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ACA Update: ACA Tax Credits to Average $2,672

A new report by the Kaiser Family Foundation indicates that families will receive an average $2,672 in tax credits to purchase insurance under the federal health reform law, which will lower premiums for the second-lowest priced plans on state exchanges by an average of 32 percent...
August 20, 2013

A new report by the Kaiser Family Foundation indicates that families will receive an average $2,672 in tax credits to purchase insurance under the federal health reform law, which will lower premiums for the second-lowest priced plans on state exchanges by an average of 32 percent. The study also shows that 48 percent of those who purchase coverage themselves, rather than through their employers, will be eligible for subsidies, averaging $5,548 per family.

The new analysis by Foundation researchers comes as some states are releasing information on what premiums will be in 2014 when the Affordable Care Act’s (ACA) market reforms and newly created health insurance marketplaces take effect. These 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.
An estimated 48% of people who currently have individual market coverage will be eligible for tax credits, the analysis finds. 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. 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 Foundation also has developed a health reform subsidy calculator that estimates the premiums and tax credits available to people next year through the insurance marketplaces, based on their income levels, family size, ages and tobacco use.

There are many reasons why premium costs in the individual insurance market will change under the ACA before tax credits are applied. For instance, insurance companies will be prohibited from discriminating against people with pre-existing conditions. Insurance providers will be required to meet a minimum level of coverage that will raise premiums for people buying skimpier coverage today, but also lower their out-of-pocket costs on average when they use those services. Premiums before and after the law goes into effect are not necessarily comparable, as health plans in the new exchanges will be required to cover a broader range of services than are found in many current individual market policies.

Agents Begin Adapting to the Affordable Care Act (PIA Connection 8/2013)

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