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Center on Budget and Policy Priorities
cbpp.org
ACA Health Coverage Enrollment Overview
Center on Budget and Policy PrioritiesSeptember 24, 2013
Center on Budget and Policy Priorities
cbpp.org
Topics
• Who is eligible for coverage under the health care law?
• What is the premium tax credit?• How is the premium tax credit
determined?
Center on Budget and Policy Priorities
cbpp.org
Major Components of the Affordable Care Act Become Effective January 1, 2014
• Insurance reforms that allow everyone to purchase coverage
• Individual mandate to have coverage• Creation of Health Insurance
Marketplaces (Exchanges) to make buying insurance easier
• Help paying for insurance– Medicaid expansion– Premium tax credits for low- to
moderate-income individuals and families.
4
Center on Budget and Policy Priorities
cbpp.org
Insurance Reforms Will Make Coverage More Accessible
• Requirement to sell to everyone• Prohibition from charging more or
excluding people based on health status or pre-existing conditions
• Premium costs can vary only based on:– Age– Number of people covered in a policy– Geographic area– Tobacco use
• Enrollment limited to defined “open enrollment” and “special enrollment” periods
5
Center on Budget and Policy Priorities
cbpp.org
Individual Mandate to Make Insurance Reforms Work
• Individuals must have health insurance coverage or pay a penalty
• Most existing coverage will satisfy the mandate (e.g., employer-sponsored insurance, Medicare, Medicaid)
• Exemptions provided to certain groups, including people who can’t afford coverage
• Penalty assessed as a tax
6
Center on Budget and Policy Priorities
cbpp.org
Health Insurance Marketplaces (Exchanges) Will Facilitate Enrollment in Coverage
• A place to comparison shop for health insurance
• Available in every state • Must be operational by October 1, 2013 for
coverage starting January 1, 2014• Run by state or federal government• Premium tax credits can only be used to
purchase coverage sold in the Marketplace
Center on Budget and Policy Priorities
cbpp.org
ACA Provides Assistance to Help People Meet the Individual Mandate
Medicaid Expansion
• Expansion to individuals and families with income up to 133% FPL
• States decide whether to expand
• 13 million newly-eligible enrollees by 2023
Premium Tax Credit
• Income 100 – 400% FPL
• Available in every state
• 19 million will use the APTC by 2023
• Average exchange subsidy will be $7,900
by 2023
Center on Budget and Policy Priorities
cbpp.org
Income Eligibility for Programs Determined Using 2013 Federal Poverty Level (FPL)
9
Household size 100% 133% 200% 250% 400%
1 $11,490 $15,282 $22,980 $28,725 $45,960
2 $15,510 $20,628 $31,020 $38,775 $62,040
3 $19,530 $25,975 $39,060 $48,825 $78,120
4 $23,550 $31,322 $47,100 $58,875 $94,200
5 $27,570 $36,668 $55,140 $68,925 $110,280
• The FPL is calculated every year by HHS• Sets the precise income standard for determining
eligibility for insurance affordability programs
Center on Budget and Policy Priorities
cbpp.org
Children Childless Adults
Working Parents
JoblessParents
Pregnant Women
250%Subsidized
Unsubsidized
37%61%
Coverage Landscape in 2014
0%
185%
Medicaid and CHIP coverage, based on 2012 eligibility levels in a typical stateSource: Kaiser Commission on Medicaid and the Uninsured
FPL
400%
100%
133%
200%
300%
Current Medicaid / CHIP Eligibility
ExpansionCoverage Gap
Center on Budget and Policy Priorities
cbpp.org
What Are Premium Credits?
• Assistance with the cost of coverage for people purchasing coverage in the new Health Insurance Marketplaces (aka Exchanges)
• Provided in the form of advanceable and refundable tax credits
• Administered through the tax system and the Marketplaces
• Available starting January 1, 2014
Center on Budget and Policy Priorities
cbpp.org
What Are the Eligibility Criteria for Premium Tax Credits?• Income between 100% to 400% FPL• US citizenship or lawful present in the US• Must not be eligible for:
– Medicare, Medicaid, or most other public coverage– Employer coverage that meets certain
requirements
• Lawfully residing immigrants with incomes below 100% FPL who are not eligible for Medicaid because of their immigration status
• Must file a return for the year in which credit is used
• If married, must file a joint return
Center on Budget and Policy Priorities
cbpp.org
How Do People Get Premium Credits?
