Last Updated- January 2017:

Potential Impact of ACA Repeal: Premium Tax Credits

If premium tax credits were eliminated, how much would premium costs increase for those with 2017 HealthCare.gov health insurance?

See a smiilar analysis for California plans.
*2016 150% FPL for 48 contiguous U.S. states. For Alaska, 2016 150% FPL is $22,260, and for Hawaii is $20,505

Overview

The Affordable Care Act (ACA) established health insurance Marketplaces, including the Federally-facilitated Marketplace available via HealthCare.gov, for uninsured consumers to purchase and enroll in Qualified Health Plans (QHPs) (referred to here as “plans”).


As with most health insurance options, plans offered through the Marketplaces charge enrollees a monthly premium. Lower-income enrollees may qualify for a premium tax credit (PTC) to subsidize a plan’s premium costs and lower the amount the enrollee pays each month. PTCs are generally available to qualified individuals and families with incomes below 400% of the federal poverty level ($80,640 for a family of 3 in the 48 contiguous states and D.C.).


Currently, there is no change to the ACA and PTCs are available to those who qualify. Congress is considering legislation to repeal the ACA, including the elimination of existing PTCs. This installment of the ACA Spotlight examines what enrollees’ premium costs would be for 2017 HealthCare.gov plans without PTCs, assuming the cost of premiums would remain unchanged. The Spotlight compares premium costs for the second lowest cost silver plan (also known as the benchmark plan) for enrollees of three different ages (27, 40, and 60 years old) and at three different levels of poverty (150%, 250%, and 350% of poverty). Data are available for all states that use HealthCare.gov and can be displayed by county or as a statewide average.


Depending on the details of a possible ACA repeal that eliminated PTCs and subsequent market reactions and health reforms, in such a case actual results for consumers may differ from results shown here. For example, the elimination of PTCs would not necessarily be enacted or go into effect in calendar year 2017. Moreover, repeal of the ACA would likely result in changes to individual health insurance offerings and premiums for consumers that are not reflected in these ACA Spotlight results.

At-A-Glance: State Marketplace Decisions

State Marketplace Type* Enrollment Website**
Alabama Federally-facilitated Marketplace healthcare.gov
Alaska Federally-facilitated Marketplace healthcare.gov
Arizona Federally-facilitated Marketplace healthcare.gov
Arkansas State-based Marketplace-Federal Reform healthcare.gov
California State-based Marketplace coveredca.com
Colorado State-based Marketplace connectforhealthco.com
Connecticut State-based Marketplace accesshealthct.com
Delaware State-Partnership Marketplace healthcare.gov
District of Columbia State-based Marketplace dchealthlink.com
Florida Federally-facilitated Marketplace healthcare.gov
Georgia Federally-facilitated Marketplace healthcare.gov
Hawaii Federally-facilitated Marketplace healthcare.gov
Idaho State-based Marketplace yourhealthidaho.org
Illinois State-Partnership Marketplace healthcare.gov
Indiana Federally-facilitated Marketplace healthcare.gov
Iowa State-Partnership Marketplace healthcare.gov
Kansas Federally-facilitated Marketplace healthcare.gov
Kentucky State-based Marketplace-Federal Reform healthcare.gov
Louisiana Federally-facilitated Marketplace healthcare.gov
Maine Federally-facilitated Marketplace healthcare.gov
Maryland State-based Marketplace marylandhealthconnection.gov
Massachusetts State-based Marketplace mahealthconnector.org
Michigan State-Partnership Marketplace healthcare.gov
Minnesota State-based Marketplace mnsure.org
Mississippi Federally-facilitated Marketplace healthcare.gov
Missouri Federally-facilitated Marketplace healthcare.gov
Montana Federally-facilitated Marketplace healthcare.gov
Nebraska Federally-facilitated Marketplace healthcare.gov
Nevada State-based Marketplace-Federal Reform healthcare.gov
New Hampshire State-Partnership Marketplace healthcare.gov
New Jersey Federally-facilitated Marketplace healthcare.gov
New Mexico State-based Marketplace-Federal Reform healthcare.gov
New York State-based Marketplace healthcare.gov
North Carolina Federally-facilitated Marketplace healthcare.gov
North Dakota Federally-facilitated Marketplace healthcare.gov
Ohio Federally-facilitated Marketplace healthcare.gov
Oklahoma Federally-facilitated Marketplace healthcare.gov
Oregon State-based Marketplace-Federal Reform healthcare.gov
Pennsylvania Federally-facilitated Marketplace healthcare.gov
Rhode Island State-based Marketplace healthsourceri.com
South Carolina Federally-facilitated Marketplace healthcare.gov
South Dakota Federally-facilitated Marketplace healthcare.gov
Tennessee Federally-facilitated Marketplace healthcare.gov
Texas Federally-facilitated Marketplace healthcare.gov
Utah Federally-facilitated Marketplace healthcare.gov
Vermont State-based Marketplace healthconnect.vermont.gov
Virginia Federally-facilitated Marketplace healthcare.gov
Washington State-based Marketplace wahealthplanfinder.org
West Virginia State-Partnership Marketplace healthcare.gov
Wisconsin Federally-facilitated Marketplace healthcare.gov
Wyoming Federally-facilitated Marketplace healthcare.gov

* See Kaiser Family Foundation here.

** See healthcare.gov here.

Background

The Affordable Care Act (ACA) established health insurance Marketplaces, either through State-based Marketplaces or the Federally-facilitated Marketplace available via HealthCare.gov, for uninsured consumers to purchase and enroll in Qualified Health Plans (QHPs) (referred to here as “plans”). As of January 2017, 39 states use HealthCare.gov for their residents to purchase and enroll in plans.


