By Joe Touschner
[For more up-to-date information on figuring out premium tax credits, visit Consumer Reports health tax credit tool or state specific brochures. Kaiser Family Foundation has also updated its subsidy calculator.]
Insurers have been filing small group and non-group rates in several states recently, leading to claims and counter-claims about whether the ACA will lead to higher premium costs for some people. Many of us know that these rates are not the full story because they don’t take into account the premium tax credits that millions of people will be eligible for next year. But how do the premium tax credits work? For whom will they reduce premiums and by how much? A couple of new resources are available to help us both understand the premium tax credits and explain them to those who will benefit from them.
The Center on Budget and Policy Priorities has compiled a handy Q&A document on the credits. It covers who is eligible, how much of a credit families will qualify for (both in percent of income and dollars), how the credits will affect what families actually pay for coverage, and the process for comparing advance credits with actual amounts at tax filing time. At only five and a half pages, it’s a clear and concise explanation of this complex topic.
The complexity of the tax credits, in fact, has many worried whether those who qualify will adequately understand the choices they face in choosing health plans and applying the credits. Consumers’ Union has done some research on this topic, including focus groups to test different ways of explaining the credit. They used their findings to develop a brochure to inform consumers about how the credits work. A state-specific version of the brochure for each state will be available as call center information becomes available to direct consumers to more information. In addition, you can read the report that describes the consumer testing performed as the brochure was developed.
Tax credits will be a key way of making marketplace coverage affordable for moderate income families who don’t have access to other sources of coverage, along with cost-sharing reductions and other provisions of the ACA. As we approach open enrollment, taking a few minutes to better understand how the credits work and how best to explain them can help us all make sure that both policymakers and families know what they need to know about the credits.
[For more information on premium tax credits, visit the Center on Budget and Policy Priorities new “Beyond the Basics” website.]