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Average Obamacare premiums are lower than projected: why yours may not be (+video)

With Obamacare's health insurance 'marketplaces' set to launch on Oct 1, the Department of Health and Human Services released its first data on average health-care premiums, but what individuals actually pay varies widely.

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There is one more significant wrinkle to these numbers, however: The federal government will give tax credits for low income buyers who do not qualify for Medicare or Medicaid. Of the estimated 41.3 uninsured Americans who must purchase coverage by Jan. 1, 2014, 18.6 million of these will be eligible to receive TAX credits, and about half of them will see monthly premiums less than $100, according to HHS.

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An average 27-year old making $25,000 a year in Texas, for example, could pay as little as $83 a month for the lowest cost plan. A family of four making $50,000 a year in Indiana would only have to pay $46 a month for the lowest cost plan, and a similar family in Alaska wouldn’t have to pay anything. Tax credits are available to individuals and families who make up to 4 times the Federal Poverty Level (FPL).

But some experts see potential problems with these numbers. The individual market for health insurance is notoriously difficult to price, because only those who become sick tended to pay for this insurance in the past. Obamacare makes it illegal for carriers to reject a customer who has pre-existing conditions.

“I think there’s a lot of confusion out there, and I think the problem is, these carriers don’t know what their pool is going to be, so it’s hard for them to really price it at this point,” says Mark Isenberg, a partner with Zotec Partners, a nation-wide medical billing company headquartered in Carmel, Ind. “Because if you have all these different levels, and I’m a healthy 30-year-old, and I know it’s a yearly plan, I’m going to opt for the cheapest plan.

“But if I’m really sick and I know I’m going to be really sick, I’m going to opt for the entire plan,” Mr. Isenberg continues. “So you’re going to have a lot of top-heavy risk pools associated with it, so I don’t think their actuaries have a firm handle on what their actual costs are going to be on these plans.”

Yet the Obama administration projects that 7 million Americans will join the health-care rolls in 2014 – including 2.7 million young and healthy consumers who are essential to the Obamacare logic: The young and healthy are needed to offset the high costs of sicker members.

Hence the tax penalties or “shared responsibility fee” for those who do not join. The health-care law will cost uninsured individuals who do not purchase insurance on the exchanges $95 per person per year in 2014, or 1 percent of personal income. This will jump to $325, or 2 percent of personal income in 2015, and $695 or 2.5 percent in 2016.

“My expectation is in 2015 and 2016, we’ll see a greater number of people moving to the exchanges,” says David Oscar, communications chair of the New Jersey Association of Health Underwriters. He doesn’t believe very many of the young and healthy will opt to buy insurance from these exchanges, especially now when paying the penalties is so much cheaper than buying insurance.

Yet the 11 million people eligible to receive subsidies, says Mr. Oscar, who manages the plans of about 2,000 small- and mid-sized businesses, as well as about 500 individuals, will probably visit the online marketplaces and purchase coverage.

“The small business owner, the mom and pop shop that only shows $50,000 of income – they’re going to go to the individual plans [on the exchanges] because, from what it looks like, the individual plans are, on the surface, better looking than the current individual plans,” he adds.

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