As with most health insurance options, plans offered through the Marketplaces charge enrollees a monthly premium. Lower-income enrollees may qualify for a premium tax credit (PTC) to subsidize a plan’s premium costs and lower the amount the enrollee pays each month. PTCs are generally available to qualified individuals and families with incomes between 100% ($20,160 for a family of 3) and 400% of the federal poverty level ($80,640 for a family of 3 in the 48 contiguous states and D.C.). The amount of the PTC is calculated based on the enrollee’s federal poverty level percentage and the premium for the second lowest cost silver plan (also known as the benchmark plan) in the enrollee’s county. The PTC is designed to ensure that insurance options are available to the enrollee at a cost at or below 9.69% of the enrollee’s household income, a threshold set by the ACA. Though the PTC is calculated based on the premium for the second lowest cost silver plan in the enrollee’s county, the PTC can be applied to all plan categories except catastrophic plans.


Congress is considering legislation to repeal the ACA, including elimination of existing PTCs. This installment of the ACA Spotlight examines what enrollees’ premium costs would be for 2017 HealthCare.gov plans without PTCs, assuming the cost of premiums would remain unchanged. The Spotlight compares by county or as a statewide average for states that use HealthCare.gov the premium costs for the second lowest cost silver plan (also known as the benchmark plan) for enrollees of three different ages (27, 40, and 60 years old) and at three different levels of poverty (150%, 250%, and 350% of poverty). These parameters were chosen because under the ACA, Marketplace plan premiums may only vary for a consumer based on age, and because PTC eligibility and amount are determined by an enrollee’s annual household income.


This analysis demonstrates the potential effects if PTCs were no longer available to consumers in 2017 but HealthCare.gov plans continued to be available for the remainder of 2017 at current premium levels. Depending on the details of a possible ACA repeal that eliminated PTCs and subsequent market reactions and health reforms, in such a case actual results for consumers may differ from results shown here. For example, the elimination of PTCs would not necessarily be enacted or go into effect in calendar year 2017. Moreover, repeal of the ACA would likely result in changes to individual health insurance offerings and premiums for consumers that are not reflected in these ACA Spotlight results.

Methodology

The infographics in this ACA Spotlight compare by state and county the difference in enrollees’ premium costs with and without premium tax credits for a 2017 HealthCare.gov plan. Spotlight users can see three types of data related to the second lowest cost silver plan in each county:


  1. Gross increase in monthly premium costs without a premium tax credit. Under the ACA, the monthly premium cost to the enrollee equals the total premium minus any PTC available to the enrollee. Therefore, if the PTC is eliminated, the increase in monthly premium cost is equal to the PTC.
  2. Percent increase in monthly premium costs without a premium tax credit. This amount equals the total monthly premium divided by the net monthly premium cost (total monthly premium minus PTC).
  3. Share of annual household income paid to premiums without a premium tax credit. This amount equals a year’s worth of monthly premiums divided by the annual household income for the selected scenario (see below).

Premiums depend on the age of the enrollee and PTCs depend on the household income of the enrollee. Spotlight users can choose to see a display of each of the above types of data for any of the following age and annual household income/federal poverty level scenarios:


  • 27 year old at 150% of the federal poverty level ($17,820 annually),
  • 27 year old at 250% of the federal poverty level ($29,700.00 annually),
  • 27 year old at 350% of the federal poverty level ($41,580 annually),
  • 40 year old at 150% of the federal poverty level ($17,820 annually),
  • 40 year old at 250% of the federal poverty level ($29,700.00 annually),
  • 40 year old at 350% of the federal poverty level ($41,580 annually),
  • 60 year old at 150% of the federal poverty level ($17,820 annually),
  • 60 year old at 250% of the federal poverty level ($29,700.00 annually), or a
  • 60 year old at 350% of the federal poverty level ($41,580 annually)

These scenarios are based on 2016 federal poverty levels for the 48 contiguous states and D.C. Federal poverty levels vary slightly for Alaska and Hawaii, and those variations are accounted for in the calculations for those states.


Users can also toggle between a county-level view and a state-level view. The state-level view provides statewide average data across all of the second lowest cost silver plans offered in the counties within the state.


This ACA Spotlight provides calculations for the states in which consumers can use HealthCare.gov to purchase and enroll in plans. To determine the difference for select consumers’ premium costs with and without a premium tax credit, the MAGI Cloud platform makes a calculation using HealthCare.gov’s 2017 plan data and the age and annual household income/federal poverty level parameters the user selects. For the county view, the second lowest cost silver plan available in the county is selected (for counties with only one silver plan available, the one silver plan is selected as the second lowest cost silver plan). The premium tax credit is calculated based upon the federal poverty level selected. For the state view, the county view data is calculated into a statewide average.


ACA Spotlight calculations demonstrate the potential effects if PTCs were no longer available to consumers in 2017 but HealthCare.gov plans continued to be available for the remainder of 2017 at current premium levels. Depending on the details of a possible ACA repeal that eliminated PTCs and subsequent market reactions and health reforms, in such a case actual results for consumers may differ from results shown here. For example, in such a case the elimination of PTCs would not necessarily be enacted or go into effect in calendar year 2017. Moreover, repeal of the ACA would likely result in changes to individual health insurance offerings and premiums for consumers that are not reflected in these ACA Spotlight results.


Social Interest Solutions (SIS) produced the data and infographics using the MAGI Cloud platform. The MAGI Cloud platform includes a comprehensive rules engine that can generate ACA eligibility results across all states and across the full spectrum of health insurance options, including Medicaid, the Children’s Health Insurance Program (CHIP), and QHPs with and without premium tax credits and cost-sharing reduction subsidies. To learn more about the MAGI Cloud platform, click here.


Data used in this Spotlight are available upon request. Please email requests to info@socialinterest.org.

Additional Resources