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Center on Budget and Policy Priorities

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ACA Health Coverage Enrollment Overview

Center on Budget and Policy PrioritiesSeptember 24, 2013


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Topics

• Who is eligible for coverage under the health care law?

• What is the premium tax credit?• How is the premium tax credit

determined?


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Overview of Major ACA Components


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Major Components of the Affordable Care Act Become Effective January 1, 2014

• Insurance reforms that allow everyone to purchase coverage

• Individual mandate to have coverage• Creation of Health Insurance

Marketplaces (Exchanges) to make buying insurance easier

• Help paying for insurance– Medicaid expansion– Premium tax credits for low- to

moderate-income individuals and families.

4


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Insurance Reforms Will Make Coverage More Accessible

• Requirement to sell to everyone• Prohibition from charging more or

excluding people based on health status or pre-existing conditions

• Premium costs can vary only based on:– Age– Number of people covered in a policy– Geographic area– Tobacco use

• Enrollment limited to defined “open enrollment” and “special enrollment” periods

5


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Individual Mandate to Make Insurance Reforms Work

• Individuals must have health insurance coverage or pay a penalty

• Most existing coverage will satisfy the mandate (e.g., employer-sponsored insurance, Medicare, Medicaid)

• Exemptions provided to certain groups, including people who can’t afford coverage

• Penalty assessed as a tax

6


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Health Insurance Marketplaces (Exchanges) Will Facilitate Enrollment in Coverage

• A place to comparison shop for health insurance

• Available in every state • Must be operational by October 1, 2013 for

coverage starting January 1, 2014• Run by state or federal government• Premium tax credits can only be used to

purchase coverage sold in the Marketplace


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ACA Provides Assistance to Help People Meet the Individual Mandate

Medicaid Expansion

• Expansion to individuals and families with income up to 133% FPL

• States decide whether to expand

• 13 million newly-eligible enrollees by 2023

Premium Tax Credit

• Income 100 – 400% FPL

• Available in every state

• 19 million will use the APTC by 2023

• Average exchange subsidy will be $7,900

by 2023


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Income Eligibility for Programs Determined Using 2013 Federal Poverty Level (FPL)

9

Household size 100% 133% 200% 250% 400%

1 $11,490 $15,282 $22,980 $28,725 $45,960

2 $15,510 $20,628 $31,020 $38,775 $62,040

3 $19,530 $25,975 $39,060 $48,825 $78,120

4 $23,550 $31,322 $47,100 $58,875 $94,200

5 $27,570 $36,668 $55,140 $68,925 $110,280

• The FPL is calculated every year by HHS• Sets the precise income standard for determining

eligibility for insurance affordability programs


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Children Childless Adults

Working Parents

JoblessParents

Pregnant Women

250%Subsidized

Unsubsidized

37%61%

Coverage Landscape in 2014

0%

185%

Medicaid and CHIP coverage, based on 2012 eligibility levels in a typical stateSource: Kaiser Commission on Medicaid and the Uninsured

FPL

400%

100%

133%

200%

300%

Current Medicaid / CHIP Eligibility

ExpansionCoverage Gap


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What are Premium Tax Credits?


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What Are Premium Credits?

• Assistance with the cost of coverage for people purchasing coverage in the new Health Insurance Marketplaces (aka Exchanges)

• Provided in the form of advanceable and refundable tax credits

• Administered through the tax system and the Marketplaces

• Available starting January 1, 2014


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What Are the Eligibility Criteria for Premium Tax Credits?• Income between 100% to 400% FPL• US citizenship or lawful present in the US• Must not be eligible for:

– Medicare, Medicaid, or most other public coverage– Employer coverage that meets certain

requirements

• Lawfully residing immigrants with incomes below 100% FPL who are not eligible for Medicaid because of their immigration status

• Must file a return for the year in which credit is used

• If married, must file a joint return


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How Do People Get Premium Credits?

