The age-based tax credits proposed to replace the Patient Protection and Affordable Care Act’s (ACA) (P.L. 111-148) income-based credits could influence insurers to create health plans that cost no more than the proposed credit amount. The Urban Institute’s Health Policy Center created sample health insurance plans that could be purchased with the amount of the tax credits offered by the Empowering Patients First Act (H.R. 3400), sponsored by HHS Secretary Tom Price during his time in the House of Representatives as an ACA replacement.
Plan comprehensiveness. The Urban Institute noted that the provisions of the act would eliminate certain requirements, such as essential health benefit (EHB) standards and minimum actuarial value (AV) standards, and end the risk adjustment program. Due to these changes, insurers could be hard pressed to offer comprehensive options for the price of the tax credit. The credits would start at $900 per child, increase to $1,200 for adults up to age 34, $2100 for adults ages 35 to 49, and $3000 for those age 50 and up. Insurers would be able to charge higher rates for each year of age, so the tax credit would pay for less coverage over time within an age bracket.
AV percent. The Urban Institute estimated that a 25 percent AV plan would be the highest amount of coverage those ages 61 to 64 could purchase with their tax credits, while a few limited age ranges could purchase plans up to 41 percent AV. The youngest adults could purchase a 70 percent AV plan, while those ages 18-20 and 35-39 could afford a 60 percent AV plan.
Creating plans. An example plan that all nonelderly adults could afford with their tax credit at a 25 percent AV would have a $25,000 deductible for single coverage and a $50,000 deductible for family coverage, but these would also be the out of pocket maximums. The plan would cover only generic drugs and exclude outpatient mental health and other types of therapy services. About half of the population between ages 18 and 64 could afford a 47 percent AV plan with their tax credits, with $6,8650/$13,700 single/family deductibles and out-of-pocket maximums. The cost of these plans excludes any additional criteria, such as gender or health status.
Companies: Urban Institute
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