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How am I supposed to afford insurance?

Consumer Reports News: February 08, 2013 08:08 AM

Q. I make about $35,000 a year, and my employer doesn't provide health insurance. I barely make it through the month as it is, and I definitely won't be able to afford health insurance or a fine once the Affordable Care Act mandate starts. I'm afraid of what will happen.

A The affordability of health insurance is somewhat in the eye of the beholder. I'm betting you're generally healthy and have never experienced the breathtaking bills that can come with a serious illness or injury. If you had, you might be more motivated to find room in your budget for health insurance.

Let's walk through the process of obtaining individual coverage under the Affordable Care Act. On Oct. 1, a health insurance "exchange," or Marketplace, will open for business in every state, selling plans that begin on Jan. 1, 2014. That's the date by which almost all Americans will be required to have health insurance or pay a fine. You'll be able to access your state's Marketplace online, on the phone, or in person, and compare and purchase private health plans that meet new, higher standards for quality and value. You'll also be able to find out among other things, how much insurance is going to cost you based on your age, income, family size, and whether you smoke.

To get a rough idea of what you might pay in 2014, check out the Kaiser Family Foundation's online subsidy calculator. If you are single, age 40, and making $35,000 a year, you'll qualify for a subsidy of about $98 a month, which will be paid directly to the health plan you choose. You would then choose a "tier" of coverage. They are, in descending order of generosity, platinum, gold, silver, and bronze. If you buy a midpriced silver plan (the only type the Kaiser calculator includes), you'll be expected to pay an additional $277 a month yourself. Like all plans sold on the exchange, it would provide comprehensive coverage of all types of medical care.

You can also opt for a less costly bronze plan, in which case your $98 subsidy will cover a larger share of your premium. The trade-off is a higher deductible, copays, and/or coinsurance. If your share of the premium for the cheapest bronze plan on your exchange is more than 8 percent of your income--which in your case works out to about $233 a month-- you'll be exempt from paying a fine for not having health insurance.

But you would also, at that point, qualify for catastrophic insurance. (Those under 30 will be eligible for catastrophic insurance regardless of income.) The catastrophic plan will probably be slightly cheaper than a bronze plan, but the only things covered without a deductible will be preventive care and three primary-care doctor visits a year, and the deductible could be as high as about $6,250. You may think it's not worth it, but if you should come down with something as minor as appendicitis, you'd run through that deductible in no time, and everything above it would be covered 100 percent.

For more information, see our Health Insurance Buying Guide as well as rankings of health insurance plans.
Got a question for me? Ask it here. Please include the state you live in.

Nancy Metcalf

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