With inflation and rising costs stretching budgets across the country, most households are trying to cut spending wherever they can. You can’t control your rent or mortgage, you have to eat and you can’t go without health insurance — or can you?
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Many people — particularly those who rarely visit the doctor — are wondering just what it is they’re getting for all that money their health insurer pulls from their checking account every month.
You know what you pay for health insurance — but do you know the potential cost of going it alone? Keep reading to find out whether health insurance is worth the expense.
Marketplace Metals: Higher Premiums vs. More Expensive Care
The Affordable Care Act (ACA), commonly called Obamacare, established the Health Insurance Marketplace, a unified exchange where individuals and families can shop for policies from many carriers.
The marketplace’s metal-based tier structure gives you a choice between higher monthly premiums for reduced-cost care or lower monthly premiums for care that costs more when you need it.
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Bronze plans have the lowest monthly premiums and the highest deductibles. Policyholders often pay thousands of dollars before the insurance company starts paying its share, which is only 60% — you’re still on the hook for the other 40%.
On the other end of the spectrum are platinum plans, which require the policyholder to pay just 10% to the insurance company’s 90%. Platinum plans also have very low deductibles, which means your insurer starts paying its share much earlier. The tradeoff is high monthly premiums, which can cost more than $1,000 per month for an individual.
Silver and gold plans are in the middle.
So, What’s the Cost of Being Covered?
According to the Kaiser Family Foundation (KFF), the average national monthly premium for an individual ACA silver plan in 2022 is $438, but that can change dramatically depending on where you live. It’s $762 In Wyoming. In New Hampshire, it’s $309.
Your state is just one variable. In all but a handful of states, you’ll pay more as you age. According to Forbes, the national average monthly premium for an ACA plan for a 21-year-old is $313 for a bronze plan, $410 for silver and $450 for gold. At 30, it jumps to $356, $468 and $514. At 50, it jumps to $560, $736 and $808. At 60, it’s $850, $1,115 and $1,225.
Your personal habits play a big role, too — e.g., the ACA allows insurers to charge up to 50% more to policyholders who smoke.
More People Means Higher Premiums
Those numbers were for individuals. According to Forbes, the national average monthly ACA plan premium for families is $928 for bronze, $1,217 for silver and $1,336 for gold.
Keep in mind that different types of plans — like HMOs, PPOs and EPOs — have different deductible/premium tradeoffs, and individual plans charge different copays.
It’s important to note that everything discussed so far is for ACA Marketplace plans only. According to KFF, the average monthly premium for employer-sponsored family health insurance in 2021 was $1,851.75. Private, non-marketplace policies vary so much from insurer to insurer and state to state that averages don’t mean much.
More important: If you opt out of the marketplace, you miss out on the lucrative income-based subsidies that it offers.
Subsidies Make Health Insurance More Affordable
The ACA gives cost-sharing subsidies and tax credits based on income, which both lower monthly premiums and reduce out-of-pocket costs at the time of care. Those subsidies are available to households making 400% of the poverty level based on the number of people in the household:
- 1 person: $54,360
- 2 people: $73,240
- 3 people: $92,120
- 4 people: $111,100
- 5 people: $129,880
With subsidies, the national average monthly premium for an individual silver plan in 2022 drops from $438 to $66.72, according to KFF. In states like Hawaii, Connecticut and New York, it’s as low as $37. In more than a half-dozen other states, it’s $83.
The Kaiser Family Foundation and many other organizations offer Health Insurance Marketplace calculators to help you estimate your specific household costs more accurately.
Then There’s the Cost of Not Being Covered
The catch-22 associated with health insurance — even with subsidies — is that the low-cost plans that most people can afford come with outrageously high deductibles, leaving the policyholder on the hook for the full cost of treatment for all but the most expensive care.
According to HealthCareInsider, the average silver plan now has a $4,879 deductible. For bronze plans, it’s $6,992.
That’s the amount you have to pay before the insurance company even starts kicking in its percentage. The penalty for not being covered ended in 2018, so you might be tempted to go without coverage now that you can — but think about the risk.
According to Healthcare.gov, a broken bone can cost $7,500 to fix. That alone is above the average deductible for even the highest-deductible bronze plans. A three-day hospital stay will cost you $30,000 — enough to bankrupt the typical family. Comprehensive cancer care costs hundreds of thousands of dollars, which is beyond the reach of even most well-off families.
Even if the care you require isn’t as dramatic as those examples, insurance companies negotiate discounts with plan providers that are in their coverage networks — and their customers benefit from those negotiations. For example, you might pay $25 for an in-network flu shot instead of $40 if no insurer has your back. A standard visit to the doctor’s office might cost $85 instead of $150.
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