MENLO PARK, Calif., Aug. 26 (UPI) -- News reports on the new individual health insurance premiums are meaningless without including the U.S. tax credits that will lower the cost, researchers say.
Larry Levitt, Gary Claxton and Anthony Damico of the Kaiser Family Foundation said premium subsidies -- in the form of federal tax credits -- will be available for people buying their own insurance via the new marketplaces or exchanges who have incomes from 100 percent up to 400 percent of the poverty level or $24,000 to $94,000 per year for a family of four in 2014. Those with access to employer-provided insurance or Medicaid are ineligible for these tax credits.
The amount of the tax credit is based on a benchmark premium, which is the cost of the second-lowest-cost silver plan in the area where a person lives. The tax credit equals that benchmark premium minus what the individual is expected to pay based on their family income, which is calculated on a sliding scale from 2 percent to 9.5 percent of income, the researchers said.
For example, a 40-year-old individual making $30,000 a year:
-- Estimated benchmark premium for a 40-year old = $3,857 per year. This number varies from area to area.
-- A person is responsible for paying 8.37 percent of their income = $2,512
-- Tax credit = $1,345
The tax credit can be used in any plan offered in the health insurance marketplace, so the person would end up paying less than $2,512 to enroll in the lowest cost silver plan or a lower cost bronze plan, and more to enroll in a higher cost plan. A calculator from the Kaiser Family Foundation provides subsidy estimates for families and individuals of varying characteristics.
Anyone who is currently not covered for health insurance from an employer can calculate his or her federal subsidy under the Affordable Care Act at: http://kff.org/interactive/subsidy-calculator/.