Last week, we kicked off our health insurance exchange podcast series with an overview of the types of exchanges and the coverage options that will be offered. This week, we are covering the types of financial support available.
In order to help individuals and families afford coverage, the Affordable Care Act (ACA) makes premium tax credits and cost-sharing assistance available through the exchanges.
Beginning in 2014, households with incomes that fall between 100 and 400 percent of the federal poverty line (FPL) may be eligible for an advance premium tax credit. The tax credit can be used right away to lower monthly premium costs. Differences in the amount of the advance and the actual tax credit you’re due will be settled when you file your federal income tax return.
The tax credit amount is based on a formula that includes family income and size, and the cost of a pre-identified benchmark plan in the exchange. You can enroll in any level of plan and still be eligible for a credit.
In addition to tax credits, two forms of cost-sharing assistance will be available to some people enrolled in the silver-level plan, which requires the consumer to pay 30 percent out-of-pocket costs.
Households with incomes that fall between 100 and 250 percent of FPL, which is roughly $59,000 for a family of four, may be eligible for assistance that raises their plan’s actuarial value. That means it covers more than the original silver-level 70 percent of costs and thus requires less out-of-pocket spending for the family. Households with incomes that fall between 100 and 400 percent of FPL may be eligible for lower-limit caps to their total out-of-pocket costs.
However, even with these financial assistance programs, many people still face the risk of being uninsured or underinsured. Low-income adults living in states that are not expanding their Medicaid program will have an especially difficult time finding coverage if they fall in the gap between those who already qualify for Medicaid and those at 100 percent FPL, who qualify for these marketplace subsidies. Likewise, people eligible for marketplace cost-sharing assistance will face the risk that it will not be enough to cover all medical costs.
Yet, ensuring people have enough health coverage is critical. Members of America’s Essential Hospitals provide nearly 20 percent of the nation’s uncompensated care and face looming cuts to financing outlined in the ACA. As the health insurance exchanges move forward, essential hospitals will face new questions and challenges but will continue to help patients obtain coverage and ensure access to care for all.
Thanks for listening to another edition of This Week in Washington. I’m Erin Richardson; join us next week as we continue our discussion of health insurance exchanges.