Woman making free hand sign; free health insurance

Some Americans could receive free health insurance by qualifying for zero-premium bronze plans. Why? Because silver insurance plan premiums remain high this year. Silver plans are the marketplace benchmark, so when their premiums increase, so do the premium subsidies (tax credits) for all plans, including the cheaper bronze plans. Sometimes the subsidy amount is larger than the monthly premium for a bronze plan, which is why some bronze plans may end up being “free.” Confused? Don’t believe it? We’ll explain.

Silver Plan Rates Are Still High and Rising in Some States

The national average premium for Affordable Care Act (ACA)-approved silver benchmark plans sold on the government-run marketplace only dropped by 1.5 percent from 2018 to 2019. In some states, premiums are increasing in price by up to 23 percent. These high rates create an opportunity for some to find zero-premium or low-cost health insurance.

In order to set premium rates for 2019, insurance companies have weighed the effects of:

  • the repeal of the individual mandate penalty.
  • the changes to policy concerning short-term health insurance plans.

Many insurance companies are also still reacting to the loss of cost-sharing reduction (CSR) payments in 2018. All of these changes factor in to whether insurance companies in your state have increased or lowered the average premiums for silver health insurance plans.

What do CSR payments have to do with silver plan premiums?

CSR payments were part of a subsidy program. The government gave these payments to insurance companies, and insurance companies lowered the cost of copays, deductibles, and coinsurance amounts for low-income citizens. This particular subsidy only applied to silver plans.

After the government cut off CSR payments, insurance companies were no longer receiving the funds to cover the cost of the reductions they’d been offering to consumers. In order to ease their losses, insurance companies hiked prices for plans that this subsidy affected: silver plans.

Other metal level plans did not seeing the same premium hikes.

Platinum, gold, and bronze metal level plans did not see the same premium rate hikes as silver plans. “Premiums for gold and bronze plans are unusually cheap,” Avalere Health Senior Vice President Caroline Pearson said about the 2018 plan rates.

In fact, you could end up getting a cheap gold plan, a free bronze plan with a $0 premium, or very low-cost health insurance with a bronze plan. Why? Because silver premium hikes  caused premium subsidy amounts to increase proportionally.

Premium Subsidies Increased, Too

Let’s brush up on our premium subsidy (tax credit) knowledge. Premium subsidies are still in effect for 2019 coverage. If you are within 100 to 400 percent of the federal poverty level (FPL), you are eligible to receive a subsidy to help pay for your insurance premium. That’s an income of around $12,140 to $48,560 for an individual, or about $25,100 to $100,400 for a family of four.

Real-world examples

Premium subsidies can be used on any metal level, but here are a couple of real examples (based on 2018 subsidy calculations) of how increased premium subsidies (due to silver premium hikes) could mean $0 premium or low-premium bronze plans for those who qualify. Remember: Premium subsidies will vary, depending on the area where you live.*

  • Sandra is a single 40-year-old preschool teacher in Kansas City, MO, who will make an estimated $30,150 in 2018. Her premium subsidy would be $314 per month, which would pay for all but $9 per month for a bronze plan. So, she can have health insurance coverage for less than $10 per month because her premium subsidy covers most of the cost of that bronze plan.
  • Sam is a married freelance graphic artist with two kids ages 10 and 12 living in Nashville. He’s 40, and the family makes $50,000 per year. The premium subsidy for his family is $1,594 per month. Bronze plans for him start at $1,123, which means he can in enroll in a bronze plan for $0. The entire family can be covered without paying anything for the premium. In short, Sam qualifies for free health insurance.

How premium subsidies are decided

Premium subsidies work like this: A maximum amount that an individual or family is expected to spend on monthly premiums for health insurance is determined. The maximum amount is set using a benchmark plan and your income. The benchmark plan will always be calculated using the second-cheapest silver plan available in your area. The maximum amount ends up being a maximum percentage of your income that you can be expected to pay for the second-lowest silver plan. Any amount over your calculated maximum will be subsidized (or paid for) by the government. So, with silver plan premiums increasing, that means premium subsidies will also increase.

IncomePremium Cap (max % of income for 2nd lowest silver plan)
% Federal Poverty Level2018
Under 100%No Cap
100% – 133%2.01%
133% – 150%3.02% – 4.03%
150% – 200%4.03% – 6.34%
200% – 250%6.34% – 8.10%
250% – 300%8.10% – 9.56%
300% – 400%9.56%
Over 400%No Cap

**Alaska and Hawaii have different poverty guidelines. The tax credits for the 2017 benefit year are calculated using 2016 federal poverty guidelines. | SOURCE: Kaiser Family Foundation

How Increased Premium Subsidies Work on Bronze Plans

Bronze plans have the least expensive premiums. Although they have the highest out-of-pocket costs (such as deductibles and copays), they still provide all of the essential health benefits. Individuals who qualify for premium subsidies (tax credits) can use their credits on any metal plan, including bronze plans. Because of this, purchasing a bronze plan could be an inexpensive way to ensure quality coverage.

But for some with certain income levels, premium subsidies could equal the gross premium of a bronze plan, making it free. Remember Sandra from the example above? In order to get free health insurance and pay nothing in monthly premiums, Sandra would only need to find a plan in her area that was less than her premium subsidy of $314 per month. If the benchmark silver plan in her area was more expensive, her premium subsidy would increase. If Sandra’s income was lower, her premium subsidy would also increase.

Thanks to high silver premiums, free bronze plans with zero premiums, and cheap health insurance for other plan levels, may turn out to be common this year for those who qualify.

See if You Qualify for Zero Premium Health Insurance

You might be closer to free health insurance than you think. A licensed health insurance agent can help you determine if you qualify for a premium subsidy. And if you do, an agent can help you determine the amount of your subsidy. If you are eligible for $0 premium health insurance, an agent can help you evaluate if that plan is best suited for your needs.

Even if you don’t qualify for a premium subsidy, a licensed agent can help you compare plans on and off the health insurance marketplace. That way, you can find affordable healthcare that meets needs. Best of all, their services come at no cost to you.

To contact an agent today, call us at (800) 304-3414.

 

* Premium subsidies will vary, depending on the area where you live, because premium subsidies are higher where silver plans cost more. The examples provided were generated using a subsidy calculator available on the marketplace and may not reflect the premium subsidies available to you, if you qualify.

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References

https://www.cms.gov/newsroom/press-releases/premiums-federally-facilitated-exchanges-drop-2019 |https://www.kff.org/private-insurance/issue-brief/tracking-2019-premium-changes-on-aca-exchanges/ | http://www.npr.org/sections/health-shots/2017/10/24/559565543/limited-outreach-shorter-sign-up-time-may-cause-insurance-headaches-in-2018 | https://aspe.hhs.gov/poverty-guidelines | https://www.kff.org/interactive/subsidy-calculator/ | https://www.kff.org/health-reform/issue-brief/explaining-health-care-reform-questions-about-health/ | https://www.forbes.com/sites/nextavenue/2017/10/22/affordable-care-act-tips-for-the-nuttiest-open-enrollment-season-ever/#263a65d4155d

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