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eHealth ObamaCare Countdown: Your Second Step to Get Ready for Health Reform This Year

MOUNTAIN VIEW, CA--(Jun 10, 2013) - Today eHealth, Inc (NASDAQEHTH), parent company of eHealthInsurance.com (http://www.ehealthinsurance.com), America's first and largest private online health insurance exchange, published the second step in its six step guide to help consumers prepare for health care reform and this year's new open enrollment period, which begins Oct. 1, 2013.

Beginning in 2014, individuals and families who do not have major medical health insurance that meets minimum federal standards will be subject to a tax penalty, which has been dubbed "the mandate tax."

In Step One of this six step process, eHealth outlined when an individual or family that already had health insurance might be required to enroll in a new plan. In this step, Step 2, eHealth breaks down the mandate tax, along with the subsidies in Obamacare that are designed to help make insurance more affordable for lower income families.

Individual and family subsidies will be based on the cost of the second least expensive "silver-level" plan available in a given area. The benefit and structure of new health insurance plans, including their Bronze, Silver, Gold and Platinum Level "Actuarial Values," will be described in greater detail in Step Three.

Step 2: June, 2013: Understand the new tax penalties and government subsidies. 
Many of the individuals and families who purchase their own health insurance may be able to qualify for subsidies, or "premium tax credits," designed to make their health insurance more affordable. Consumers who understand how the subsidies and tax penalties work will be better able to make decisions about which products to purchase and at what price.

Qualifying for Subsidies
The law determines whether or not an individual is eligible for subsidies based on the following criteria:

1. They live in the United States of America. 
2. They're a U.S. citizen, U.S. national or otherwise lawfully present in the United States. 
3. They cannot be incarcerated. 
4. Their combined total household income is between 133% and 400% of the Federal Poverty Level (FPL). People with incomes below 133% of FPL will qualify for Medicaid in most states.

This table breaks out income levels below 400% of the Federal Poverty Level (FPL).

Income requirements for the Affordable Care Act      
Household Size   2013 Annual Income Above the Federal Poverty Level (FPL)     
    100% FPL   133% FPL   150% FPL   200% FPL   300% FPL   400% FPL
1   $11,490   $15,282   $17,235   $22,980   $34,470   $45,960
2   $15,510   $20,628   $23,265   $31,020   $46,530   $62,040
3   $19,530   $25,975   $29,295   $39,060   $58,590   $78,120
4   $23,550   $31,322   $35,325   $47,100   $70,650   $94,200
For each additional person add   $4,020   $5,347   $6,030   $8,040   $12,060   $16,080

How Subsidies (Premium Tax Credits) Work
The subsidies (also called Premium Tax Credits) will work on a sliding scale that limits an individual or family's spending on their monthly health insurance premiums to a fixed percentage of their estimated annual income. Subsidies will be based off of the second least expensive "silver-level" plan (a plan that covers 70% of the average cost) available in the area where the individual lives.

If the second least expensive silver plan costs more than the fixed percentage of their estimated annual income, the individual or family would receive a subsidy in the amount of the difference. They could then use that subsidy when purchasing a health insurance plan. See this example.

Subsidy Calculation
Adult Male (Dave)
non-smoker, age 31
Annual Income  
$2,873 per month / $34,476 per year.
Step 1: Determine the cost of 2nd least expensive silver plan
• Assume the cost is $500 per month for the purpose of illustration only.
Step 2: Determine Individual's Maximum Monthly Premium
• Premiums cannot exceed 9.5% of income
• 9.5% of $34,476 per year = $3,276 (year) or $273 (month)
Step 3: Determine Subsidy Amount
• Calculate the difference between the 2nd least expensive silver plan ($500 per month) and 9.5% of income ($273 per month)
• $500 - $273 = $227 
• The amount of the subsidy would be $227 (per month)
Step 4: Shop for plans using subsidy
• Dave can use that $227 subsidy to buy a bronze, silver, gold or platinum plan. 
• For simplicity, let's assume "Dave" wants a silver plan and there are three to choose from. 
• He would take his subsidy of $227 and be able to apply it to the cost of the three silver plans available.
Silver I Plan Silver II Plan  Silver III Plan
Monthly Premium: $450 Monthly Premium: $500  Monthly Premium: $550
Value of Subsidy: $227 Value of Subsidy: $227  Value of Subsidy: $227
Cost After Subsidy: $223 Cost After Subsidy: $273  Cost After Subsidy: $323

The amount of money any individual or family could spend on the 2nd least expensive silver plan would range from four percent of their income, to nine-and-a-half percent of their income. Families earning between 133% and 150% of FPL, would spend no more than four percent on that plan, while families with incomes between 300% and 400% of FPL would spend no more than nine-and-a-half percent of their income on that plan.

