Albert E. Bergen, CPA

Obamacare for Maine individuals

The Affordable Care Act (ACA or “Obamacare”) is  set to take full effect beginning in 2014.  Maine didn’t set-up its own health insurance exchange, so Maine taxpayers who who want to buy an individual plan that might be eligible for the Obamacare tax credit must use the federal exchange.  The Obama administration claims that the exchange website now works 90% of the time, and the deadline for enrolling has been moved because of all of the earlier website problems.  Individuals who want insurance through the exchange now have until December 23rd to buy it if they want it to take effect for January 1.

Obamacare Overview for Maine Taxpayers

It seems to be impossible to read or watch any sort of news without see at least one story about the Affordable Care Act.  There are some articles that just give straight facts, and a lot of articles that spin them for one side or the other.  There isn’t a lot of specific information out there about how Obamacare will affect people in Maine.  The provisions of the Affordable Care Act aren’t state-specific, but variations in demographics and how the ACA has been implemented mean that its effects do vary from state-to-state.  This post is meant to explore some of the ways that individuals in Maine might be affected differently than people in other states.

Obamacare, Generally

The Affordable Care Act uses a carrot-and-stick approach to try and increase the number of Americans with health insurance.  The carrots are tax credits.  There are credits to help small employers afford group health plans and credits to help individuals buy their own health insurance if their employers don’t offer affordable health plans.  The sticks are penalties.  Large employers who don’t subsidize health plans for their full-time employees are subject to penalties, and individuals who the government believes can afford health face penalties of their own.  The employer provisions may provide material for a different post, but this one will focus on the parts of the ACA that affect individuals.

Individual ACA Tax Credit

First, the carrot.  The ACA provides a tax credit for many individuals who earn between 138% and 400% of the federal poverty level (FPL) and don’t have access to an affordable health plan through their employers, Medicare, or Medicaid.  The FPL is different in Alaska and Hawaii, but in 2013 it is $11,490 for an individual, $15,510 for a family of 2, $19,530 for a family of 3, and $23,550 for a family of 4 in Maine and the 48 contiguous states.  A single individual may be eligible for a credit if he or she earns between $15,856 and $45,960.  A family of 4 may receive a credit if they earn between $32,499 and $94,200.   Individuals who earn less than the FPL are not eligible for a tax credit because they were intended to be covered by a federally-funded expansion of Medicaid (called “Mainecare” in Maine) to cover people earning up to 138% of the FPL.   Maine chose not to participate in the expansion of Medicaid, so families earning less than 138% of the FPL may find themselves without access to Mainecare and without a tax credit to help pay for insurance.

The credit is designed to limit the taxpayer’s cost for a mid-level (called “Silver”) plan to a percentage of their income that depends upon their income.  The price of the silver plan referenced for figuring the tax credit will vary based upon the taxpayer’s age, smoking or nonsmoking status, and where they live.  Here in Maine, plans are cheapest in Cumberland county and more expensive in most other parts of the state, including Androscoggin county.  The ACA reduces the net cost the referenced plan to an amount between 3% and 9.5% of the taxpayer’s modified adjusted gross income.  Because the policy premiums drive the tax credit, the final amount of the credit varies with income, age, county of residence, and whether or not the taxpayer smokes.

 

Obamacare Maine Plans

There are two insurers offering plans in Maine through the health insurance exchange.  Maine Community Health Options is a new insurance cooperative headquartered locally in Lewiston.  Anthem, of course, has been offering health insurance in Maine for many years.   Maine’s Office of Professional and Financial Regulation maintains a page with information about the plans, including some cost information, but this cost information is difficult to navigate.  The best way to get exact pricing is to go through the full process of applying for insurance and also the tax credits to help pay for it at healthcare.gov.  For a quicker idea of what Obamacare will cost you,  the Henry J. Kaiser Family Foundation maintains a calculator that can give a quick estimate.

According to this calculator, a family of three (two adults, both age 34, and one child) in Auburn earning the city’s median income of $41,649 would have a gross premium of $11,739 for a Silver-level plan, but would be eligible for a premium credit of $8,922.  This brings the total cost of the plan to $2,817.  At a monthly cost of just over $234, this compares very well with many employer-sponsored plans this author is familiar with.

The story changes a bit for an older family with a higher income.  A couple age 54, with a combined income of $80,000, would have a gross premium of $13,555 per year.  This family would be  paying just under $1130 per month and would not be eligible for a tax credit to offset the premium.  Such a couple may be better-able to afford the premiums than a younger family with a lower income and a child, and it is probably less than they would have paid for similar insurance before the Affordable Care Act, but “affordable” may still not be an accurate description for such a policy.

Summary

The average Mainer who wants to have health insurance should do fairly well under the affordable care act.  This is especially true for lower-income families.  Mainers earning 400% or more of the poverty level do less well, especially if they would have preferred to go uninsured and take their chances without the federal mandate.

 

 

 

 

Resources

Henry J. Kaiser Family Foundation Subsidy Calculator http://kff.org/interactive/subsidy-calculator/

Obamacare Plans Costlier in Maine than in Other States

Obamacare Facts.  www.obamacarefacts.com

Maine Community Health Options.  www.maineoptions.org

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