Even as a kid I never understood why people like to be scared and shocked. I avoided haunted houses and horror movies. I prefer the comfort of knowing what is about to happen. I like being able to prepare for the future.
I realize that there is a large percentage of the population that likes to be surprised and startled. I am just not in that demographic.
Today’s post is for my tribe. I mean no disrespect to those who prefer to be surprised but for those people who are like me, I want to give them what tools I am able to help them prepare for 2014.
I have linked the banner above to the Kaiser Family Foundation Subsidy Calculator. It should give you an idea of what help, if any, you can expect from the federal government when you are required to buy a government approved health insurance policy this fall.
If you elect to use the calculator, please remember that the figures it gives you are only estimations. The Department of Health and Human Services just gave insurance companies final rules and regulations in February. Since it is too soon to expect health insurance companies to build and price plans that are compliant with both federal and state insurance laws, the rates that are used are just estimates.
While the percent of government subsidy is “etched in stone,” the premiums that are referenced are just estimates. The final numbers will not be available until later this summer.
NOT ALL PLANS ARE ELIGIBLE FOR SUBSIDIES
It is also important that you understand that the supplements will only be available on certain policies. Right now, the most common health insurance plan in America has an 80% actuarial value. Under Obamacare, the only plans that will be eligible for a subsidy for most Americans will be the second least expensive “Silver” plan (at least that is the information that I have gotten.) The Silver plan only has a 70% actuarial value.
After closely watching the Department of Health and Human Services over the last 4 years, I have learned that they can change their mind. Until the Open Enrollment materials are made available later this year, I am not willing to guarantee anything about the Exchanges, Essential Benefit Plans or Individual Mandate.
The only thing that I am willing to say with any certainty at this time is that nobody can be certain what the exchanges will look like.
THE SUBSIDIES WILL NOT PAY FOR EVERYTHING
There is another point to the anticipated federal subsidies that is often ignored. While the subsidies will pay for 100% of the cost for health insurance for the very poor, they will only pay for a portion of the higher premiums for middle-class Americans who earn more than the Federal Poverty Level but still qualify for some subsidy.
Although every penny of help will be welcome to many Americans, after the premiums for all of the Essential Benefits are calculated, it is likely that you will still be required to pay much more for health insurance out of your income than you have in the past, even with the government subsidies.
In my opinion, this tool is only good to illustrate that if you are going to need to buy your own health insurance in 2014, you need to start preparing for “Rate Shock” in 2013.