• Submit application to the Marketplace for advance payment of credits– Marketplace estimates amount of advance
payment based on projected income– Credit is sent directly to insurer, individual
pays insurer balance of premium
• Can also wait until tax filing and claim on return– Only available for months enrolled in a
Marketplace health plan
Center on Budget and Policy Priorities
cbpp.org
How Is the Amount of the Tax Credit Determined?
• Benchmark plan: Second lowest cost silver plan, as determined by the Marketplace
• Expected premium contribution: A percentage of income someone is expected to pay, based on a sliding scale
Credit amount =
Cost of benchmark plan–
Expected premium contribution
Center on Budget and Policy Priorities
cbpp.org
What Is the Expected Premium Contribution?
50% 100% 150% 200% 250% 300% 350% 400%0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
Household Income (% FPL)
Expe
cted
Pre
miu
m C
ontr
ibuti
on
(% o
f Inc
ome)
Center on Budget and Policy Priorities
cbpp.org150% FPL 250% FPL
0
500
1000
1500
2000
2500
3000
3500
$689
$2,312
$2,329
$706
Expected Contribution Federal Premium Credit
John: Example 1: 150% FPL
Income: $17,235
Expected Contribution: • Share of income: 4%• Amount: $689
Premium Credit: $2,329
Example 2: 250% FPL
Income: $28,725
Expected Contribution: • Share of income: 8.05%• Amount: $2,312
Premium Credit: $706
Age: 24 Plan Cost: $3,018
Center on Budget and Policy Priorities
cbpp.org
What Is the Benchmark Plan and How Is it Determined?
• Second lowest cost silver plan available to each eligible household member– Number calculated by the Marketplace– Might be a single plan to multiple plans
added together
Center on Budget and Policy Priorities
cbpp.org
Example: Single Individual
3 Lowest Cost Silver Plans Covering John:
• Plan A: $2,800• Plan B: $3,018• Plan C: $3,200
John:
• 24 years old• Income of $28,725 (250% FPL)• Expected contribution: 8.05% or $2,312
Benchmark
Premium Credit:
$3,018 - $2,312 = $706
Center on Budget and Policy Priorities
cbpp.org
3 Lowest Cost Silver Plans that Cover Entire Family:
• Plan A: $11,500• Plan B: $12,000• Plan C: $12,500
Example: Family of Four (Reyes Family)
Income: $52,988 (225% FPL)Expected contribution: 7.18% or $3,802
Premium Credit:
$12,000 - $3,802 = $8,198
Benchmark
Center on Budget and Policy Priorities
cbpp.org
Example: Household with Multiple Sources of Insurance
Reyes Family• Income: $52,988 (225% FPL)• State has CHIP up to 250% FPL• Mom and dad purchase coverage• Kids on CHIP
3 Lowest Cost Silver Plans Covering Mom and Dad• Plan A: $7,800• Plan B: $8,000• Plan C: $8,200
Premium Credit:
$8,000 – 3,802 = $4,198
Benchmark
Center on Budget and Policy Priorities
cbpp.org
Comparing Two Reyes Family Scenarios
Income: $52,988 (225% FPL)Expected contribution: 7.18% or $3,802
All Members Eligible Parents Eligible, Kids in CHIP$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$3,802 $3,802
$8,198
$4,198
Expected Contribution Credit Amount
Key takeaway:Choice of benchmark plan affects credit amount but not expected contribution
Center on Budget and Policy Priorities
cbpp.org
What Factors Affect the Amount of the Credit?
• Age– Insurers can charge older people up to 3
times more than younger people
• Family size• Geographic area
– Health care costs vary by region
Center on Budget and Policy Priorities
cbpp.org
24 Years Old 64 Years Old0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
$1,448 $1,448
$1,570
$7,606
Contribution Federal Premium Credit
John: Age 24
Premium: $3,018
Premium Credit: $1,570
Income:$22,980 (200% FPL)
Expected Contribution:
6.3% or $1,448
Age 64
Premium: $9,054
Premium Credit: $7,606
Center on Budget and Policy Priorities
cbpp.org
What Factors Affect What People Will Actually Pay for Coverage?
• Tobacco use– Insurers can charge tobacco users 50%
more– Difference due to tobacco use not
accounted for in premium credit calculation
• Plan chosen by consumer– Amount of credit pegged to second lowest
cost silver plan– But consumer can purchase plans that are
more or less expensive
Center on Budget and Policy Priorities
cbpp.org
Contact Info
www.centeronbudget.org
• Tara Straw, [email protected]• Judy Solomon, [email protected]