurance company out of the market, but they can work with individual companies to make sure that rates represent a fair estimate of doing business. In an effort to keep consumers informed on rate increases of more than 10 percent, the government offers a convenient tracker that allows you to search by state and insurer.
Shopping for Better Deals
What can you do to prevent a substantial price hike for yourself or your family? Shop the marketplace. The annual enrollment period for 2018 started on November 1 and runs through December 15, leaving just six weeks to sign up. The downside is that final rates for many insurers aren’t released until the fall, just before the marketplaces open for business. That means that you won’t have much time to adjust to potential sticker shock before it’s time to re-enroll for 2017. However, you can still compare plans in your area, talk to an independent broker or speak directly with your insurer about available coverage.
Health care officials have urged people since the second open enrollment period to shop around for insurance plans because rates usually increase each year. Plus, your plan may not offer the same level of coverage that it did before. All ACA-compliant plans cover 10 essential benefits and afford consumers the same rights and protections, but not every plan is created equal in terms of premiums, co-payments, coinsurance or deductibles. To make sure that you’re getting the best deal, use the next open enrollment period to compare the costs.
Average Increases and Insurer Withdrawals for 2017
Premiums will increase across all tier levels for the 2017 plan year. The marketplace offers four tiers: bronze, silver, gold and platinum. On average, bronze plans will increase by about 21 percent. In numbers, that’s about $311 for a single 30-year-old nonsmoker compared to $258 in 2016. The average deductible will increase to just under $6,100 next year as well.
For silver plans, the premium rate will jump 17 percent. Silver plans are the most popular choice on the marketplace. They’re also used as benchmark plans to calculate subsidies. In 2017, a 30-year-old nonsmoker will pay about $365 a month for a silver plan. In 2016, that same person would have paid $312 a month. Deductibles will increase to about $3,572 – up from $3,117 last year.
Gold plans will see a 22 percent increase in premiums, from about $381 a month in 2016 to $464 a month in 2017 for a 30-year-old nonsmoker. The average individual deductible will be about $1,200, which is only up by 3 percent over last year.
At the platinum tier, a 30-year-old nonsmoker will pay about $553 a month for coverage in 2017, up 15 percent over 2016. Platinum plans will see the greatest increase in deductible amount, but platinum plans have historically low deductibles to begin with. In 2017, the individual deductible jumps 74 percent to $405 compared to $233 in 2016.
Across the country, premium rates will increase by 25 percent in 2017 owing in some part to the withdrawal of several major insurers from the Obamacare marketplaces. Earlier this year, United Healthcare, Humana and Aetna announced that they would be severely limiting participation in the public exchange sites. As three of the largest insurance companies in the U.S., their participation – or lack thereof – makes a difference in choice and competition, which affect price. Smaller companies have also exited the exchange sites in certain states, such as Health Choice of Arizona. Regardless of carrier size, having fewer options on the exchanges impacts peoples’ ability to buy affordable coverage. But it’s not just insurer participation that has led to skyrocketing premium increases for 2017. The problem centers on the inability of insurers to accurately set premium rates over the past three years. This is also why some of the largest insurers have opted out to begin with. Simply put, they’re losing money.
Bloomberg estimates that about 1.4 million people will lose their current health insurance plans for 2017 due to the withdrawal of major health carriers from the exchanges. ACASignUps.net, a site that tracks numbers for the ACA, estimates that closer to 2 million people will lose their current coverage. Of those nearly 2 million people, about 1.6 million will lose their health insurance from the big three insurers (Aetna, Humana and United Healthcare) alone. The remaining insurance carriers account for the difference.
In North Carolina, 284,000 people will have to shop for new coverage now that Aetna and United have withdrawn from the marketplace. Blue Cross Blue Shield of Tennessee is scaling back its participation in the private market for Tennessee, leaving 117,000 people without coverage for 2017. Approximately 103,000 Minnesota enrollees will lose their coverage thanks to Blue Cross Blue Shield of Minnesota’s withdrawal of PPO plans on and off the marketplace. And in Alaska, 14,000 people will lose plans via Moda while 26,000 people in New Jersey will lose coverage through Lifewise. A Kaiser Family Foundation analysis for the Washington Times found that nearly one third of the country will only be able to choose plans from one health carrier in 2017.
Premium rates will increase by about 25 percent on average, but some states will see even more staggering price hikes. A report published by the Department of Health and Human Services in October 2016 revealed that Arizona residents may face a rate hike of 116 percent next year. After Arizona, the highest rate increases are in Oklahoma (69 percent), Tennessee (63 percent), Minnesota (59 percent) and Alabama (58 percent). Percentages are based on a 27-year-old individual who buys the second-lowest silver plan and receives no tax credits.
