About 17 million consumers will be eligible for subsidies in exchanges
About 17 million of the 29 million estimated customers that could potentially purchase insurance through the healthcare insurance marketplaces will be eligible for tax credits under the Affordable Care Act (ACA), according to a recent Kaiser Family Foundation analysis.
“The take-away for this report is to remind us that a lot of people out there will qualify for this subsidy,” says Don Hall, principal at DeltaSigma LLC, and MHE editorial advisor. “They will be strong incentives for people to buy insurance.”
However, the emerging political battle in 2014 and beyond could call into question the total amount of taxpayer money committed for subsidies. Private insurers will receive such payments directly from government.
Each state’s numbers reflect key demographic information about its residents, such as how many lack insurance or buy their own coverage now and their income levels, as well as whether the state will expand its Medicaid program in 2014.
The three states with the largest number of residents eligible for tax credits are Texas (2 million), California (1.9 million) and Florida (1.6 million), while seven states have fewer than 50,000 residents who would be eligible for tax credits, with the District of Columbia (9,500) and Vermont (27,000) having the fewest eligible residents.
“This report provides hard data and more clarification about how many people will be qualified to participate in the exchange. The numbers are not shocking, and within the estimates,” Hall says. “But it’s interesting. For instance, Texas is opting out of the Medicaid expansion. About the same number of people who qualify for a subsidy in Texas would have qualified for Medicaid.”
To qualify for tax credits, people must earn between 100% and 400% of the federal poverty level (FPL) (between $23,550 and $94,200 annually for a family of four) and must not be eligible for affordable coverage from an employer or from Medicaid or Medicare. Undocumented residents and those who are incarcerated are not eligible for tax credits.
In states that expand Medicaid under the ACA, uninsured residents with incomes up to 138% of the federal poverty level will qualify for Medicaid. In states that do not expand, uninsured residents between 100% and 138% of FPL generally will be eligible for tax credits. In essence, the break out of eligibility creates a counterintuitive gap. In states that don’t expand, those with lower incomes under 100% of FPL generally will be left without assistance when they go to the exhanges.
Hall says a significant number of people fall below 400% of FPL.
“The hardest thing about all of this is that the politics are so striking,” he says. “Many Republicans are trying to tell people, even if they qualify, not to sign up because they are trying to make ACA a failure. But there are a lot of people out there who could get a substantial part of their premium covered if they went to the exchanges. A lot of people could benefit, and there is value in looking at this on a state-by-state basis.”
About 29 million people will be potential customers for the exchanges, including those who are currently uninsured or who buy private insurance through existing markets for non-group insurance. Consumers who buy coverage also will face deductibles and other costs, depending on the plan, although some who are eligible for tax credits will also receive additional assistance for their out-of-pocket expenses.
This article was corrected to change Florida number of tax-credit-eligible individuals to 1.6 million.