If you’re unfortunate enough to have lost company-sponsored health insurance as well as your job amid the economic havoc caused by COVID, you’ve probably been shocked by the cost of private coverage. Monthly premiums for high-deductible plans can run $1,500 to $3,000 – bad enough in good times but devastating when you’re unemployed.
Some 29 million Americans went without health insurance in 2019, largely because coverage costs so much. And the Kaiser Family Foundation says the total has almost certainly grown since then.
Millions of those people do not have to risk being uninsured in a pandemic. More than four out of 10 uninsured people could obtain no- or low-cost coverage under the Affordable Care Act, or Obamacare, the Kaiser Foundation’s Program on the ACA says.
“Unfortunately, a large share of the population is unaware the ACA offers financial assistance to buy insurance,” says Cynthia Cox, director of Programs on the ACA. The assistance is in the form of tax credits, which reduce monthly premiums.
Some people think they have too much home equity or too much savings to qualify. “They don’t realize qualification is based solely on income, not assets,” says Emily Gee, a health economist at the Center for American Progress.
Here is a quick primer on what is available, whether you are eligible, and how you can apply.
The ACA established marketplaces where insurers offer a variety of plans that meet minimum-coverage standards. Some states run their own marketplaces while the rest rely on the federal health insurance marketplace. There are four levels of coverage: platinum, gold, silver and bronze. Platinum plans have the highest premiums and lowest deductibles; bronze plans have low premiums and high deductibles.
As an example, bronze plans for families in New York City cost about $1,400 a month, but come with a $4,700 out-of-pocket deductible. Platinum plans are as high as $5,370 a month, but there is no deductible.
At first glance, none of the options seem remotely affordable for middle-income families. But the ACA offers subsidies for individuals and families with household incomes — wages, dividends, interest and Social Security — up to four times the federal poverty level. For 2021, individuals who make less than $51,040 and families of four with incomes below $104,800 can qualify.
About 10 million people are eligible for help, Kaiser estimates. Half would qualify for enough aid to cover all the premiums on bronze plans. You still have to pay the deductible, but you’d be on the hook for that without insurance, too. The value of a no-premium bronze-level plan becomes clear if COVID-19 or an accident puts you in a hospital, where a three-day stay costs $30,000, on average. Comprehensive cancer care can cost 10 times as much or far more.
Five million other currently uninsured people may be eligible for a credit that covers 50% to 90% or more of their premiums. The idea is to cap how much of their income individuals and families pay for coverage. Families at the poverty line — $26,200 for a household of four in 2020 — pay no more than 2.06% of their income on premiums, and a tax credit pays the rest. As incomes rise, so does the percentage of income that participants are required to contribute.
The Kaiser Foundation offers this example: A 30-year-old single woman estimates she will earn $31,900 in 2021, or two-and-a-half times the poverty level. Under the ACA, she would have to pay no more than 8.33% of her income, or $221 a month, on healthcare insurance premiums. If she signs up for the benchmark plan, which has a $500 premium, she would be eligible for a monthly tax credit of $279. She may choose a more expensive plan, but the credit would remain the same.
You can claim the credits when you file your tax return or ask for them in advance to lower your monthly premium. Kaiser has an online calculator to help you estimate how much aid you may qualify for. A Spanish-language calculator also is available.
You apply for aid through an online ACA marketplace. The process can be confusing, especially for freelance workers who don’t have pay stubs to prove their income, but free help is available from trained “navigators” at nonprofit groups or insurance agencies or brokerages. You can find one near you on the HealthCare.gov website.
Individuals and families whose income is below the poverty level or more than four times the poverty level cannot participate. The first group — roughly 24% of the uninsured, or more than 7 million people — likely qualifies for Medicaid. This program, expanded under the ACA, is jointly funded by states and the federal government, so eligibility criteria vary among the states. Medicaid summarizes the rules for each state on its website.