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Subsidies, Deductibles & Premiums…OH MY!

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Obamacare Guy Thursday 10 15 15Open Enrollment has OFFICIALLY begun!  As of November 1, 2015, you can get covered, change health plans or upgrade your current health plan without needing a change in life status.  AND…Right about now you may be in the midst of learning more than you ever needed to know about your income and how it relates to the Affordable Care Act’s (a.k.a. Obamacare) subsidies and deductibles.

This blog post is going to help you tremendously as we explore what a subsidies are, how you get them and how you can qualify for lower deductibles.

What Are Subsidies?

A subsidy is financial assistance you receive to help pay for health insurance coverage. A subsidy reduces your cost for insurance.

You may also qualify for reduced deductibles, and reduced co-pays.

Who Benefits From Subsidies?

Subsidies were designed to help low to moderate income Americans afford health insurance coverage.

To receive subsidies, you must have coverage on a plan in the Marketplace.

There are 3 types of subsides or cost assistance a person can receive.  They are;

  • Advance Premium Tax Credits which are used to lower premiums
  • Cost Sharing Reduction to help lower out-of-pocket costs
  • Medicaid and CHIP

How are Subsidies Calculated?

Your Obamacare Guy Tuesday 10 13 15 CANVASubsidies are calculated based on income and are available to people and their families who have an income level between 100-400% of the Federal Poverty Level.  Many people refer to this as the “FPL”.

NOTE:  The FPL or Federal Poverty Level adjusts every year to account for inflation.  This adjustment allows more citizens to quality for subsidies.

Specifically, the calculation used is something called MAGI or Modified Adjusted Gross Income.

MAGI is sum of the following:

Adjusted Gross Income +
Non-Taxable Social Security Benefits +
Tax-Exempt Interest +
Excluded Foreign Income
_________________________________
= MAGI (Modified Adjusted Gross Income)

Once you qualify for subsidies there are some points you should be aware of:

  • Subsidies are only valid on Plans purchased in the marketplace
  • Your marketplace health insurance plan cannot cost you more than 9.5% of your income AFTER tax credits are applied
  • The amount of cost assistance you can gain is based on the second lowest cost of the Silver Plan in your state’s marketplace

Who is NOT Eligible for Subsidies?

  • People reporting over 400% of the FPL will not be eligible for cost assistance
  • Those who have access to affordable, employer-based health insurance
  • People eligible for Medicare
  • Those who fall into the Medicaid gap

NOTE:  People who are making under 138% of the FPL are eligible for Medicaid.

When can I Apply for Subsidies?

Open enrollment is the PERFECT time to apply for subsidies and cost assistance.  If you don’t apply during open enrollment, you will need to wait until the following year’s open enrollment period or if you experience a life qualifying event.

Exploring Deductibles…

Obamacare Guy Tuesday 10 6 15 CANVAWhat is a deductible?

This is the amount of money you need to pay out-of-pocket for covered services before you insurance begins to pay.

This amount does NOT include:

  • Insurance Premiums
  • Costs that are NOT covered by your plan
  • Deductibles re-set every policy period

What happens after I meet my deductible?

Once you meet your deductible, your health insurance plan will pay it’s portion of your coinsurance.

Now that we know the basics of deductibles, discover how Obamacare has impacted them.

Here are some FAST FACTS pertaining to IN-NETWORK deductibles:

  • Obamacare mandates that major medical plans must meet specific cost sharing deductibles
  • Deductibles cannot be hight than out-of-pocket limits
  • Individual out-of-pocket limits are $6,600 (2015 figure)
  • Family out-of-pocket limits are $13,200 (2015 figure)

Deductibles – The More You Know…

Here are some quick tips you should be aware of when thinking about deductibles.

  • Deductibles start when your policy begins
  • Policy periods usually run from January 1st and ends December 31.  To ensure that you are taking full advantage of your policy period, make sure you are enrolled in a plan by December 15.
  • If you switch your plan mid-year, you may lose any deductibles already utilized
  • If switching plans during the year, try to use the same carrier to see if deductibles can be rolled over
  • Low deductible plans usually have higher premiums
  • High deductible plans tend to have lower premiums
  • Premiums do not count towards your deductible
  • Co-insurance usually does not start until deductibles are met
  • Co-pays usually go toward deductibles and out-of-pocket maximums

Obamacare Guy 9 30 15 CanvaThere is A LOT to consider during open enrollment and it can be confusing.  The best thing you can do for you and your family is to get sound advice from a professional.  As Your Obamacare Guy, it is my mission to help you get covered with the best plan and help you get the subsidies you need.

Call me today for help navigating your options when it comes to health insurance:  (813) 391-3448 or email me:  Dave@YourObamacareguy.com

Glossary of Terms:

Co-Pay/Co-payment:
A fixed amount (for example, $15) you pay for a covered health care service, usually when you get the service. The amount can vary by the type of covered health care service.

Coinsurance:
Your share of the costs of a covered health care service, calculated as a percentage (for example, 20%) of the allowed amount for the service. You pay coinsurance after you’ve met your deductible. For example, if the health insurance plan’s allowed amount for an office visit is $100 and you’ve met your deductible, your 20% coinsurance payment would be $20. The health insurance plan pays the rest.

Cost Sharing:
The share of costs covered by your insurance that you pay out of your own pocket. This term generally includes deductibles, coinsurance, and copayments, or similar charges, but it doesn’t include premiums, balance billing amounts for non-network providers, or the cost of non-covered services. Cost sharing in Medicaid and CHIP also includes premiums.

Deductible:
The amount you owe for covered health care services before your health insurance plan begins to pay. For example, if your deductible is $1,000, your plan won’t pay anything until you’ve paid $1,000 for covered services. Some plans pay for certain health care services before you’ve met your deductible.

FPL:
A measure of income level issued annually by the Department of Health and Human Services. Federal poverty levels are used to determine your eligibility for certain programs and benefits.

(The amounts below are 2015 numbers and used for calculating eligibility for Medicaid and the Children’s Health Insurance Program (CHIP). 2014 numbers are used to calculate eligibility for savings on private insurance plans for 2015.

•$11,770 for individuals
•$15,930 for a family of 2
•$20,090 for a family of 3
•$24,250 for a family of 4
•$28,410 for a family of 5
•$32,570 for a family of 6
•$36,730 for a family of 7
•$40,890 for a family of 8

MAGI:
The figure used to determine eligibility for lower costs in the Marketplace and for Medicaid and CHIP. Generally, modified adjusted gross income is your adjusted gross income plus any tax-exempt Social Security, interest, or foreign income you have.

Premium:
The amount that must be paid for your health insurance or plan. You and/or your employer usually pay it monthly, quarterly or yearly.

Subsidy:
Health coverage that’s obtained through financial assistance from programs to help people with low and middle incomes.

Glossary of terms were provided by:  HealthCare.gov

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