As a recent college graduate, the looming implementation of the Affordable Care Act, “ObamaCare”, quite frankly scares me. It is no secret that jobs are hard to come by these days, especially for those who are fresh out of college. Not only do we have to worry about finding a job in order to pay off our mounds of student loans, but now we also have to worry about rising costs in health care.
ObamaCare is set to take effect in approximately four days. What exactly does this mean for the younger generation when it comes to their health care costs? My recent findings, via a college friend, are frightening.
A July 2013 study from the U.S. Government Accountability Office lays out the Annual Base Premiums prior to underwriting for both smokers and nonsmokers age 30 (North Carolina is page 37). Underwriting may occur for an individual who is in poor health or has certain medical conditions that may cause a rise in medical bills. For the sake of this article the examples will be based off average, non-smoking individuals who have no predetermined medical conditions that may affect their premiums. For example, a single, nonsmoking male, age 30, currently pays about $505 a year on a plan with a minimum premium. That comes out to $42.08 a month.
A report released this week by the U.S. Department of Health & Human Services makes it clear that those current prices are set to skyrocket. Democrats have tried to spin this report by saying that prices are lower than projected. While they may be lower than projected they are nowhere near the current prices.
Under ObamaCare, the lowest bronze premium before tax credits for a 27-year-old is approximately $186, according to the HHS report. That’s a $143.92 increase—341% higher than the current price of $42 a month. That individual would go from paying $505 a year to paying $2,232 a year. How are individuals that have either just graduated from college or have only been out for a short time expected to pay for these increases? Unfortunately, many of them may soon find out that they are not going to be able to afford the new ObamaCare.
Granted, certain individuals may be eligible for tax credits if they choose to purchase health insurance on their own in the new insurance exchanges, but they will have to meet certain requirements. Tax credits are available to individuals and families with incomes between 100 and 400 percent of the poverty level. That’s up to $45,960 for an individual and $94,200 for a family of four. The Kaiser Family Foundation has developed a calculator that can be used to determine how much of a tax credit individuals and families may receive.
But there is a catch. The people who fall within these ranges may still be denied the tax credit if their employer offers employee-only coverage that costs less than 9.5% of the employee’s household income and if the plan covers at least 60% of the cost of covered benefits. So for an individual earning $45,960, the top end of the eligibility range, an employee would have to offer coverage that costs less that $4,366 a year and cover at least 60% of the cost of covered benefits. For instance, a 27 year-old non-smoker in Raleigh earning $35,000/yr would not receive any tax subsidy on their plan, while the same person earning $28,000 would receive an annual subsidy of $470.
Bottom line: in most instances, young people will see their health insurance premiums rise significantly in the individual market.
Note: The individuals in the report released this week from HHS are not divided up based on gender or smoking habits like those included in the July 2013 study. Premiums do differ based on gender, age, and other individual factors, but there will not be an overwhelming difference with the examples given above. A 30-year-old and a 27-year-old, both who do not smoke, are going to have premiums that differ very little. Likewise, males and females are going to differ very little as well.