Despite the substantial rate increases in most states, there are some states that will see premium rates drop for 2017. In Massachusetts and Indiana, costs will decrease by 3 percent from last year. Some states will also experience moderate or negligible price increases. And the administration has been quick to note that with subsidies, about 77 percent of consumers can still find plans for less than $100 a month on the marketplace, 72 percent can find plans that cost less than $75 a month, and 65 percent can enroll in a plan for $50 a month or less. Most people will see a premium increase for 2017, but subsidies can help to offset higher prices.
This article was last updated September 1, 2015
Do You Have Questions About How Much Obamacare Will Cost?
During the debate over healthcare reform and the Affordable Care Act in the United States, one thing that kept coming up was the actual cost of Obamacare in terms of its impact on society and its actual dollar amount. Under the Affordable Care Act, healthcare in America must now offer ten Essential Health Benefits and provide for the protection of consumer rights against dubious practices, and these reforms don't come without a price tag. Whether you're for or against the new healthcare law, you will be responsible for supporting it financially. In this article, we'll go over the cost of Obamacare and how the new healthcare law affects your family's budget.
Projected Cost of Obamacare To Taxpayers
How much will Obamacare cost taxpayers over the next decade? It's estimated that the total cost of the new healthcare law will be between $1.36 and $2.6 trillion over the next decade. If that number does not astound you, it should. Healthcare reform will be expensive and difficult at first. However, the Congressional Budget Office also estimates that Obamacare will reduce the national deficit by approximately $200 billion in the same time period and up to $1 trillion within the next 20 years. Over time, the high cost of health reform should help to reduce our national debt while providing better health options for millions of people in the United States.
When discussing the cost of Obamacare, it's easy to get caught up in the current numbers. However, many people don't realize how inflated the cost of healthcare had become under old laws and regulations. Prior to the implementation of the Affordable Care Act, patients spent millions of dollars every year on hospital trips, outpatient facilities and other medical providers to get the healthcare they needed. Approximately 45 million Americans lacked health insurance, and this fact placed a huge burden on providers to offer coverage. In terms of premiums, several states indicate an average of lower costs under Obamacare than they had prior to the new law. For example, young adults in New York and Colorado enjoy significantly lower premiums by buying health insurance through the new marketplaces; in New York alone, it was reported that young adults have enjoyed a decrease in premiums of nearly 29 percent.
If you're curious about how America will pay for the cost of Obamacare, then direct your attention to the Internal Revenue Service. People who don't obtain health insurance through the Marketplace, their employers or a private source will be assessed a tax penalty. This penalty is called the "Shared Responsibility Payment" and falls under the individual mandate clause of the Affordable Care Act. Because the Supreme Court ruled that the individual mandate is a tax on June 28, 2012, the IRS has jurisdiction over collecting the fee. There are exceptions to the individual mandate, and you can check out the full list of exemptions by reading the Individual Mandate article on this website.
While the IRS collects the penalty fee, they cannot impose any criminal sanctions against you as they might if you fail to pay regular taxes. However, the IRS can assess interest fees on unpaid penalty fees. How much is the penalty? In 2015, the tax penalty was $325 per uninsured adult and $162.50 per uninsured child or 2% of the annual household income, whichever is greater. When calculating percentages, the IRS uses your income after deducting the annual tax-filing threshold for your taxpayer status. The fee is assessed against every month that you don't obtain insurance.
In 2016, the penalty is $695.00 per uninsured adult and $347.50 per child or 2.5% of your yearly household income, whichever is greater.
In 2016, let's say that you earn $50,000 in taxable income as a single person without insurance. The penalty for your non-compliance would be approximately $1,000 (calculated by first subtracting $10,150, which makes up the Tax-Filing Threshold, and then multiplying 2.5% of your yearly income because that amount is higher than the flat $695.00). If you obtain insurance in June through your employer, then you'll owe the prorated portion of that $1,000 fee, which equals approximately $500 for the six months that you lacked coverage. This fee will be taken from any tax refund you might be entitled to or added onto your bill when you file taxes. If you fail to pay the fee, then you will accrue interest indefinitely until you pay your bill to the IRS. Over time, a small non-compliance fee can become a huge headache.
You might argue that it would be more cost-effective to simply pay the non-compliance fee instead of buying health insurance. To some degree and in some cases, you may be right. Young and healthy individuals will pay much higher premiums than other portions of the population, and we'll discuss the specific numbers in a subsequent section. For these people, paying a $1,000 non-compliance fee may make more financial sense in the short-term because they won't need as many medical services. However, non-compliance fees increase every year. In 2017, the fee will jump even higher and as the penalty fee increases, you will need to decide whether it would be more beneficial to buy insurance or pay the fine to the IRS.
