Obama Care – Affordable Care Act – Tax Credit Update
Whatever its larger merits or shortcomings, the federal health-care overhaul seems likely to benefit one demographic group in particular: the 50-plus crowd.
Starting Oct. 1, state-based health-insurance exchanges created by the 2010 Patient Protection and Affordable Care Act will open for business. For those without access to insurance through work, or for the self-employed who have been buying coverage as sole proprietors, the exchanges will serve as clearinghouses for evaluating and buying health plans.
The policies, which will take effect Jan. 1, must cover 10 “essential benefits,” including preventative services, hospitalizations, mental health and prescription drugs. Notably, insurers can no longer exclude people with pre-existing conditions.
Also factoring into the premium equation are tax credits. Individuals with incomes of up to $45,960 and couples earning up to $62,040 may be eligible for tax credits that cap their premiums on a benchmark plan—designed to cover 70% of medical expenses—at between 2% and 9.5% of income. (The percentage rises with income; on plans with more generous coverage, the tax credit will cover a smaller share of the premium.) Because older people typically are charged higher premiums by insurers, they are more likely to benefit from these caps.
For example, a 55-year-old Denver resident who earns $45,000 a year and picks a policy that Anthem Blue Cross & Blue Shield plans to offer there for $597 a month would be eligible for $240 in monthly tax credits. A 27-year-old with the same salary and policy would pay $281 a month and receive no tax credits, according to the nonprofit Colorado Consumer Health Initiative.