PEORIA (MCT) — An uninsured 25-year-old man who earns $25,000 a year could find insurance for as little as $76 a month on Illinois' new health care exchange.
For a 35-year-old woman with one child and an annual income of $40,000, the lowest monthly premium is $149.
Now consider a married couple with a combined annual income of $90,000 a year. He's 54, she's 52 and they have two children. They could find a plan on the exchange with a premium as low as $348 a month.
In all three instances, a federal subsidy in the form of tax credits for low- to moderate-income families lowered monthly premium costs.
Besides the technical glitches and system failures that accompanied the launch of the Affordable Care Act's online health care shopping site, Marc Pierce says the other major challenge people face is figuring out if they're eligible for the tax credits.
"That's the biggest thing we're finding," says Pierce, owner of Stonegate Advisors, an independent consulting company in Chicago that conducts research for insurers. "People want to know if they should think about buying on the exchange and if they're eligible for the subsidy."
In many cases, they are.
But first, those who aren't. People who already have adequate, affordable coverage from employers aren't eligible for the subsidy. Neither are people covered by Medicare.
"And if you don't get the tax credit, it doesn't make sense to buy on the exchange," Pierce says. "Go direct to the carrier."
Depending on a number of factors, subsidies may be available to individuals earning as much as $45,960 a year and a family of four earning up to $94,200.
The 25-year-old man in the scenario already mentioned was eligible for a monthly subsidy of $52. The 35-year-old single mother's subsidy was $87 and the married couple's was $334. They could use the subsidies to lower premium costs on dozens of plans available from six insurers for the Tri-County Area, from the least expensive to the most costly. Between 71 and 88 plans are available in Peoria and Tazewell counties, 61 to 70 in Woodford County.
Pierce recently analyzed premiums on the Illinois exchange for Peoria-area residents for the Journal Star, as he has done for media outlets throughout the state.
"By and large, Peoria area rates are not higher than other counties," he says.
Almost 900,000 of Illinois' poorest uninsured residents will qualify for the state's expanded Medicaid program, another component of the Affordable Care Act, also known as Obamacare. The tax credits were designed to make health care affordable for residents with incomes higher than the federal poverty level, up to 400 percent higher in some cases.
Confusion about the tax-credit subsidy prompted Stonegate to create an online calculator for consumers at www.caretaxcredit.com. The Kaiser Family Foundation also has a consumer calculator at www.kff.org/interactive/subsidy-calculator.
To keep it simple, Pierce limited the local analysis to non-smokers in one ZIP code, Peoria's populous 61614 area. But prices and subsidies are comparable throughout the Tri-County Area, he says. According to his analysis, area consumers can choose from a wide range of prices, even among similar plans.
"Chances are, they're much more affordable than before," he says, especially for someone who has a pre-existing condition.
Four levels of plans are offered on the exchange, bronze, silver, gold and platinum. A bronze plan, which generally has the lowest monthly premiums, covers 60 percent of medical costs while the consumer pays 40 percent. A silver plan covers 70 percent of costs, on up to platinum plans, which cover 90 percent of costs.
The lower the monthly premium, generally the higher the out-of-pocket costs for deductibles and co-pays, and vice versa. Pierce says he still is compiling data on co-pays and deductibles. Deductibles can't be more than $2,000 on any plan unless it's a health savings account.
Only people who buy the silver plan are potentially eligible for reduced deductibles or co-pays. But tax-credit subsidies can be coupled with almost all of the available plans to reduce premiums. They are based on a number of factors, including age, income, family size and geographic region. In general, the lower the income, the higher the subsidy. At a yearly salary of $15,900, the same 25-year-old man would get a monthly subsidy of $152. Though the subsidy drops as income increases for the 25-year-old, he can expect it to begin increasing again as he gets older, even if his income increases.
That's because insurance rates increase as people get older, Pierce explains. "By the time you get to 55 or 60, pretty much everybody gets a subsidy."
(c)2013 the Journal Star (Peoria, Ill.) Distributed by MCT Information Services