Obamacare Healthcare Plan Premiums
Keeping up with the cost of Premium can be difficult when it comes to Obamacare because various factors affect your rates. As with private insurance or healthcare coverage purchased through your employer, plans bought via the health insurance exchange or general Marketplace will vary in coverage options and premium prices. Plus, some families will be eligible for subsidies and tax credits that lower the monthly premiums even more. In this section, we'll give you a couple of examples of the types of premiums available to help you make a more informed decision about Obamacare. Keep in mind that the following information is just a guide and could vary significantly depending on your individual situation.
In an effort to help people become familiar with the cost of premiums available on the Marketplace, we have created a subsidy calculator that can also help you understand the cost of healthcare premiums. Let's start with a family of four that earns above the federal poverty threshold percentage; in other words, this family would not receive any subsidies on the Marketplace because they earn enough to pay for insurance without assistance.
Real World Cost Of Obamacare For Families
- Meet the Clarks. The Clark family comprises two adults and two children living in Orlando, Florida. The adults are 42 and 38, and both kids are minors. Neither parent uses tobacco.
- The total annual income for the household is $110,000, and the parents cannot obtain insurance through their employers.
- The Clarks have several options on the Marketplace for coverage, but they will not be able to get subsidies or tax credits because they earn more than four times the federal poverty line.
- For a Bronze plan on the Marketplace, the Clarks will pay $8,013 per year or approximately $668 per month for healthcare coverage. This number represents 7.28 percent of the Clarks' annual income. The Bronze plan includes insurance for the whole family and covers 60 percent of the Clarks' medical costs.
- For a Silver plan on the Marketplace, the Clarks will pay $9,909 annually or $826 per month. Silver plans cover 70 percent of medical costs.
You can buy four types of plans on the Marketplace: Bronze, Silver, Gold and Platinum. There's also a "Catastrophic" plan available, but this plan is generally reserved for healthy individuals under the age of 30, who want basic coverage for emergency situations only or people that are experiencing a hardship..
As you can see with the example above, the Clarks will pay higher premiums for more coverage; Platinum plans cover 90 percent of medical costs but require significantly higher premiums. Now, let's see how much the Clarks would pay if they didn't have children.
- The Clark family now comprises two adults aged 38 and 42 living in Orlando, Florida; neither adult uses tobacco.
- Together, the Clarks earn $70,000 per year, but unfortunately their employers do not provide health insurance.
- The Clarks' combined income is more than four times the federal poverty line so they're unable to apply for subsidies or tax credits to help offset the cost of monthly premiums.
- For a Bronze plan, the Clarks will pay $5,363 per year or $447 per month, which is about 7.66 percent of their yearly income. For a Silver plan, the Clarks will pay $6,633 per year or $553 per month.
As mentioned in an earlier section, some families will pay more in healthcare costs than they would pay in penalty fees. In this scenario, the Clarks are relatively young and healthy, and they have no kids. For them, the penalty fee might be around $700 for the year based on their income versus more than $5,000 in healthcare premiums. The Clarks may choose to forgo insurance and pay the fine instead until they reach an age when they need more medical care. You should also note that the ACA limits out-of-pocket costs to $12,700 per year for families and $5,200 per year for individuals.
You may have noticed that we made a point to mention the Clarks' tobacco use. Under the Affordable Care Act, tobacco users will pay more for health insurance. The goal of Obamacare is to provide more affordable coverage for more Americans while increasing public awareness for better healthcare management. This means that those who smoke will pay more. If the Clarks were to take up smoking, they could expect an increase in their yearly premium via a "tobacco surcharge" assessed by the government. They might also pay more due to the out-of-pocket costs associated with prolonged tobacco use.
Obamacare Subsides and Cost Assistance for Families
In the examples listed above, the Clarks earned well above the federal poverty line with and without kids. Unfortunately, millions of Americans live and work well under the poverty line and still need the same healthcare coverage as their more affluent neighbors. Obamacare was designed to help low-to-middle-income families get the coverage they need. Through subsidies and a Tax Credit, thousands of lower income families in the United States have access to unprecedented coverage and healthcare options. In this section, we'll discuss how Obamacare can help offset the cost of monthly premiums and work to your advantage if you fall beneath the poverty threshold.
In 2015, the federal poverty line in the United States is currently set to $4,060 per person after the initial threshold of $11,670 for an individual. In other words, for a family of four the poverty line would be $23,850. The amounts for 2016 are different so check out our 2016 Federal Poverty Level chart for updated information. Under the Affordable Care Act, families that earn between one and four times the federal poverty line are eligible for subsidies and tax credits that help make insurance more affordable by reducing the monthly premiums. Let's take a look at the Granger family as an example.
- The Granger family lives in Boise, Idaho and consists of two adults and three kids. The adults are 33 and 35, and every kid is a minor. Neither parent smokes or uses tobacco.
- Despite the fact that both parents work, the Granger family only takes in about $60,000 per year and can't afford health insurance through work or another source.
