NCPA - National Center for Policy Analysis

Will Your Premiums Go Up This Year?

October 21, 2014

The Affordable Care Act's second year of open enrollment begins in November. Angela Boothe of the American Action Forum has identified seven different ways that a person's premium on the exchange might increase this year. These include:


  • Data mismatch: After last year's enrollment, there were a number of individuals whose income information on their health insurance applications was different from the income information that the Internal Revenue Service had for that person. If the income information originally provided was too low, the enrollee will see an increase in premiums this year, as the cost of the premium goes up as subsidies go down (and subsidies go down as incomes rise).
  • Getting a raise: An increase in pay could send your monthly premiums rising. Boothe offers an example: an exchange enrollee with a $15,000 annual salary would typically pay $25 per month in premiums. If that individual sees his pay rise by just $2,000, his premiums will double to $50 per month. Individuals who do not report changes in pay will be subject to "claw back" during next year's tax season.
  • A new earner: Premium subsidies are determined by household, not individual, income. As a result, the law may encourage families to limit increases in household income. For example, a couple's teenage child might want to get an after-school job, but the additional earnings could send the family's household income up, consequently raising premiums.
  • Marriage: Two individuals eligible for subsidies may no longer be eligible for subsidies once they are married and have a combined household income above the premium assistance threshold. For example, two individuals earning $25,000 annually will receive $600 each in federal subsidies, but if they marry, their $50,000 household will not be eligible for support.
  • Moving: Insurance rates vary from state to state, and even within states. Because premiums are based on geographic "rating areas," a short move from one area to another could have major cost implications. For example, Boothe writes that a 50-year-old woman in Virginia who moves from one county to another -- yet keeps her same insurance plan -- could see a premium increase of more than $40 per month.

Source: Angela Boothe, "Seven Ways Your Exchange Premium Can Increase," American Action Forum, October 16, 2014. 


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