February 9, 2015
Arpit Misra and Thomas Tsai
The Affordable Care Act helps families afford health insurance coverage by providing financial assistance in the form of advanced premium tax credits and cost-sharing reductions in the Health Insurance Marketplaces (the “Marketplaces”). From November 15, 2014 through January 30, 2015, almost 7.5 million individuals had selected or been automatically re-enrolled into 2015 Marketplace plans in the 37 states that use the HealthCare.gov platform.1 The vast majority of these individuals are receiving financial assistance. Data in this report are preliminary, and data in this report will be updated after the close of the 2015 Open Enrollment Period.
Premium tax credits are available to reduce premium costs for qualified individuals.2 As an initial step to assess the affordability of coverage for individuals selecting or being automatically reenrolled into Marketplace plans during the 2015 Open Enrollment Period, this report measures 1) the proportion of individuals with plan selections paying a reduced monthly premium as a result of the advance premium tax credit; 2) the effect of advance premium tax credits on net premium costs; and 3) the proportion of individuals who could receive a plan with a net premium cost of less than $100.
In the 37 States using the HealthCare.gov platform from November 15, 2014 through January 30, 2015, among consumers who selected or were re-enrolled in a plan for 2015 coverage:
1All premium estimates in this report are based on plan selections during the 11-15-14 to 1-30-15 reporting period.
2The premium tax credit (“PTC”) is calculated as the difference between the cost of the adjusted monthly premium of the second-lowest cost silver plan with respect to the applicable taxpayer and the applicable contribution percentage that a person is statutorily required to pay deter-mined by household income. An individual may choose to have all or a portion of the PTC paid in advance (advance premium tax credit or “APTC”) to an issuer of a qualified health plan in order to reduce the cost of monthly insurance premiums. APTCs are generally available for individuals with a projected household income between 100 percent (133 percent in states that have chosen to expand their Medicaid programs) and 400 percent of the Federal Poverty Level (FPL). For 2015, the percentage of household income that a qualified individual or family will pay toward a health insurance premium ranges from 2.01 percent of household income at 100 percent of the FPL to 9.56 percent of income at 400 percent of FPL. For more information on the required contribution percentage, see http://www.irs.gov/pub/irs-drop/rp-14-37.pdf