Are You Braced for 2014 Insurance Premiums? Will You Pay More or Less?

August 16, 2013
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Summary: With 2014 approaching rapidly, do you know how much you will pay for health insurance? Do you know the2014 health insurance premiums factors used to determine the cost? Will you be able to afford or will you pay the penalty?

Overall average premiums are slated to rise for 2014 but by how much?

Summary: With 2014 approaching rapidly, do you know how much you will pay for health insurance? Do you know the2014 health insurance premiums factors used to determine the cost? Will you be able to afford or will you pay the penalty?

Overall average premiums are slated to rise for 2014 but by how much?

The average cost of insurance is expected to increase, and this is unfortunate because it means that not all of the increased premiums are being used to cover those that qualify for the premium subsides and cost-share reductions. If the increases were only used to fund the decrease in price for those that qualified then the average would remain the same. According to a recent report by Milliman dated April 25, 2013, http://www.ahip.org/MillimanReportACA2013/, an average increase of 6.9% above 2011 healthcare costs is expected. This indicates that 6.9% of the increases are not going directly to those that qualify for discounts and subsidies, and could be spent in other sectors or the result of inefficiencies in the system. On average, yes the premiums are predicted to increase, but this aside how else will it affect premiums some may wonder. A good way to look at the new costs is that everyone will be paying similar amounts for healthcare, so those that were paying little before will pay more and those that were paying high amounts before will be charged less.

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What are the factors which will affect 2014 health insurance premiums?

According to the Milliman report, there are many factors predicted to increase health insurance premiums. These factors include new taxes and fees along with new requirements and limitations. The most significant factors that are going to be important in calculating the increase in premiums are gender, age, income, and geographic area.  Location could play a part in premium calculations particularly those that had a highobamacare ratio of covered individuals with preexisting conditions which are now guaranteed issue and new community rating requirements. These states may actually see a decrease or a minimal increase in premiums on average.

Who is slated to pay lower premiums in 2014?

The real savings will be seen by those making less than four times the federal poverty line (FPL) as they will be able to acquire prepaid tax credits and cost-sharing reductions to substantially lower the cost of their care. According to familiesusa.org, the 2013 federal poverty line for a family of four in the 48 contiguous states and DC is set at $23,550. The amount by which healthcare costs are predicted to decrease is dependent on how far below the poverty line a family’s income is. Less healthy elderly individuals can expect a decrease from what they are currently paying.

Who is slated to pay higher premiums in 2014?

As expected, this decrease in cost has to come from somewhere and that place is the people making over four times the poverty line, and according to the Congressional Budget Office this currently makes up more than 40% of people with coverage in the individual market. It is said that this group will not be seeing a decrease, but instead a substantial increase. According to the report young, healthy males are expected to see the biggest increase in premiums.

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Contingent factors – will the healthier individuals continue insurance coverage with hefty increases in premiums?

The increase is dependent on the number of low cost individuals enrolled in the program, so the higher the number of low cost individuals enrolled the lower the increase in health care costs will be for everyone involved. The plan works better the more healthy people are enrolled. However, these people have little incentive to stay in the program as their premiums will be raising the most and there is only a small penalty for avoiding participation. The lower the number of healthy people that are enrolled the higher the amount of extra funds are going to be needed, and thus will need to be funded by either raising premiums for enrollees or government intervention which in the end would mean that the additional cost would be covered by everyone through taxes. The new policies will surely increase premiums for some and the healthcare world is going to change greatly. It seems to be a great program for the unhealthy and the elderly, but the fact that it is not the best option for other groups of people could be its downfall.