By now most consumers know that they can get premium subsidies to buy health insurance if their income is below 400% of the national poverty level. The less you make, the larger subsidy. If you earn too much, there is no subsidy at all.
But for Americans with income between 100%-250% of the national poverty level, there is another way to reduce the cost of health care – Cost-Sharing Reductions (CSR).
A new study released by Avalere Health points out that more than two million Americans could have saved money had they understood the true value of the rules surrounding CSR.
The CSR allows individuals who buy a Silver plan (that is the mid-priced Silver plan) to get a credit on their deductible and improve their out-of-pocket coverage. But only if you buy a Silver plan. This is done by increasing the actuarial value (the amount of medical expenses typically covered) of your health insurance. For example:
- 100-150% FPL = 94% Actuarial Value (CSR 94)
- 150-200% FPL = 87% Actuarial Value (CSR 87)
- 200-250% FPL = 73% Actuarial Value (CSR 73)
- More than 250% FPL = 70% Actuarial Value (Silver plan without CSR)
Because many Americans shop for health insurance only on price, they opt for the cheaper Bronze plans (they have a 60% actuarial value.) This is an example of what I call ‘unaffordably cheap’ health insurance. If you have preexisting medical conditions, and expect to use your health plan, the key thing to calculate is the total family healthcare spend, of which health insurance is one part, and the other is medical expenses not covered by your health insurance.
For a 30 year old, in 2015 the difference between the average cost Bronze plan and the average cost Silver plan is about $50 a month. But, if that person is between 100% and 250% of the Federal Poverty Level, and buys a Silver plan, they could save up to $1,750 by being eligible for a plan with a lower deductible and improved out of pocket coverage. The less they make, the larger the potential savings if they use covered healthcare services.
Too often, people believe that ‘next year’ is the year they won’t have out-of-pocket expenses. They don’t have access to the tools that help them estimate their likely medical expenses, which will be a new feature this year at HealthCare.com. Our tools will help consumers pick the plan that best fit their personal budget and health needs.
To make sure you learn about these new tools when they are available, run a quote on HealthCare.com, and sign up to become a registered user. Just click “Sign In” and create an account with your email address, or link to your Facebook page to gain access. We’ll let you know when you can find out how much you can save on your healthcare plan this coming year.