Premium Tax Credit Could Slash Private Health Insurance Costs
A health insurance premium tax credit that is part of the Patient Protection and Affordable Care Act (ACA) could assist more than 28.6 million Americans in purchasing healthcare coverage—even if they have pre-existing conditions, change jobs, or experience drops in income, according to a study released Tuesday from Families USA. The value of the tax credits, slated to go into effect in 2014, is expected to be about $110.1 billion during the first year.
Individuals in working families—with annual incomes at or above 200% of the federal poverty level ($44,100 for a family of four in 2010)—will make up about two-thirds (65.6%) of those who will be eligible for a premium tax credit, according to the report, Lower Taxes, Lower Premiums: The New Health Insurance Tax Credit.
Overall, 95% of the people eligible for the new tax credit are going to be from "working families," the report noted. Specifically, 24.8 million of those eligible for the credits are from families with at least one worker who is employed full-time, while an additional 2.5 million people are in families with a worker who is employed part-time.
More than half of those who will be eligible for the premium tax credit will be working for small businesses with fewer than 100 workers (52.9%). About 15.2 million people will be in families in which a primary worker is employed by a business with fewer than 100 workers. Approximately 11.4 million people will be in families in which the primary worker is employed by a business with fewer than 25 workers.
The new tax credits will be providing individuals and families with tax relief—based on both their annual income and family size. For example, the tax credits would be available for four-person families with annual incomes (in current dollars) of up to $88,200; a three-person family would be eligible with incomes up to $73,240.