Health Insurance 101 | How Tax Credits Work

Achieve  Alpha - Health insurance 101 Blog Graphic

The Affordable Care Act has transformed how Health Insurance operates. In order to understand how health insurance works lets go through a real life example. The most popular plan my agency sells is the Premera Silver $3,000 deductible plan (There are Platinum, Gold, Silver & Bronze Plans), so wanted to pick a middle priced plan that provides a strong network of doctors, prescriptions and overall services.

To walk through Health Insurance 101. Essentially as you make less money you pay less, then as you make more you pay more. Pretty simple concept, yet wanted to give you actual premium amounts to walk you through what a 51 year old couple would pay.Premiums of a 51 year old couple_wording1

The two red lines indicates the income range where this couple would get tax credits. If they make less than $22,000 they get the FREE Medicaid plan (also called Apple Health). However once they make over $63,000 they would pay the full cost level of $913/mo. There is a downside to the FREE Apple Health coverage, as it has a fairly limited network of doctors, especially if you are looking for a specialist. Yet if you have a major medical issue and rushed to the hospital they cover all expenses for the Apple Health program.

Monthly Premiums Age 51 Premera Silver PlanIf their income is $23,000 or more they would qualify for a Qualified Health Plan (QHP) where the government gives tax credits in order to make their premium payment more affordable. This is only based on 2015 income and does not take assets into account. So technically they could have $1 Million in the bank and make $30,000 and only pay $328/mo for health insurance for both of them.

Now that you can see what the price for the Premera Silver $3,000 deductible would be, but what about how ACA health plan benefits?

To give you the 101 overview, all plans cover pre-existing conditions. Since all medically necessary health issues are covered this makes plans very expensive. The good news is that you can change plans every year…so if you expect to have a lot of medical expenses in one year just upgrade to a Platinum or Gold plan, then downgrade back to a Bronze plan the next year.

Other coverages included are maternity, prescription drugs and preventative care. Previously the main differences between plans were Maternity or Non-Maternity, which means men clearly did not buy the maternity plans (and health insurance was cheaper for men and more expensive for women in their child bearing years).

In conclusion of Health Insurance 101, under the ACA some people are paying more (for example if a couple makes more than $63,000) and some people pay less (a couple that makes below $63,000). This is an over generalization, but it is actually quite an accurate way of comparing 2013 pre-ACA plans compared to plans starting in 2014 post-ACA plans.

2015 ACA Income Chart

For your personal situation and determining how much your tax credit would be check out the chart to the right.

Note, if you are offered coverage through an employer plan, even if it is too expensive…then you are NOT eligible for any tax credits.

If you have any questions please give us a call anytime at 425-802-2783.

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Gary Franke, MBA
Independent Broker
Achieve Alpha Insurance, LLC           
12507 Bel-Red Rd, Ste 103
Bellevue, WA 98005
(425) 802-2783

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