- Fortunately, the Grangers can receive cost assistance through the health insurance exchange because they make under 250% of the federal poverty line and that amount falls within the boundaries of the Affordable Care Act in order to receive federal subsidy assistance.
- Without cost assistance, the Grangers would pay $7,185 per year for a Bronze-level plan and $9,371 for a Silver plan. With tax credits, the Grangers should only have to pay $1,964 for a Bronze plan or $164 per month – a premium that represents 3.27 percent of the Grangers' income.
How do the Grangers get such a great deal when the Clarks had to pay full price for their premiums? The Clarks earn almost twice as much as the Grangers do with one less child to support. Obamacare works on the premise that those who can afford insurance should contribute more to the shared responsibility pool. Lower income families will benefit from the new healthcare law in a way that many affluent families were already enjoying. By being able to purchase subsidized healthcare through Idaho's marketplace, the Grangers will enjoy the same access to healthcare that the Clarks probably already had prior to the ACA.
Obamacare Plan Costs For Single Individuals
If you live without a spouse or any dependents, then you may be wondering about cost assistant for single taxpayers. Can individuals receive cost assistance? The answer to this question depends on where you live, your age, your income level and several other factors, but the short answer is that even single people can apply for cost assistance if they meet the right parameters. For an example, let's take a look at Cassidy Jones.
- Cassidy is 32 years old and lives in Chattanooga, Tennessee. She works full-time, but her employer doesn't offer health insurance. Her current salary is $23,000. She lives alone and doesn't use tobacco.
- Because Cassidy's income falls within the range set forth by the ACA, she is eligible for a subsidy to offset the cost of her monthly premiums.
- If Cassidy chooses a Silver plan from the Marketplace, then she can expect to pay $1,450 per year or $121 per month after a subsidy of $633. If she chooses a Bronze-level plan, then she would pay around $75 per month or $902 per year. These premium estimates represent 3.92 percent of Cassidy's annual income.
- Cassidy lives in a state that chose not to expand Medicaid, which means that she can't apply for Medicaid benefits even though she falls within the expanded guidelines.
Because Cassidy probably won't make as many trips to the doctor as her older relatives, she may choose to purchase a Bronze plan instead of a more expensive metal plan on the Marketplace. If she were a few years younger, Cassidy might instead choose a "Catastrophic" plan to cover emergencies only. Keep in mind that regardless of the plan you choose on the Marketplace or off, you can expect preventative care and select other benefits to be included in your coverage.
If you qualify for Medicaid or the Children's Health Insurance Program, then you don't need to worry about the individual mandate or the health insurance coverage requirement because you meet the minimum essential coverage requirement by enrolling in Medicaid or CHIP. These government systems still exist and still are available to lower income families regardless of the new law. In fact, several states have approved the expansion of Medicaid as set forth by the Affordable Care Act, which means that you may now qualify for Medicaid even if you didn't in the past. Check out the government's health insurance exchange site for more information on your state's participation in Medicaid expansion.
What Is The Cost of Healthcare Without Insurance?
The examples in this article featured relatively young and healthy people who most likely would not need a lot of medical care throughout the year. Some very young people may even get away with paying the penalty fee for non-compliance rather than spending money on health insurance they feel they don't need. However, the cost of insurance rises for everyone if people refuse to participate in Obamacare. And just because you pay the fine doesn't mean that you have coverage in case of an emergency. In fact, if you need medical treatment but lack insurance then you will be liable for 100 percent of the cost out-of-pocket.
Did you know that a significant portion of debt in the America comes from unpaid medical bills? In fact, unpaid medical bills are the leading cause of bankruptcy in the United States as of 2013. Even people with insurance can sometimes struggle to pay high deductibles and out-of-pocket expenses, so imagine what people without insurance will pay when they need emergency appendectomies or life-saving vaccines. With so many billions of dollars on the line, it's important to consider the whole cost of healthcare rather than the upfront cost of increased premiums.
If it works correctly, then Obamacare may lower the cost of healthcare in indirect ways as well. For example, one of the ten essential benefits mandated by the Affordable Care Act is free preventative care. This includes access to yearly screenings for high blood pressure, high cholesterol, breast cancer and colon cancer. If more people have access to these valuable preventative services, then people will stay healthier and reduce the burden on the healthcare industry as a whole. Over time, these costs add up to real savings and better, more affordable healthcare for everyone.
When considering the cost of Obamacare, you need to take into account various factors such as long-term implications, personal contributions and the cost of total healthcare reform in the United States. There's no easy or straightforward answer to the question of cost, but you can see how the new healthcare law will benefit millions of previously uninsured Americans. If everyone contributes to the total cost of the program, then Obamacare can work to provide better protections and more efficient healthcare regardless of the type of coverage you obtain. And since the goal of the Affordable Care Act is to reduce wasteful spending and strengthen consumer protections, the financial cost of healthcare reform may be offset by its many benefits.