Buying Insurance? Costs Could Jump for Older Adults

by Nancy Metcalf Health Writer

The latest proposed replacement for the Affordable Care Act (aka Obamacare) would start hammering older consumers with higher health care costs as early as next year. Here’s what’s going on.

The American Health Care Act recently introduced in the House of Representatives would, starting in 2020, increase health insurance costs significantly for older adults buying coverage on their own.

Like an earlier version of the bill that we wrote about last week, this legislation would simultaneously reduce the subsidies available to many older buyers and increase the premiums that insurance companies are allowed to charge them.

How it would work

But the bill’s authors want to start charging older consumers more right away. Their vehicle is a tweak to Obamacare’s system of premium tax credits that would increase older buyers’ costs by hundreds of dollars a year in the transitional years of 2018 and 2019, during which most of the existing law would remain in effect.

Under the current system, a buyer’s expected contribution to his or her health insurance premium is capped at a certain percentage of income, with a tax credit making up the difference.

As a buyer’s income increases, so does the expected contribution, from a low of 2.04 percent for a buyer with a poverty-level income of $11,880 a year up to 9.69 percent for a buyer earning four times the poverty level, or $47,520. (The Kaiser Family Foundation has a good explainer on how this works.)

More out-of-pocket costs

The American Health Care Act would add a second factor—age—to the calculation. Premium caps would actually decline for consumers under the age of 50, but increase for people older than that.

Right now, for instance, a 55-year-old making $30,000 a year is expected to chip in 8.28 percent of his or her income toward health insurance. The proposed bill would raise that number to 9 percent in 2018 and 10.5 percent in 2019, by which time the buyer would be on the hook for an extra $665 a year.

A 60-year-old making the same income would fare even worse, with a contribution expected to rise to 11.5 percent by 2018. That’s $960 more.

Nancy Metcalf
Meet Our Writer
Nancy Metcalf

Nancy Metcalf is an award-winning independent journalist specializing in health topics. A senior writer and editor for Consumer Reports for more than 25 years, she is a nationally recognized expert on health insurance and health reform.