Americans who currently buy their own insurance through the individual market would receive tax credits averaging nearly $2,700 next year for coverage purchased through new insurance marketplaces, found a new study.
The tax credits or subsidies would cover 32 percent of the premiums on average for this group of enrollees in a so-called “silver” plan, according to the Kaiser Family Foundation analysis. .
Foundation researchers released the analysis as some states are releasing information on what premiums will be in 2014 when the Affordable Care Act’s market reforms and newly created health insurance marketplaces take effect.
The rate announcements illustrate “sticker prices” that do not reflect federal subsidies that will offset the cost of insurance for many current individual market policy holders, said the foundation based in Menlo Park, California.
“Tax subsidies are an essential part of the equation for many people who buy insurance through the new marketplaces next year,” Foundation President and CEO Drew Altman said. “They will help make coverage more affordable for low- and middle-income people.”
Under the ACA tax credits will be available to subsidize premiums for people who buy their insurance in the new marketplaces, do not have access to other affordable coverage, and have incomes between 100 percent and 400 percent of the federal poverty level (between about $11,500 and $46,000 for a single person, and $24,000 and $94,000 for a family of four).
An estimated 48 percent of people who currently have individual market coverage will be eligible for tax credits, researchers found. Tax credits among those eligible will average $5,548 per family, and subsidies will average $2,672 across all families now purchasing their own insurance, the researchers said.
Many people who are now uninsured will also be eligible for subsidies in the new marketplaces, and their tax credits will likely be higher on average since they have lower incomes than those who now buy their own coverage, the researchers said.
Using data from the Congressional Budget Office (CBO) and the federal government’s Survey of Income and Program Participation, study authors said the analysis estimates the average impact of the ACA on the individual market by quantifying how current enrollees will fare once relevant provisions of the health law are implemented.
Premium data released by states thus far suggest that the CBO premium projection is reliable, the researchers said. While subsidies and premiums will vary widely depending on each enrollee’s personal characteristics, the analysis focuses on averages to provide an indication of how much overall assistance the law will provide to people buying their own coverage today, the study authors added.