Obamacare: subsidies based upon household income

Does household composition — or number of insureds — reduce the premium amounts of the adults in the household in Obamacare?

Skeptic

Dear Skeptic,

It’s a bit of both.

First, let’s straighten out a few concepts and terms.  Premiums are the amount that the insurer charges for the plan.  This may be different from what the person pays if he gets a subsidy (government help.)  The insurer does, of course, count how many people are being covered by the plan.  My point is that the total premium may be more than what the person pays out of his own pocket.

The number of people in the household WILL change a few other things.  The number of people, including the adults and children is used to determine what percentage of Federal Poverty the household has.  Subsidies are available for households with up to 400% of Federal Poverty ($95,400 for a household of four people.)

The number of people in the household may not be the same as the number of people who need health insurance.  For example, a child might be covered by an ex-spouse’s group plan.  The count of people who need a health plan determines whether you need a family plan, a two-adult plan, an adult-child plan etc.

So, in answer to your question, the household composition is used to figure out your subsidies, which in turn sets how much you pay out of your own pocket for your coverage.  The insurer sets its total premium based upon the number of people you are covering, but total premium will be higher than what you actually pay if you get a subsidy.

Linda Riddell

About Linda Riddell

A published author and health policy analyst with 25 years’ experience, Linda Riddell's goal is to alleviate the widespread ailment of not knowing what your health plan can do for you.