Obamacare deadline 101: How much will enrolling cost me?

For many Americans, the question of enrolling in Obamacare is not just about the health-insurance benefits – it’s also about what those benefits will cost.

Those costs can vary widely depending on your circumstances, allowing President Obama to tout his health insurance reforms as offering premiums for "the equivalent of your cellphone bill," even as some families see their costs jump to a higher level than ever.

It's true that with subsidies provided by the law a 30-year-old with $20,000 in income might pay as little as $44 per month in premiums – less than many typical cellphone bills. But the same individual, if earning a higher income and being a bit older, could owe $250 or more per month.

Before walking through the details of how this all works, a word or two on who is buying insurance on one of the 50 state “exchanges” under the Affordable Care Act.

Most Americans don’t need to sign up on an exchange. The large majority are insured through an employer plan, Medicare, or Medicaid (a program that more Americans now qualify for due to Obamacare).

But for people who don’t have insurance, you have until March 31 to enroll on an exchange (with some newly announced flexibility surrounding that date) or owe a tax penalty that may total 1 percent of your income for the 2014 calendar year. You may qualify for an exemption from the penalty as a result of factors such as financial hardship.  

Costs on the exchanges will hinge on a few key factors. Those are:

1. Where you live.
2. The plan you choose (from “bronze” level to “platinum”).
3. Your income.
4. Your age.
5. How many people in your family are being covered.
6. Whether you use tobacco.

What won't matter anymore, due to the Obamacare reforms, is whether you’re a man or a woman or whether you have any health problems (“preexisting conditions” in insurance-speak).

Here’s how each of the variables plays out:

Where you live. The prices within Obamcare are set by insurance companies that have chosen to participate. They offer coverage to residents of specific areas they serve. Their pricing can vary a lot among states (and even among counties within a state) depending on the amount of competition.

Let's say you're 45 years old and make $50,000 per year – higher than what would qualify for Obamacare subsidies to help with your costs. Here and throughout the story, the numbers flow from an Affordable Care Act calculator set up by the Kaiser Family Foundation.

If you live in Minneapolis, you’d owe $2,093 per year ($174 per month) in premiums for a plan that meets Obamacare standards as “silver” quality coverage.

The same plan would cost you $5,106 per year ($426 a month) if you live in San Francisco (a higher-cost area) or $6,525 per year ($544 per month) if you live in rural Albany, Ga., where there’s only one insurer offering coverage.

A national average cost for you, according to the calculator, is $3,661 a year ($305 per month).

The plan you choose. Shoppers on the exchanges can choose different levels of coverage. The more you agree to pay in monthly premiums, the less you’ll be asked to pay in “out of pocket” costs when you use medical services. The quality level called “silver” is popular because, once you’ve paid your premium, the insurer should pay for about 70 percent of covered care. In a bronze plan this value drops to about 60 percent.

If you owe $3,661 for a silver plan, you would owe $3,034 for a bronze plan (nationwide average in the calculator).

Income. Now, let’s say you make less income – and thus are eligible for Obamacare subsidies.

Although the sticker price of the average silver plan remains the same, if you're a 45-year-old who makes $30,000, you would get about one-third of your premium covered through a federal tax credit. You'd owe about $2,512 per year, compared with $3,661.

If your income is $17,500, the subsidy rises and the cost drops even more – to $719 per year. That’s getting down into cellphone range.

With income much lower than that, you would start to be eligible for Medicaid rather than a subsidy for the exchange, except in states that aren’t participating in Obamacare’s expansion of that program. The subsidies phase out entirely as income rises to 400 percent of the poverty level.

The poverty level is determined by the number of people in your household. The US Department of Health and Human Services has a chart.

Your age. Being older or younger can also make a big difference. A 64-year-old who is not eligible for subsidies would pay more than twice as much as a 45-year-old in premiums for a silver plan.

That 64-year-old’s $7,606 annual premium compares to $2,877 for a 30-year-old. (Again, these are national average figures.) Once people reach 65, they are eligible for Medicare and wouldn’t need to shop on exchanges.

Number of people enrolling. Families pay more than a single individual in general, but the cost per person goes down because children are cheaper to insure. A married couple age 45 (and not eligible for subsidies) would owe $7,322 per year, or twice as much as a single person. The cost then rises by about $1,600 per child, but beyond the third child the premium will stop going up. So, in the national-average example, the annual premium for a five-person family is $12,151.

But note this: As your family gets bigger, that can also push you closer to the poverty line for a given level of income – and thus help you qualify for subsidies. The examples just given assume no subsidies, yet for most families the tax credits will be substantial.

At $50,000 in income, the two-parent family with three kids would owe just $1,719 a year in premiums (not $12,151). In fact, with that many kids, even a family with $100,000 in annual income would qualify for some subsidy.

And, although the overall premium doesn’t change as the number of children goes beyond three, the subsidies do keep growing, because each child is bringing the family closer to the official poverty level.  

Having kids doesn’t guarantee a subsidy, though. The two-parent household we’ve been discussing, if it includes one child, would qualify for a subsidy at $78,000 in income but not at $80,000.

Tobacco use. So far, all the examples in this story have assumed that enrollees are not tobacco users. Here’s how smoking affects the equation: Generally, insurers can add surcharges of as much as 50 percent for people who use tobacco products. So a premium might jump from $2,000 a year to $3,000 for this reason, explains the Kaiser Family Foundation, a nonprofit group that tracks health-care issues.

“States can prohibit insurers from applying a tobacco surcharge or further limit the tobacco penalty,” Kaiser says, saying states that have done so include California, Massachusetts, Rhode Island, and Vermont, as well as the District of Columbia.

Bottom line. As you see, whether the Affordable Care Act delivers on the “affordable” part of its name depends a lot on your own circumstances. Backers of the law say a big plus is that it’s making high-quality plans available to anyone, regardless of preexisting conditions.

Health-care experts say that’s true, but also that costs are a big factor affecting whether many people enroll. They warn that the costs are bound to change as insurers learn more about the health status of people who enroll. The more costly the pool of people is in a given area, the more prices will rise in that locale.

The penalty for not enrolling is also slated to go up, by the way. If you go without health insurance for 2014, the law says you’ll owe a tax penalty of 1 percent of income or $95, whichever is greater. For 2015 the penalty rises to 2 percent of income or $325, whichever is greater.