Attending policy wonk webinars usually means that you are bombarded with acronyms and catchy phrases that only the insiders know. One such term that came up in a tutorial on the Affordable Care Act, “premium stacking,” caught me short before I found an article from Families USA explaining what it refers to.
Briefly, when health care reform takes effect next year, some families will have at least one child who qualifies for the Children’s Health Insurance Program (CHIP) while the parents earn too much to be eligible themselves for Medicaid, leaving them to buy private insurance on the exchanges. The Affordable Care Act subsidizes families for the cost of those private premiums based on their incomes if they earn 400 percent of the poverty line or below. But the calculation of those subsidies does not subtract the premium parents pay for their children’s CHIP coverage. It is in that sense that they will face “stacked premiums,” which in some cases will be burdensome.
The Families USA explanation includes as an example a family in Missouri. If you are a family with four children making 250% of the poverty level ($59,111), you are asked to pay a premium for CHIP of 4.4% or $2,592. This CHIP premium will not be included when determining the limit a family will have to pay in the insurance exchange.
That parent, though, will have to buy into the insurance exchange. In the exchange that parent will have to pay 8.05% of the family income- about $4758. That means that the family will be paying a total of about $7,350, about 12.4% of their income.
There are about 33 states currently charging premiums for CHIP, which means that this premium stacking scenario may not be some hypothetical thought experiment. A lot of families may not be able to afford paying the premiums, even though they were promised a more affordable system.
As the authors of the Family USA article point out, this premium stacking doesn’t even take into account other charges like deductibles and lab tests and medication. When you combine all the costs, some families won’t have much money left for anything else.
The authors of the article suggest that premium stacking conundrum could be alleviated if states stopped charging premiums for CHIP programs. In any case, it’s one example of how the many complex moving parts of the Affordable Care Act may need to be revisited as its bugs become apparent.