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Affordable Care Act: Average Premiums Will Be Lower Than Projected

Government estimates monthly cost at $328 (September 25)

Days before new online health insurance markets are set to open, the Obama administration has released a look at average premiums, saying rates in most states are lower than earlier projected — and that 95% of consumers will have at least two insurers to choose from.

The report comes as part of a stepped-up administration effort to explain and defend the health law as congressional Republicans target it for defunding.

Until the new report, little information was available about insurance rates in most of the 36 states whose online marketplaces will be overseen entirely or partially by the federal government because state leaders opted out of running their own.

The analysis showed significant variations among states: A family of four making $50,000 in Wyoming, for instance, would pay $1,237 a month, on average, for a midlevel plan before subsidies, compared with $584 a month, on average, in Tennessee. After subsidies are added in, however, the cost to both families would be $282 because the amount they pay is linked to their income, not to the cost of coverage.

While experts say premiums vary across the states and even within states, the analysis pegged the national average for an individual at $328 a month for a midlevel policy called a silver plan, before subsidies are factored in. That’s less than the average $392 projection drawn from earlier data released by the nonpartisan Congressional Budget Office, which will mean savings to families as well as to the federal government for tax credits.

The insurance marketplaces, which can be used by individuals and small businesses, are expected to enroll 7 million people next year, according to the CBO. Of those, 6 million are expected to qualify for subsidies because they do not have affordable job-based coverage and their incomes are between 100% and 400% of the federal poverty level. That’s between $11,500 and $46,000 a year for an individual, or up to $94,000 for a family of four. Those who receive subsidies must pay between 2.0% and 9.5% of their income — on a sliding scale — toward the premium.

Source: Kaiser Health News; September 25, 2013.

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