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Regulation and Compliance > Federal Regulation

Exchange plan prices may be low

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The new public exchanges have done a good enough job at controlling premiums to hold down 2014 federal health insurance subsidy spending.

Analysts at eHealth Inc., a Web-based health insurance broker, give that assessment in a look at PPACA individual exchange plan prices.

PPACA calls for the government to provide subsidies for eligible people with incomes of 133 percent to 400 percent of the federal poverty level who buy coverage through the PPACA exchanges in 2014.

Opponents of PPACA are still trying to block its implementation. Some have gone to court, for example, to argue that PPACA makes subsidies available only to users of state-based exchanges, not to the 36 state exchanges run by the U.S. Department of Health and Human Services.

If the PPACA subsidy program takes effect as written, the government is supposed to provide enough of a subsidy to keep a moderate-income consumer’s share of the premium for the “second least expensive silver-level plan” to 9.5 percent of taxable income.

That means that the consumer’s net cost for moderately generous, “silver-level” coverage should be less than 9.5 percent of taxable income.

A consumer could get a lower net premium by taking a cheaper, bare-bones, “bronze-level” plan.

At the federal exchanges, the second-cheapest silver-level plans are cheap enough that the typical single consumer will need an income under 361 percent of the federal poverty-level, or about $41,000 per year, to qualify for a subsidy, eHealth analysts estimate.

Because coverage will be cheaper for younger buyers, single consumers in their 20s may need to have an income under 265 percent of the federal poverty-level, or about $31,000 per year, to qualify for a subsidy. Under the PPACA definition, young consumers with incomes over that level should be able to pay the full premium for silver-level exchange plans without help from a government subsidy.

At the state-based exchanges eHealth reviewed, silver-level coverage will be affordable by the PPACA definition for most consumers in their 20s who are earning more than 2.5 to 3 times the federal poverty-level.

Consumers in their 50s and 60s likely will need help paying for silver-level plans even if they’re earning 400 percent of the federal poverty-level, the analysts say.

In New York state, which is requiring carriers to charge older consumers and younger consumers the same premiums, consumers of all ages will need to earn 384 percent of the federal poverty-level to find silver-level coverage affordable, the analysts say.

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