Obamacare is right around the corner. Do you know what you’re going to do?
The Affordable Care Act was created to help low-income individuals who don’t have health insurance. That’s about 48 million people, or 15 percent of the population, according to the Census Bureau.
The problem is, while it may help Americans with low income, it’s hurting the middle class.
For someone healthy living in Texas that earns about $25,000, he or she may have to pay $85 per month. A family of four in Kentucky bringing in $50,000 may only have to pay $32. How fair is that?
The average cost of health insurance after Obamacare goes into effect next year will be $2,988 a year. This is just the average for the first year. Who is to say it won’t increase after 2014?
The financial estimates on Obamacare were just released this week – after individuals and companies have already spent months preparing for the changes. According to Forbes, insurance premiums for younger men will rise 97 to 99 percent on average. For younger women, the average increase will be 55 to 62 percent. Obamacare will end up negatively affecting younger men living in North Carolina – whose premiums are expected to quadruple – the most.
The average national premium for health insurance policies under Obamacare will be $328. This is without any of the subsidies that middle to low-income individuals will receive.
Of course, your cost will vary depending on your income, where you live, and the type of coverage you buy. There will be five types to choose from: catastrophic coverage, bronze, silver, gold, and platinum for some states.
Premiums are no longer affected by pre-existing conditions, which is great for people who have medical problems, but what about healthy people? They end up paying the same as the guy down the street that needs to go to the doctor multiple times a week. How fair is that?
The U.S. Department of Health and Human Services has reported that the cost of health insurance premiums is derived from the level of competition. For states that have fewer insurance companies, the prices are higher. The states with many insurance companies will have lower premiums. But this also means the government is monopolizing on people with fewer choices.
Mississippi, Alaska, Wyoming, and Florida all came in with the highest projected premiums. Why? Because these are areas with the most rural populations, so they have the lowest number of health insurance companies.
Let’s look into this more. Out of the 41 million uninsured people right now, only 56% of them will receive subsidies to pay for the premiums. What’s happening to the other half?
Well, there’s likely a reason they don’t have health insurance. But in 2014, that reason isn’t going to matter anymore. If those people want to continue to be uninsured, they will have to pay the penalty.
The government will penalize you $95 or 1% of your family income in 2014 if you don’t have health insurance. Income is determined by looking at the total income you have above the filing threshold – $10,000 for individuals and $20,000 for families, CNN reports.
Individuals making $50,000 a year will save money by choosing the penalty over insurance. They would only have to pay $400 versus the nearly $3,000 in premiums.
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Of course, it depends on your situation. While the Manhattan Institute says people who have private insurance plans right now will end up seeing an increase of 24 percent, you may not see a very big increase at all. It varies so much depending on where you live, your income, and plan that it’s hard to make comparisons and decisions right now.
And while Obamacare seems to meet the needs of low-income individuals for the most part, it may not be the best choice for them either. The plans that come through the exchanges will come along with restrictions. These might make it difficult for people to see the doctors they have been seeing for a long time, and they may deny them the ability to seek care from certain specialists. If individuals decide to go out of their network, they may end up paying out of pocket, which is going to be an extraordinary expense.
So if you’re not in the low income bracket to receive subsidies for your health insurance premiums, you either pay up or take the penalty. The penalty doesn’t look half bad seeing that it’s less. But it also means taking a big risk in going without insurance.
If you decide you should have health insurance, start shopping around. It’s likely that health insurance companies will start to compete with the government to bring on people just like you. That may end up saving you money and allow you to see the doctors you want to see.
And as an investor, you could even stand to make a little money. Look into the insurance providers that will be profiting from this overhaul. They could stand to gain a lot come the start of enrollment on October 1st.
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