Affordable Care: Employer plan costs too much

Is ObamaCare a good option for a college student who makes about $15,444 a year? I still live with my mom and our combined income totals $30,000.  I work at a university (part-time) and I’m 50% benefits eligible, but their health plan costs about $250 per month. That’s roughly 55% of my check. I have bills and believe that this is too much for me to pay for university coverage. Please advise. 

Danielle in Texas

Dear Danielle in Texas,

Your mother’s income won’t be counted on your application for government subsidies, so let’s focus on your income.

At $15,444, you are just above 133% of Federal Poverty.  This is good news.  It means that you will qualify for government help to buy a plan from the health insurance exchange (also called “marketplace”).  It’s important that your income not go below 133% or $15,282.  There is a bit of a strange situation in Texas and other states that are not expanding Medicaid.  People earning less than 133% cannot get subsidies to buy health insurance, and also cannot get Medicaid.  (These people also don’t face the penalty for going uninsured, so don’t worry about that.)

Next, the university plan costs you more than 9.5% of your income to join.  Therefore, health reform considers it “unaffordable”.  It’s possible that the university would get hit with a penalty because you are offered an unaffordable plan.  They may be eliminating the option for part-timers, in order to avoid these penalties.  Or, they might reduce your cost to 9.5% of your income.  They would notify you about changes at least 30 days before the plan has its annual renewal.

If the university reduces your cost to join so that it is considered affordable, then you cannot go to the exchange to buy your own plan.  The exchange is only for people who do not have an employer plan, or whose employer plan does not meet health reform standards.

I’m going to assume that the university will drop its part-timer plan.  They are not required to offer it and it could lead to penalties unless they make it affordable.  Based upon that, you should go to the health insurance exchange and find out your options.  They will cost you less than the $250 per month you are paying now.  A person earning 133% of Federal Poverty will pay between two and three percent of income for his/her coverage from the exchange.    That would be about $300 to $460 per year for you.  You would also qualify for help paying your co-pays and deductibles; to get this help, you have to choose particular plans.

It may take some time before the exchanges have their systems working properly to show you the plan options and calculate your subsidy.  You don’t need to rush though.  You have until December 15 to sign up for coverage that starts January 1.

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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.