Smoke Em’ If You Got Em’

Many people will be surprised at what the Affordable Care Act will bring in the near future. Perhaps none will be more surprised than folks who think that their income will entitle them to a subsidy from a state or federal healthcare exchange only to discover that the smoking surcharge WILL NOT be subsidized.  That’s right folks, something that is getting little fan fare, perhaps rightly so, the only health consideration in the rating formula under the new law is whether you are a smoker or not.  The law allows up to a 50% surcharge for smokers.  Simply put, if your age and geographic location dictate a rate of $1000 per month and you are a smoker, you will pay $1500 per month.  Here are two estimates from the subsidy calculator for you to puff on…

John Q Clean           Unsubsidized Premium estimate= $3,761

Age 38                       Amount you pay for Premiums = $3,325 which covers 88% of Premium
$35,000 per year      305% of poverty level
No dependents        You would qualify for $436 in subsidy which is 12% of the overall premium
Monthly Spend         $313.41 per month

John Q Marlboro     Unsubsidized Premium estimate= $5,641 ($1880 Surcharge or 50%)

Age 38                      Amount you pay for Premiums =$5,205 which covers 92% of Premium          
$35,000 per year     305% of poverty level
No dependents       You would qualify for $436 in subsidy which is 8% of the overall premium
Monthly Spend        $433.75 

These price estimates are for a Silver level plan.   You are guaranteed access to a Silver plan with an actuarial value of 70%. This means that for all enrollees in a typical population, the plan will pay for 70% of expenses in total for covered benefits, with enrollees responsible for the rest.

 I see two things to keep in mind here.

 

1)     The subsidy for either one of these scenarios is still pretty light for someone of that income level. The media is touting that most people will qualify for a subsidy, but in this scenario, the employee would be better off under an employer plan where the employer is paying 50% of the single premium.

2)     The additional costs added for the smokers premium is a regressive “tax” on the lower income brackets that this act is reportedly striving to help.  

 Even at substantially lower income levels ($20,000)  on the Rate Subsidy Calculator the overall premium remains the same, the subsidy does increase but the $1,880 tobacco surcharge remains unsubsidized even at an income of $15,000 less per year, making that surcharge a larger percentage of the overall income of the individual. 

I feel very confident with the Logan Lavelle Hunt solution of Association Health Plans for employers under 50 employees.  Give us a call; we can see if we can help you.  We want to be your trusted source for Health Care Reform. #kyhealthplans#kyexchange#healthcarereform#kynect#healthinsurance#obamacare#healthexchange

Peace