Health Plan Choice and Premiums in the 2015 Health Insurance Marketplace. Health Insurance Plan Affordability after Tax Credits in the Marketplace in 2015

12/04/2014

With over 25 percent more issuers in the Marketplace this coming year, the increased choice and competition means there are affordable premiums for new consumers and for those who selected a plan last year and are returning to shop.

In order to make health insurance affordable, the Affordable Care Act established premium tax credits to help consumers with the cost of coverage based on their incomes.During the initial open enrollment period, 85 percent of consumers who selected a Marketplace plan received financial assistance.10 And nearly 7 out of 10 who selected a plan with tax credits found coverage for less than $100 after tax credits.11

The tax credits are based on the premium of the so-called benchmark plan in their area (the second-lowest-cost silver plan). The health plan category or “metal level” determines how consumers and plans share the costs of care. For example, with a silver level plan the health plan pays about 70 percent of the total costs of care for essential health benefits, on average, and the consumer pays 30 percent of these costs. This takes into account the plan’s deductibles, copayments, coinsurance, and out-of-pocket maximums. The second-lowest cost silver plan premiums are significant because premium tax credits that are available to help make Marketplace coverage more affordable are calculated based on the premium for those plans. The actual payment made by consumers for their insurance depends on the plan they choose and the level of tax credit they qualify for.

Competition and tax credits are related. Increased numbers of plans in a market means more competition. More competition tends to put downward pressure on premiums. As competition intensifies, the benchmark plan (second-lowest cost silver plan) may change. This means that the benchmark premium (and thus the tax credit) may grow more slowly than a consumer’s current plan’s premium. For this reason, consumers that want to make their tax credit’s purchasing power go as far as possible should shop. Another implication is that premium competition serves to benefit taxpayers by holding down tax credit costs.

The percentages in Tables 3, 4, and 5 include current Marketplace enrollees who selected a plan, with or without tax credits. Table 3 shows the percent of current Marketplace enrollees in the 35 states who could get coverage for as little as $100 or less per month, taking into account any applicable tax credits in 2015, regardless of the metal level they selected in 2014. For example, 79 percent of all customers returning to the Marketplace can get coverage for $100 or less after tax credits, regardless of their 2014 plan metal level choice. Sixty-six percent can get coverage for $50 or less, and an additional 12 percent could get coverage for as little as $50 to $100. (Percentages of those who could obtain coverage for $100 or less by state are shown in Table 13 in the Appendix at the end of this brief.)

TABLE 3

It Pays to Shop: Percent of Current Marketplace Enrollees Who Could Obtain Coverage for $100 or Less after Any Applicable Tax Credits in 2015, 35 States

Regardless of Metal Level in 2014

Monthly Premium After Tax Credits Any Plan Type Bronze Silver Gold Platinum
$100 or less 79% 79% 64% 36% 9%
$50 or Less 66% 66% 42% 8% 1%
$50 to $100 12% 12% 22% 27% 8%

Source: Plan information is from the plan landscape files as of November 2014 for 35 states. Enrollment information is based on active plan selections by in the CMS Multidimensional Insurance Data Analytics System (MIDAS) as of May 12, 2014.

Note: Columns may not sum due to rounding. This analysis holds all enrollee characteristics unchanged and calculates 2015 premiums and tax credits based on the same age, family composition, and household income as percentage of the FPL as in 2014. This analysis includes only enrollees who could be linked to complete plan and premium data for both 2014 and 2015, and excludes tobacco users. Catastrophic plans, which are not available to all consumers, were not considered in these calculations. See the “Methods and Limitations” section at the end of this brief for more details.


Table 4 shows the percentage of current Marketplace enrollees who could get covered for $100 or less, taking into account any applicable tax credits, if they keep their current plan and do not switch to a lower-premium plan for 2015. For example, 58 percent of Marketplace enrollees who selected a silver-level plan in 2014 will have 2015 coverage for $100 or less if they do not change plans.

TABLE 4

It Pays to Shop: Percent of Current Marketplace Enrollees Who Would Be Covered for $100 or Less after Any Applicable Tax Credits in 2015, 35 States

If They Did Not Switch Plans

Monthly Premium After Tax Credits All Plan Types Bronze Silver Gold Platinum
$100 or less 50% 47% 58% 8% 4%
$50 or Less 26% 26% 31% 1% 0%
$50 to $100 23% 20% 27% 7% 3%

Source: Plan information is from the plan landscape files as of November 2014 for 35 states. Enrollment information is based on active plan selections in the CMS Multidimensional Insurance Data Analytics System (MIDAS) as of May 12, 2014.

Note: Columns may not sum due to rounding. This analysis holds all enrollee characteristics unchanged and calculates 2015 premiums and tax credits based on the same age, family composition, and household income as percentage of the FPL as in 2014. This analysis includes only enrollees linked to complete plan and premium data for both 2014 and 2015, and excludes tobacco users. Catastrophic plans, which are not available to all consumers, were not considered in these calculations. See the “Methods and Limitations” section at the end of this brief for more details.


However, there may be more affordable plans in 2015 available to current enrollees. Table 5, below, shows the percentage of current Marketplace enrollees in the 35 states that could get coverage for $100 or less, taking into account any applicable tax credits, while staying in their current metal level. For example, 65 percent of all people who selected a plan in 2014 could get coverage for $100 or less if they selected a lower-premium plan in their same metal level. Of those who selected a silver plan in 2014, 77 percent could get silver plan coverage for $100 or less in 2015 if they choose a lower-cost plan.

TABLE 5

It Pays to Shop: Percent of Current Marketplace Enrollees Who Could Obtain Coverage for $100 or Less after Tax Credits in 2015, 35 States

within Their Current Metal Level

Monthly Premium After Tax Credits All Plan Types Bronze Silver Gold Platinum
$100 or less 65% 58% 77% 14% 7%
$50 or Less 45% 39% 54% 2% 1%
$50 to $100 20% 19% 23% 12% 7%

Source: Plan information is from the plan landscape files as of November 2014 for 35 states. Enrollment information is based on active plan selections by in the CMS Multidimensional Insurance Data Analytics System (MIDAS) as of May 12, 2014.

Note: Columns may not sum due to rounding. This analysis holds all enrollee characteristics unchanged and calculates 2015 premiums and tax credits based on the same age, family composition, and household income as percentage of the FPL as in 2014. This analysis includes only enrollees linked to complete plan and premium data for both 2014 and 2015, and excludes tobacco users. Catastrophic plans, which are not available to all consumers, were not considered in these calculations. See the “Methods and Limitations” section at the end of this brief for more details.


10 Represents the percentage of individuals who selected a 2014 Marketplace plan and qualified for an advance premium tax credit (APTC), with or without a cost-sharing reduction, from: HHS, ASPE, May 1, 2014, “Health Insurance Marketplace: Summary Enrollment Report for the Initial Annual Open Enrollment Period.”

11 Amy Burke, Arpit Misra, and Steven Sheingold, “Premium Affordability, Competition and Choice in the Health Insurance Marketplace, 2014,” ASPE Research Brief, June 2014.

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