In the world of a global marketplace at the touch of a button, it is increasingly incumbent upon people to shop around for nearly everything, including health care coverage. Prior to opening the marketplace for healthcare coverage last year, the Obama administration unveiled data showing that many Americans with health insurance bought under the Affordable Care Act could face substantial price increases in 2015 — in some cases as much as 20 percent — unless they switch plans. Whether this was intended to spur people to check out the new policies or was a harsh reality, this year has been telling.
The Affordable Care Act was intended to reduce the number of uninsured people, and relative to this goal, it has been successful. The number of uninsured Americans hit a seven-year low in July, as only 11.4% of adults lacked some form of health insurance. That number fell 37% since late 2013, a marked victory for the Affordable Care Act.
Coverage is fairly uniform across age groups below age 65, and the most significant increases have been in coverage for Blacks, Hispanics, and households making less than $36,000 per year. The chart below from Gallup1 shows the percentage changes of those uninsured for different demographics; each group has seen increased coverage.
If health insurance is otherwise affordable, but one chooses not to buy it, a fee called the individual shared responsibility payment is applicable. The fee is due for any month an individual or spouse, for himself or herself or dependents fails to have insurance. The fee is due when filing federal tax returns for the year without coverage.
The fee is calculated 2 different ways – as a percentage of household income, and per person. The higher of the two is what is due.
Percentage of income
- 2.5% of household income
- Maximum: Total yearly premium for the national average price of a Bronze plan sold through the Marketplace
Per person
- $695 per adult
- $347.50 per child under 18
- Maximum: $2,085
Of the 10.2 million people who obtained coverage through federal and state marketplaces in 2015, note that 85 percent receive subsidies in the form of tax credits to help pay premiums. When considering the limitations of these plans, along with the significant rise in premiums, the results on affordability aren’t quite as clear.
According to research in the Wall Street Journal, the average 2016 family plan may face premium increases of 11.2%, the average individual plan may see 8% increases, and the average bronze plan may expect up to 16.6% jumps.2
According to a recent New York Times article, health insurance companies across the board need to raise premiums in order to stay afloat. These companies, saying their new customers under the Affordable Care Act turned out to be "sicker than expected," are calling for rate increases of 20 to 40 percent or more; some insurers said their claims payments totaled more than 100 percent of premiums. As a result, it is not out of line to expect to see premiums rise over the next few years until they reach a sustainable level for insurers.3
1 http://www.gallup.com/poll/181664/arkansas-kentucky-improvement-uninsured-rates.aspx
2 http://www.cnbc.com/2015/07/06/nies-seek-big-rate-increases-for-2016.html
3 http://www.nytimes.com/2015/07/04/us/health-insurance-companies-seek-big-rate-increases-for-2016.html
