Affordable Health Insurance: New Changes to ACA Premium Costs

The Affordable Care Act (ACA), also known as Obamacare, recently underwent significant revisions as part of the American Rescue Plan Act of 2021. Among these changes is a new provision that could significantly reduce health insurance premiums for many Americans.

Capping Premium Payments at 8.5% of Income

The most notable change is the capping of premium payments at 8.5% of household income. This means that individuals and families who purchase health insurance through the ACA marketplaces may only be required to pay up to 8.5% of their annual income towards their premiums.

This change is a major relief for many middle-class families who have been struggling to afford health insurance. In the past, some families were paying as much as 15% or more of their income on premiums.

Eligibility for Premium Tax Credits

To be eligible for the premium payment cap, individuals and families must meet certain income requirements. The cap applies to those with incomes between 138% and 400% of the federal poverty level (FPL).

For 2024, this means that a family of four with an income between $37,000 and $106,000 would be eligible.

Calculating the Premium Cap

The premium cap is based on the cost of the second-lowest-cost silver plan in your area. Silver plans are one of the four tiers of coverage available through the ACA marketplaces. They typically offer a good balance between affordability and coverage.

If you choose a plan that is more expensive than the benchmark plan, you will be responsible for paying the difference. Conversely, if you choose a plan that is less expensive, you will receive a larger premium tax credit.

Example

Let’s say you are a family of four with an income of $60,000. The second-lowest-cost silver plan in your area costs $1,200 per month. Under the new premium cap, you would only be required to pay 8.5% of your income towards premiums, which is $510 per month. This would save you $690 per month on your health insurance costs.

Impact of the Changes

The new premium payment cap is a significant change that could help millions of Americans afford health insurance. If you are currently uninsured or underinsured, it is worth checking to see if you qualify for premium tax credits under the new law.

To determine your eligibility and learn more about your options, please seek assistance from a licensed health insurance agent. They can help you find a plan that meets your needs and budget.

Remember, health insurance is essential for protecting yourself and your family from unexpected medical expenses. With the new premium payment cap in place, it is now more affordable than ever to get the coverage you need.