This table shows the maximum amount an individual at various income levels would pay if he or she enrolled in the second-lowest priced silver level plan in their area. The report also explains how the actual tax credit amount is calculated:
To calculate the premium tax credit amount, the Affordable Care Act specifies that an individual or family with a particular income will pay a fixed percentage of their income for the second-lowest cost silver plan available in the Marketplace in their local area (see Table 1). This is a fixed percentage, expressed as a percentage of the federal poverty level (FPL), without regard to age or the actual premiums in the Marketplace.
Lower-priced silver-level plans, according to the report, were the most popular plan selected during the initial enrollment period, but individuals who qualify for a tax credit are not required to purchase a silver-level plan. As the report explains:
While the second-lowest cost silver plan is designated as the benchmark for determining the amount of the tax credit, an individual may apply her tax credit toward a Marketplace plan from any metal level (excluding catastrophic). In some cases, the tax credit amount may even exceed a plan’s price, resulting in a plan that costs the enrollee $0 after tax credits.
The reason for the popularity of the silver-level plans can be explained, in part, by the fact that individuals and families who earn up to 250% of the federal poverty level also qualify for cost-sharing subsidies that reduce their out-of-pocket exposure and increase the actuarial value of the their plans, but the cost-sharing subsidies are only available in the silver-level.
The facts, figures, and visual aids provided in the HHS report will help agents explain the tax credits to their clients and help the media explain the program to the public in general. As word spreads about the value of the tax credits, more and more people will want to apply, and that will create a huge opportunity for agents who have an enrollment solution that will allow people to avoid the Healthcare.gov or state exchange websites. Learn how you can offer a solution to your clients today.
Footnotes referenced in the table:
9: For more information, see the Internal Revenue Service final rule on “Health Insurance Premium Tax Credit” (Federal Register, May 23, 2012, vol, 77, no. 100, p. 30392; available at: http://www.gpo.gov/fdsys/pkg/FR-2012-05-23/pdf/2012-12421.pdf) and the 2013 federal poverty guidelines (available at: http://aspe.hhs.gov/poverty/13poverty.cfm).
10: Income examples are based on the federal poverty guidelines for the continental United States. The FPL percentages in Column 2 correspond to higher income amounts in Alaska and Hawaii.
11: In Medicaid expansion states, an individual at 133 percent of the FPL may be Medicaid eligible, rather than eligible for tax credits in the Marketplace.