Health Insurance for Your Children and the Affordable Care Act

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Editor’s note: We here at Earnest Parenting view the Affordable Care Act (ACA) with a great deal of suspicion. That said, it is now reality and must be dealt with. Michael Cahill was kind enough to write this article outlining some options families have to get insurance coverage for children, and the information is balanced and well-presented.

If you have children, then you might be spending some time over the next couple of months looking at how you can get them health insurance in light of the Affordable Care Act’s (ACA) restructuring of the American health care system.

It’s true that the ACA opens up a number of different avenues for getting your children insured. However as with most things having to do with the ACA, there is an upside and a downside. We will take a look at some of these approaches as well as their unique advantages and disadvantages.

Getting A Plan On The Online Marketplace
The online marketplace at Healthcare.gov offers health insurance plans with income based federal subsidies. Your income is viewed in terms of a percentage of the Federal Poverty Level (FPL) for the purposes of determining your eligibility for a subsidy. If your annual income is between 100 percent and 400 percent of FPL you are eligible for a subsidy. Naturally, the subsidy is bigger if you make less money. If you have children, this increases the size of your household, and in turn increases your subsidy eligibility threshold. So you can make more money, but still get a sizable subsidy.

The actual amount of your subsidy is dependant on a variety of factors that are a bit too complex for the scope of this article. Luckily though a number of organizations have created health insurance subsidy calculations like the Kaiser Family Foundation, and us at Vista Health Solutions. Check them out by clicking here and here respectively to get a ballpark figure for your health insurance subsidy if you qualify.

That being said if you do not qualify for a subsidy then the cost of a marketplace plan could be fairly pricey. On average prices for individual health insurance will be much higher under the ACA. However that increase in price comes with the trade off of more comprehensive health insurance plans all around, as well as the abolition of pre-existing conditions.

Whether you qualify for a subsidy or not though, it will be pricey and increase your monthly premium to have your child join you marketplace plan as a dependant. To combat this, there is another low cost option available at the marketplace to insure your children, however it’s not without its tradeoffs.

Child Health Insurance Program
The Child Health Insurance Program (CHIP) is the Medicaid program for children, however it may have a different name depending on your state. CHIP provides health coverage to nearly 8 million children in families with incomes too high to qualify for Medicaid, but can’t afford private coverage. The ACA extends federal funding of the CHIP program through to 2019.

If you’re not eligible for a subsidy, enrolling your child in CHIP at full price will already likely be less expensive than adding them onto your new exchange plan as a dependant. But for those who do get a subsidy there is a little known component of the ACA that will help you cut down on costs, especially if you have a large family.

If you are eligible for a tax subsidy, you are also eligible to receive health insurance for your children through CHIP at a discounted rate. Here is the cost breakdown for the program depending on your income level.

  • Your income is 138 percent to 160 percent of the FPL: No cost
  • 160 percent to 222 percent of the FPL: $9 per child up to three, max: $27 per month
  • 222 percent to 250 percent of the FPL: $15 per child up to three, max: $45 per month
  • 250 percent to 300 percent of the FPL: $30 per child up to three, max: $90 per month
  • 300 percent to 350 percent of the FPL: $45 per child up to three, max: $135 per month
  • 350 percent to 400 percent of the FPL: $60 per child up to three, max: $180 per month

As you can see, depending on your income, you might be able to get very affordable health insurance for your child. There is a bit of a problem here though. When you enroll a child in Child Health Plus, they no longer count towards the size of your household. The size of your household is integral in determining your income based on the FPL as the FPL is higher for bigger households.

So, if you have two kids and you are applying for a plan on the exchange as a 4 person household, you may be eligible for a hefty subsidy. However, if you enroll your children in CHIP, your household size in the eyes of the marketplace is now just two, which may no longer make your family eligible for a subsidy.

Weigh The Costs
Basically you need to evaluate the cost of the different scenarios you could find yourself in. The first is the cost of your children’s health insurance under CHIP along with the cost of your premium with an marketplace plan and your reduced subsidy (if any subsidy at all).

Next is the cost of marketplace plans for you and your children, if you all get one. You also might want to look at things like out of pocket costs. With a big subsidy you might be able to afford a plan that covers a lot of out of pocket costs. If your children are insured through Child Health Plus, you may only be able to afford a plan with a higher deductible and big out of pocket costs.

Depending on which option you pursue, this scenario can work out in a lot of ways. One of these routes may end up saving you a lot of money. On the other hand, you may just have to bite the bullet and pay more than you’d like.

Michael Cahill is the Editor of the Vista Health Solutions Blog. He writes about the healthcare system, health insurance industry and the Affordable Care Act. Follow him on Twitter at @VistaHealthMike

Editor’s second note: I did want to add that if you are using the online enrollment system(s), please be aware that there are still HUGE problems with data security, and insurance companies are complaining that data is not getting through to them accurately. Please be careful. Print out confirmations and follow up with the insurers. Or better yet, don’t use the site(s) until security is upgraded.

Image courtesy of @Doug88888 via Creative Commons License, some rights reserved.

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