5 ways the Supreme Court could affect your Obamacare plan
The financial -- and physical -- well-being of more than 7 million Americans is now in the hands of the U.S. Supreme Court.
The high court on Wednesday began hearing arguments in King v. Burwell, which presents a legal challenge to the tax credits offered to consumers in 34 states who bought health insurance through federally run exchanges.
If the court decides to throw out the system of subsidies, consumers in those 34 states could be on the hook for paying the full monthly premium.
The worst-case scenario is "you'd have to pay the full amount yourself. The subsidies are extremely substantial, so your premium could go up from $20 a month to $300 a month," Ana Gupte, healthcare services analyst at Leerink Partners, told CBS MoneyWatch.
States with their own insurance marketplaces, such as Vermont and New York, wouldn't be impacted.
"It could create one set of states that are the have-nots and another that are the haves," said Gupte.
Given the potential financial impact, consumers should be aware of some strategies to prepare, she added. The Affordable Care Act is slated to hand out $22 billion in credits this year alone to help make insurance coverage more affordable, according to the Congressional Budget Office.
The impact wouldn't only be felt by those currently enrolled in Obamacare through federally run exchanges, however. The decision could also lead to higher premiums for people covered by their employers, as well as lower earnings for hospitals groups.
Here are five things to be aware of ahead of the Supreme Court's ruling:
Average current subsidy: The average subsidy for Obamacare enrollees is $268 a month, which covers 72 percent of the premium, according to the Henry J. Kaiser Family Foundation. Enrollees pay about $105 a month out of their own pockets. About 87 percent of those who have signed up for coverage under the ACA receive a subsidy.
Timing: Even though the Supreme Court has started hearing the case, a ruling isn't expected until June, although the timing isn't set in stone. Insurers are expected to give one month of notice, Gupte noted. That means those impacted by the ruling could be on the hook for full responsibility of their premiums in July at the earliest. Insurance rates are locked in for the full year under the ACA, so the premiums themselves wouldn't change until 2016, noted the Kaiser Family Foundation.
Pricing surge: The mix of insured individuals would shift to an older and less healthy group, pushing up average premiums for individuals buying insurance on their own by about 35 percent, according to the Urban Institute. That means consumers buying insurance outside of the marketplaces would also feel the brunt of the impact. There could also be pressure to boost rates for employer-based insurance premiums as insurers cope with the shift in their customer base, Gupte added.
Population impact: If subsidies are wiped out, millions are expected to drop their insurance because it will be too costly. In that case, there could be a surge in new uninsured consumers, with the Urban Institute pegging the number at 8.2 million.
Financial and health strategies: Consumers who receive subsidies in states with federally run exchanges should consider a few strategies for preparing for the worst-case scenario, Gupte advised. For those able to do so, saving money to pay for the full premiums is one way to plan ahead. Some consumers should also schedule their elective procedures before July, making sure they undergo medical treatment if they are concerned about whether they might be forced to drop coverage if the subsidies are wiped out.