September 5, 2013

Studies take early look at health law's premiums

By Ricardo Alonso-Zaldivar / The Associated Press

(Continued from page 1)

The states analyzed by Avalere were California, Connecticut, Indiana, Maryland, New York, Ohio, Rhode Island, South Dakota, Vermont, Virginia and Washington.

In addition to those, Kaiser included Colorado, Maine, Montana, Nebraska, New Mexico and Oregon.

No data on premiums were publicly available for Texas and Florida — together they are home to more than 10 million of the nation's nearly 50 million uninsured people — and key to the law's success.

However, Pearson said she's confident the premiums in the Avalere study will be "quite representative" of other states, because clear pricing patterns emerged.

Four levels of plans will be available under Obama's law: bronze, silver, gold and platinum. Bronze plans will cover 60 percent of expected medical costs; silver plans will cover 70 percent; gold will cover 80 percent and platinum 90 percent.

All plans cover the same benefits, but bronze features the lowest premiums, paired with higher deductibles and copays. Platinum plans would have the lowest out-of-pocket costs and the highest premiums.

Mid-range silver plans are considered the benchmark, because the tax credits will be keyed to the cost of the second-lowest-cost silver plan in a local area.

And there's another important detail for consumers to be aware of: People with modest incomes may come out ahead by sticking with a silver plan instead of going for the lower premiums with bronze. Additional help with out-of-pocket costs like copays will only be available to people enrolling in a silver plan.

Although the sticker price for premiums rises dramatically above age 40, the tax credits are shaping up as a powerful equalizer for older consumers. That's because they work by limiting what you pay for premiums to a given percentage of your income.

For example, someone making $23,000 would pay no more than 6.3 percent of his or her annual income — $1,450 — for a benchmark silver plan. The amount you pay stays the same whether the total premium is $3,000 or $9,000.

However, those tax credits taper off rapidly for people with solid middle-class incomes, above $30,000 for an individual and $60,000 for a family of four.

The Avalere study also found some striking price differences within certain states, generally larger ones. In New York, with 16 insurers participating, the difference between the cheapest and priciest silver premium was $418.

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