The Journal of the American Medicine Association and the Kaiser Family Foundation have illustrated how much insurance premiums would drop for people who get an Obamacare tax credit.
Based on their calculations, a family of four – 40-year-old, non-smoking parents with two kids – would save $317 per month. Before the Obamacare tax credit, their monthly premium was $962 in this scenario. Obamacare offers a $645 tax credit, based on a premium cap of 7.18% of income for a family that makes $53,000 per year (225% of poverty level for a four-person household). These estimates are based on Silver coverage – the cheapest policies on the marketplaces.
A retired couple would save the most, with their premiums dropping from $1365 per month to $94 per month.
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Even the smoker saves a little money. The JAMA and KFF calculations estimate a 30-year-old male smoker would save $76 per month on his policy, thanks to a tax credit.
You can do your own math with this subsidy calculator from the Kaiser Family Foundation.
Here are details from KFF about how the calculator works.
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Premiums in the calculator are illustrative examples in 2014 dollars derived from estimates of average premiums for 2016 from the Congressional Budget Office. We assume an average premium for a single adult enrolled in the second-lowest cost Silver plan to be $4,827 (before subsidies). This estimate was derived by multiplying the CBO estimate for a family premium by 37% (the average ratio of single to family premiums in previous CBO estimates) and then adjusting for assumed inflation and differences over time in the aggregate reinsurance pool to arrive at a 2014 estimate. Premiums could vary from this amount due to assumptions insurers make in setting premiums or the degree of competition in the market, and will also differ based on regional variations in underlying health costs. Premiums for Bronze plans are based on the estimated Silver and ratio of claims expenses between Bronze and Silver plans in the HHS actuarial value calculator.
Premium subsidies are based on Silver coverage (which has an actuarial value of about 70%). Enrollees may pay a lower premium for less comprehensive coverage (i.e., a Bronze plan, with an actuarial value of 60%) or may purchase more comprehensive coverage (i.e. a Gold plan, with an actuarial value of 80% or a Platinum plan with an actuarial value of 90%). People receiving subsidies can apply their subsidy toward the purchase of more or less expensive plans, but must pay difference between the premium in the selected plan and the subsidy. Premium subsidies may not cover the cost of a tobacco surcharge.