The following table provides a rough outline for the way the percentage of monthly income is calculated by household size, and the limitations that the law places on premiums for individuals and families with incomes below 400% of the Federal Poverty Level (FPL).

  2013 Monthly Income Above the
Federal Poverty Level (FPL)
133%
FPL
150%
FPL
200%
FPL
300%
FPL
400%
FPL
Monthly Income Household Size 1 $1,273 $1,437 $1,915 $2,873 $3,832
ACA Limit on Monthly  Premiums * 3% of taxable income = $38* 4% of taxable income  = $57* 6.3% of taxable income = $121* 9.5% of taxable income = $273* 9.5% of taxable income = $364*
Monthly Income Household Size 4 $2,610 $2,944 $3,925 $5,888 $7,850
ACA Limit on Monthly  Premiums * 3% of taxable income = $78* 4% of taxable income = $118* 6.3% of taxable income = $247* 9.5% of taxable income = $559* 9.5% of taxable income = $746*
*For second least expensive silver level plan available in the individual or family's area.

Tax Penalties
Individuals and families that elect to go without health insurance for more than three months in a given year may incur a tax penalty, which would be applied when they file their income taxes. Penalties are pro-rated by the number of months an individual goes without coverage.

Penalties are phased in over three years, beginning in 2014 when the penalty is 1.0% of income; in 2015 that increases to 2.0% of income; and by 2016 the penalty is calculated at 2.5% of taxable income. The maximum tax penalty can't exceed three times the minimum penalty, or the national average price for a bronze level plan, within a given year. Pricing for bronze level plans is not available, so for this table we've used three times the minimum penalty as the maximum.

This table breaks down how the penalty would be applied each year:

Household Size 2013 Annual Income as a Percentage of the
Federal Poverty Level (FPL)
133%
FPL
200%
FPL
300%
FPL
400%
FPL
Above 400%
Family Size 1 $15,282 $22,980 $34,470 $45,960 $45,961+
2014 Yearly Penalty 
- Minimum: $95 per adult, $47.50 per child
- Maximum: $285
1.0% = $153 1.0% = $230 $285  = Maximum $285 = Maximum $285 = Maximum
2015 Yearly Penalty
- Minimum: $325 per adult, $162.50 per child
- Maximum: $975
2.0% = $325
(minimum)
2.0% = $460 2.0% = $689 2.0% = $919 $975 = Maximum
2016 Yearly Penalty
- Minimum: $695 per adult, $347.50 per child
- Maximum: $2,085
2.5% = $382 2.5% = $575 2.5% = $862 2.5% = $1,149 $2,085 = Maximum
Family Size 4 $31,322 $47,100 $70,650 $94,200 $94,201
2014 Yearly Penalty
- Minimum: $95 per adult, $47.50 per child
- Maximum: $285
$285 = 
Maximum
$285 = 
Maximum
$285 = 
Maximum
$285 = 
Maximum
$285 = 
Maximum
2015 Yearly Penalty
- Minimum: $325 per adult, $162.50 per child
- Maximum: $975
2.0% = $626 2.0% = $942 $975 = Maximum $975 = Maximum $975 = Maximum
2016 Yearly Penalty
- Minimum: $695 per adult, $347.50 per child
- Maximum: $2,085
2.5% = $783 2.5% = $1,178 2.5% = $1,766 $2,085 = 
Maximum
$2,085 = 
Maximum

Additional Consumer Resources:

About eHealth
eHealth, Inc. (NASDAQEHTH) is the parent company of eHealthInsurance, America's first and largest private health insurance exchange where individuals, families and small businesses can compare health insurance products from leading insurers side by side and purchase and enroll in coverage online. eHealthInsurance offers thousands of individual, family and small business health plans underwritten by more than 200 of the nation's leading health insurance companies. eHealthInsurance is licensed to sell health insurance in all 50 states and the District of Columbia. eHealth, Inc. also provides powerful online and pharmacy-based tools to help seniors navigate Medicare health insurance options, choose the right plan and enroll in select plans online through its wholly-owned subsidiary, PlanPrescriber.com (www.planprescriber.com) and through its Medicare website eHealthMedicare.com (www.eHealthMedicare.com).

For more health insurance news and information, visit the eHealthInsurance consumer blog:Get Smart - Get Covered.