Health Insurance Blog

In today’s day and age, insurance premiums continue to become more complex. One specific area that can be confusing is how your premium changes when you remove a person from your policy. You think it would go down when there are less people on the policy but instead it goes up. Have you ever wondered why? Well, here is the math: 

• Based on your income the government says you can afford an average Silver plan if the premium was less than 8.5% of your income for the household. 
• If the premium is more than 8.5% of your income then the government will give you a tax credit equal to the difference to help you pay for it.

For example, 2 people on the average Silver plan in Davis County, Utah would cost $1860/mo. 

• Let’s say these 2 people make $140,000 per year. The tax credit calculations at 8.5% of this income determines that the household could afford $992 a month for the average plan. 
• So the government would grant this family roughly $870/mo to help pay for the difference between what they could afford and the actual cost for whatever plan you pick ($1860 - $992 = $870). Therefore, the couple would be granted a tax credit of $870/mo and pay $992/mo. This would be $496 per person per month. 

So when we remove one person from the plan and one person is left, the premium for that average plan for one person is $930/mo. 

• Because the tax credit is based on your household income and the calculations say your household could afford a premium of $992/mo.
• That is more than the average Silver plan premium for one person ($930) which means there are no tax credits available to help pay for it. 
• Therefore, the couple will get no financial help and the premium will be full price

Whereas before, the couple was paying $496 per person per month, removing a person would increase that to $930 per person per month. This happens often as children turn 26 and are no longer able to be on their parent’s plans or as one spouse becomes eligible for Medicare. If you have any questions or are in a situation like this, reach out to one of our agents and we will help you figure it out!

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