• Submit application to the Marketplace for advance payment of credits– Marketplace estimates amount of advance

payment based on projected income– Credit is sent directly to insurer, individual

pays insurer balance of premium

• Can also wait until tax filing and claim on return– Only available for months enrolled in a

Marketplace health plan


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How Is the Amount of the Tax Credit Determined?

• Benchmark plan: Second lowest cost silver plan, as determined by the Marketplace

• Expected premium contribution: A percentage of income someone is expected to pay, based on a sliding scale

Credit amount =

Cost of benchmark plan–

Expected premium contribution


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What Is the Expected Premium Contribution?

50% 100% 150% 200% 250% 300% 350% 400%0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

Household Income (% FPL)

Expe

cted

Pre

miu

m C

ontr

ibuti

on

(% o

f Inc

ome)


cbpp.org150% FPL 250% FPL

0

500

1000

1500

2000

2500

3000

3500

$689

$2,312

$2,329

$706

Expected Contribution Federal Premium Credit

John: Example 1: 150% FPL

Income: $17,235

Expected Contribution: • Share of income: 4%• Amount: $689

Premium Credit: $2,329

Example 2: 250% FPL

Income: $28,725

Expected Contribution: • Share of income: 8.05%• Amount: $2,312

Premium Credit: $706

Age: 24 Plan Cost: $3,018


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What Is the Benchmark Plan and How Is it Determined?

• Second lowest cost silver plan available to each eligible household member– Number calculated by the Marketplace– Might be a single plan to multiple plans

added together


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Example: Single Individual

3 Lowest Cost Silver Plans Covering John:

• Plan A: $2,800• Plan B: $3,018• Plan C: $3,200

John:

• 24 years old• Income of $28,725 (250% FPL)• Expected contribution: 8.05% or $2,312

Benchmark

Premium Credit:

$3,018 - $2,312 = $706


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3 Lowest Cost Silver Plans that Cover Entire Family:

• Plan A: $11,500• Plan B: $12,000• Plan C: $12,500

Example: Family of Four (Reyes Family)

Income: $52,988 (225% FPL)Expected contribution: 7.18% or $3,802

Premium Credit:

$12,000 - $3,802 = $8,198

Benchmark


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Example: Household with Multiple Sources of Insurance

Reyes Family• Income: $52,988 (225% FPL)• State has CHIP up to 250% FPL• Mom and dad purchase coverage• Kids on CHIP

3 Lowest Cost Silver Plans Covering Mom and Dad• Plan A: $7,800• Plan B: $8,000• Plan C: $8,200

Premium Credit:

$8,000 – 3,802 = $4,198

Benchmark


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Comparing Two Reyes Family Scenarios

Income: $52,988 (225% FPL)Expected contribution: 7.18% or $3,802

All Members Eligible Parents Eligible, Kids in CHIP$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$3,802 $3,802

$8,198

$4,198

Expected Contribution Credit Amount

Key takeaway:Choice of benchmark plan affects credit amount but not expected contribution


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What Factors Affect the Amount of the Credit?

• Age– Insurers can charge older people up to 3

times more than younger people

• Family size• Geographic area

– Health care costs vary by region


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24 Years Old 64 Years Old0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

$1,448 $1,448

$1,570

$7,606

Contribution Federal Premium Credit

John: Age 24

Premium: $3,018


Income:$22,980 (200% FPL)

Expected Contribution:

6.3% or $1,448

Age 64

Premium: $9,054



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What Factors Affect What People Will Actually Pay for Coverage?

• Tobacco use– Insurers can charge tobacco users 50%

more– Difference due to tobacco use not

accounted for in premium credit calculation

• Plan chosen by consumer– Amount of credit pegged to second lowest

cost silver plan– But consumer can purchase plans that are

more or less expensive


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Contact Info

www.centeronbudget.org

• Tara Straw, [email protected]• Judy Solomon, [email protected]

http://www.centeronbudget.org/

mailto:[email protected]

mailto:[email protected]

center on budget and policy priorities cbpp.org aca health coverage enrollment overview center on...

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