Premium Affordability, Competition, and Choice in the Health Insurance Marketplace, 2014. Advance Premium Tax Credit Reduces Monthly Consumer Premiums

06/18/2014

Table 2 and Figure 1 show the impact of the tax credit on the monthly premiums for consumers who selected Marketplace plans with tax credits in the FFM (see Appendix for state-level estimates).12 Approximately 87 percent of individuals in the FFM selected plans with tax credits and these individuals have post-tax credit premiums that are 76 percent less than the full premium, on average. The average premium before tax credits for persons selecting  Marketplace plans of any metal level with tax credits through the FFM was $346. The average tax credit amount was $264 and the after-tax credit premium was $82. The tax credit for people who selected silver plans resulted in the highest percent reduction in premiums after tax credits (80 percent) relative to the persons selecting plans from the other three metal levels. Persons who selected bronze plans had the next highest percent reduction in premiums after tax credits (76 percent), followed by persons who selected gold and platinum plans—51 percent for both. However, it is important to note that people selecting bronze plans are not eligible for cost-sharing reductions, so consumers selecting bronze plans may be trading off a lower premium at the time of purchase for higher cost sharing at a later date.

The tax credit also helped many individuals select Marketplace plans for less than $100 per month. Table 3 and Figure 2 show the percent of individuals whose premiums fell into one of several categories after tax credits (see Appendix for state-level estimates). Of all individuals who selected a Marketplace plan with tax credits through the FFM, 82 percent selected plans with a monthly premium of $150 or less after tax credits, 69 percent with a premium of $100 per month or less after tax credits, and 46 percent with a premium of $50 or less after tax credits. While the average premium before tax credits across all metal levels was $346 for selected Marketplace plans with tax credits, only 18 percent of plan selections with tax credits have premiums that cost more than $150 on average after tax credits.

TABLE 2 Average Monthly Premiums before and after Tax Credits, Tax Credit Amount, and Percent Reduction in Premium after Tax Credits for Individuals Who Selected Plans with Tax Credits through the 2014 Federally-facilitated Marketplace

Metal Level Percent of Individuals WhoSelected Plans With Tax Credits Average Premium before TaxCredits Average Tax Credit Amount Average Premium after Tax Credits Average Percent Reduction in Premium after Tax Credits
Bronze 73% $289 $221 $68 76%
Silver 94% $345 $276 $69 80%
Gold 65% $428 $220 $208 51%
Platinum 64% $452 $232 $220 51%
All Metal Levels 87% $346 $264 $82 76%

Source: ASPE computations of CMS Federally-facilitated Marketplace data as of 5/12/2014.
*Calculated as the number of individuals who selected Marketplace plans with tax credits as a percentage of all individuals who selected a Marketplace plan.

FIGURE 1: Average Monthly Tax Credit Amount and Premiums after Tax Credits by Metal Level for Individuals Who Selected Plans with Tax Credits, 2014  Federally-facilitated Marketplace

figure_1

Source: ASPE computations of CMS Federally-facilitated Marketplace data as of 5/12/2014.

 

TABLE 3 Percent of Marketplace Plan Selections by Selected Monthly Premium Amounts After Tax Credits for Individuals Who Selected Plans with Tax Credits, 2014 Federally-facilitated Marketplace

Monthly Premiums After Tax Credits Percent of Marketwith Tax Creditsplace Plan Selections Through the FFM
% Cumulative %
$50 or Less 46% 46%
$51 to $100 23% 69%
$101 to $150 13% 82%
Greater than $150 18% 100%

Source: ASPE computations of CMS Federally-facilitated Marketplace data as of 5/12/2014.
Note: Represents distribution of monthly Marketplace plan selections across bronze, silver, gold, and platinum metal levels.

 

FIGURE 2: Distribution of Marketplace Plan Selections by Monthly Premiums after Tax Credits at Selected Amounts for Individuals Who Selected Plans with Tax Credits, 2014 Federally-facilitated Marketplace

Source: ASPE computations of CMS Federally-facilitated Marketplace data as of 5/12/2014.
Note: Represents distribution of monthly Marketplace plan selections across bronze, silver, gold, and platinum metal levels.


12 The analyses presented in Tables 2 and 3 and Figures 1 and 2 are based on plan selections of people with non-zero tax credits, who self-identified as non-tobacco users, and those who selected a bronze, silver, gold, or platinum metal level plan. Catastrophic plans were not included as these plans are not eligible for tax credits. Table 4 and Figure 3 include all individuals who selected a plan through the FFM.

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