Q: Will insurance from a state health insurance marketplace (exchange) be cheaper than what I can get on my own now?
A. That depends on a lot of factors, including where you live, your age, your health status, and your income.
Every state has a marketplace (exchange) where people can shop for individual health insurance plans, although rates vary quite a bit from one state to another. There has been tremendous spin from both supporters and opponents of the ACA (Obamacare) regarding rates in the marketplaces, but there’s no simple answer to this question.
Prior to 2014, prices for individual health insurance varied based on medical history, age, gender and geographic location. There were a few states where carriers did not utilize medical underwriting (New York is one example, which helps explain the significant rate decrease in the individual market there, described in the link above), but in the vast majority they did.
So if you’re healthy and you’ve always been able to get an underwritten plan with no rate increase based on your medical history, a policy in the new marketplace might be more expensive for you. But people who have been paying increased premiums because of pre-existing conditions might be able to get new marketplace plans that are less expensive than what they were paying before.
The ACA prohibits gender-based premiums and limits the amount that can be charged for older enrollees to three times the price for younger enrollees. This means that younger people will likely have premiums in 2014 that are higher than what they paid in 2013, whereas older people will have lower premiums (anyone 65 or older will continue to be on Medicare, which is unchanged by the ACA; the marketplaces are irrelevant for them). Premiums in the marketplace can still vary based on tobacco use and geographic location.
The biggest factor that will impact your premiums in the marketplace is whether or not you qualify for subsidies. If you do, this will combine with the factors described above, either to mitigate all of part of the your increased premium, or to further lower your decreased premium.
The people likely to see lower premiums are those who fit into some or all of these categories:
- in poorer health
- income that qualifies for subsidies.
Those who will tend to see higher premiums fit into some or all of these categories:
- in good health
- income that does not qualify for subsidies.
If your net premium will decrease in the marketplace, your best option is probably to enroll in a marketplace plan before December 23, 2013. (Your effective date will be January 1, 2014.) But if you’re going to be paying more in the marketplace, you can shop “off-exchange” to compare additional options, or consider keeping your current plan until it renews in 2014.