How Much is Obamacare?
The Affordable Care Act, commonly known as Obamacare, has changed the way health insurance works in the United States. It’s also changed how much people pay for coverage. So, how much does health insurance cost under Obamacare?
The answer to that question can get complicated, but we’ll explore it here.
Understanding how much Obamacare really costs
Under Obamacare, many people qualify for subsidies to reduce what they personally have to pay toward their monthly health insurance premiums. Because of the way subsidies are designed, the real cost of their health insurance premiums may increase from one year to another, but the amount they must personally spend toward those premiums may or may not increase.
Because of this, one person enrolled in a health insurance plan under Obamacare may spend a lot more or a lot less than another person enrolled in the same health insurance plan, depending on whether or not they receive subsidies. The true cost of the Obamacare plan may be the same, but because of subsidies one person may spend a lot less for coverage than another person.
Another thing to keep in mind when asking how much Obamacare costs: Under Obamacare, monthly premiums are paid to keep your coverage in effect, and that’s what most people mean by the “cost” of coverage under Obamacare. But there are other costs associated with Obamacare too. For example, many plans have annual deductibles, copayments, or coinsurance which can come into play when a covered individual actually receives medical care.
With all these things in mind, let’s find out how much Obamacare costs in each of the following scenarios:
- How much is Obamacare for individuals?
- How much is Obamacare for families?
- How much is Obamacare for people with subsidies?
- How much is Obamacare when it comes to out-of-pocket costs?
- How much is Obamacare when you have a bad health year?
We’ll look at the full cost of coverage based on data from eHealth, Inc. that tracks what people are paying for coverage without subsidies in 2016*. We’ll also see what we can learn about how much people pay for coverage when they do qualify for subsidies. Finally, in the last sections, we’ll examine some of the other costs associated with Obamacare health insurance and how much someone may need to spend toward coverage and medical care if they faced serious health challenges over the course of a year.
How much is Obamacare for individuals?
According to eHealth’s data, the average monthly premium for plans selected by unsubsidized health insurance shoppers during the 2016 open enrollment period was $321. That’s an annual cost of nearly four thousand dollars.
If that sounds pretty expensive to you, you’re not alone. In fact, the cost of individual health insurance has increased significantly since the implementation of major Obamacare provisions in 2014. If you look at average premiums for individual coverage published by eHealth in the past several years, here’s what you find:
- $321 – Average individual premium for 2016
- $286 – Average individual premium for 2015
- $271 – Average individual premium for 2014
How much is Obamacare for families?
On average, according to eHealth, an unsubsidized family of two or more people chose a 2016 health insurance plan with a monthly health insurance premium of $833, which comes to nearly ten thousand dollars per year. An average family of four spent even more, paying slightly over $1,000 each month in Obamacare health insurance premiums.
Average monthly premiums for families over the past few years look like this:
- $833 – Average family premium for 2016
- $727 – Average family premium for 2015
- $667 – Average family premium for 2014
How much is Obamacare with subsidies?
How much you actually pay out of your own pocket toward your Obamacare coverage will depend, in part, on whether or not you get Obamacare subsidies.
The figures above are based on health insurance shoppers who purchased coverage without subsidies. Though these figures represent the true cost of Obamacare, a lot of health insurance consumers will find the numbers above surprising. That’s because individuals and families with a household income of no more than 400% of the federal poverty level may qualify for subsidies under Obamacare. These government subsidies are designed to help them pay their monthly health insurance premiums, and they can make a big difference to a consumer’s budget.
- According to the Department of Health and Human Services (HHS), in 2015 the average individual health insurance consumer getting a subsidy received $268 per month in assistance.**
In other words, the value of the average subsidy for individual coverage over the course of the year in 2015 was more than $3,200.
If you qualify for subsidies, the dollar value of your subsidy will vary depending on your income and will generally limit your personal expenditures for monthly premiums to between two and nine percent of your income. In order to qualify for subsidies in 2016, a single person must earn no more than about $47,000 per year. A family of four must earn no more than about $97,000 per year.
How much is Obamacare when it comes to out-of-pocket costs?
Asking how much you pay for your Obamacare coverage is different than asking how much you actually pay for your health care when you have coverage under Obamacare. The first question is about monthly premiums, but the second question is about cost-sharing, or out-of-pocket expenses, that you may face when you actually receive medical care.
Examples of cost-sharing include:
- Annual deductibles
- Copayments for office visits or prescription drugs
- Coinsurance
What you must pay from your own pocket toward your medical care will vary significantly from one health insurance plan to another, and will depend in large measure on how often you see the doctor and what kind of medical care you receive.
The most familiar form of cost-sharing is probably the annual deductible. Most health insurance plans have an annual deductible, though Obamacare places limits on how high deductibles can be. Among people who were not utilizing subsidies to pay for their Obamacare health insurance plans, here’s what eHealth has reported about average annual deductibles:
- Deductibles for individual coverage under Obamacare averaged $4,358 in 2016, an increase of about 6% compared to 2015.
- Deductibles for family coverage under Obamacare averaged $7,983 in 2016, an increase of 3% compared to 2015.
How much is Obamacare if you have a bad health year?
Based on the figures discussed above, if you are not utilizing government subsidies and you use enough medical care in a single year to pay out your full annual deductible, your total costs in the course of a year can be quite high. For example:
- The average individual in 2016 may pay $3,852 in a year for monthly premiums and an additional $4,358 for his or her deductible, for a combined total of $8,210.
- The average family may pay $9,996 over a single year for monthly health insurance premiums under Obamacare and an additional $7,983 in deductibles, for a combined total of $17,979.
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Notes:
* Unless otherwise noted, all dollar figures mentioned in this article are taken from eHealth, Inc.’s 2014, 2015, and 2016 Individual and Family Health Insurance Index Reports, which can be found here. These report are based on the health insurance plans selected by eHealth shoppers not utilizing subsidies during Obamacare nationwide open enrollment periods.