CHICAGO, IL--(Marketwire - Jan 29, 2013) - GoHealthInsurance, a leading online exchange for individuals and families to compare health insurance quotes, has created a new infographic to draw awareness to rate hikes that many young Americans may be subject to as of 2014. Because of the Affordable Care Act (ACA), both young and older adults who purchase individual health insurance will, for the first time, become part of the same risk pool.
Age Rating is a common way that health insurance companies segment risk. As of 2014, the ACA imposes a 3:1 cap on age rating. Therefore, an older American can only be charged a maximum of three times the amount a younger person is charged for the same health insurance coverage.
"Typically, older people need to use health care services more often than young adults, which makes them more expensive to insure," says Mark Colwell, Manager of Consumer Marketing at GoHealth. "Once the cap on age rating takes effect, the added cost of insuring older people will be passed on to young Americans."
The GoHealth infographic offers the following example:
- In 2013, a 25 year old single man with an annual income of $33,510 could find health insurance coverage for about $2,400/year.
- In 2014, coverage for the same man will cost $3,183/year, even after he receives a premium tax credit for buying health insurance from an online exchange. This is an increase of $783 in just one year.
Young adults do have some options, however to avoid steep rate hikes. If a person is under 26 years old, they may stay on a parent's health insurance plan. There also is the option of defying the individual health insurance mandate altogether and pay a tax penalty. The penalties for an individual who chooses not to purchase health insurance are as follows:
- 2014- $95 (or 1.0 percent of annual income, whichever is greater)
- 2015 - $325 (or 2.0 percent of annual income, whichever is greater)
- 2016 and after - $695 (or 2.5 percent of annual income, whichever is greater)
GoHealth and its customer-facing website GoHealthInsurance.com is a health insurance technology platform, working with over 100 health insurance companies and more than 10,000 licensed agents across the United States. Since the company's founding in 2001, the GoHealth platform has helped nearly 30 million Americans shop and compare health insurance quotes.