Average tax credits for health insurance plans could top $5,500 Posted: September 1st, 2013
Families looking for low cost health insurance may get a little help from the government next year. An analysis finds the average family could get thousands in tax credits to help offset their premiums.
The analysis was conducted by the Kaiser Family Foundation. It calculated the average tax credits families could get from the government should they buy health insurance plans from online exchanges that will be launched next month.
Average credit could exceed $5,500
The online exchanges are required under the Patient Protection and Affordable Care Act and intended to make affordable health insurance more accessible.
While residents in all 50 states will be able to shop for health insurance coverage on the exchanges, only those earning between 100-400 percent of the federal poverty limit will be eligible for tax credits. Those earning less will be able to receive free health insurance through Medicaid while those earning more will be required to pay the entire cost of the premiums themselves.
According to the KFF, the average tax credit for all those eligible to buy insurance on the exchanges is expected to be $5,548. Nearly half of those who currently buy their own insurance will be eligible for tax credits, and the average credit for this group will be $2,672.
Those credits should be enough to cover nearly a third of the price of silver tiered health insurance plans offered on the markets. Silver tiered plans pay for 70 percent of the cost of all covered health care services.
Easing the transition to universal coverage
The health insurance exchanges and tax credits may help smooth the transition to the virtually universal coverage required by the health reform law.
In 2014, except in rare instances, all residents of the United States will be required to have health insurance coverage. Those that fail to find or maintain insurance will be fined.
The creation of health insurance exchanges and tax credits are just two of the ways the government is seeking to help families find coverage. The Patient Protection and Affordable Care Act includes the following provisions that are also intended to make it easier for individuals to obtain medical insurance.
- Expansion of Medicaid eligibility in some states
- Ability of young adults to remain on a parent's group insurance plan until age 26
- Requirement that large employers provide access to group health benefits
- Separate exchanges and tax credits for small businesses seeking coverage for their employees
The health insurance exchanges are scheduled to be open for enrollment beginning in October with coverage starting in January.