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Health insurance costs are skyrocketing, squeezing businesses and families. Insurance premiums have increased 131% since 1999, straining the pocketbooks of American families and businesses for more than a decade. As a result, families and employers are spending more money on health care even while less comprehensive coverage leaves them responsible for an ever-growing share of medical costs. The cost and availability of insurance for people purchasing it on their own in the individual market is not only expensive but highly unpredictable, and people are often charged higher premiums because of their health, where they live, or their gender – or they are denied insurance altogether.
The Affordable Care Act (ACA) makes health care more affordable for families in several ways. The law will:
- Keep premium increases in check with premium rate review and enforcement of a medical loss ratio that caps the percentage of premiums that can be spent on administrative expenses, like profits.
- Limit discrimination by insurers based on age, gender or health status.
- Bring down the cost of medical services by emphasizing preventive care and chronic disease management and by paying doctors and hospitals based on their outcomes instead of just by the number of services they provide.
The ACA also offers new programs to help offset the cost of insurance.
- Tax credits for small businesses: Beginning in 2010, small businesses offering health insurance to their employees can receive a tax credit worth up to 35% of the cost of insurance, depending on the size of their business and the average salary of their employees. In 2014, the value of the credit goes up to 50% of the premium paid by the employer.
- Tax credits for individuals: Beginning in 2014, individuals that purchase coverage in a health insurance Exchange and meet certain income criteria will be eligible for a tax credit to cover premium and cost-sharing expenses.
HCAN’s Work on Affordability
We organize at the grassroots around all of our priority issues in order to move policymakers and build public support. Our work on Capitol Hill is also key to our effort; please see below for examples of that work and relevant documents.
Defending Tax Credits
HCAN lead opposition the hyper-partisan bill H.R. 436, which would take away money from middle class families who purchase health insurance with the assistance of premium tax credits and give it to medical device manufacturers. The provision would raise taxes on families whose midyear changes in income or circumstances cause a year-end recalculation of their premium tax credit.
Regulations on the Premium Tax Credits
HCAN is working to ensure the health insurance premium tax credits work for families. The IRS has proposed regulations for the implementation of the tax credits.
HCAN works with government rulemaking bodies to make sure people have access to preventive services as outlined in the Affordable Care Act.
The premium tax credit will be paid every month directly to the insurer of your choice based on your estimated credit. At the end of the year, on your tax return, the advance tax credit will be “reconciled” with the amount that you qualify for based on your actual income. People who were advanced a lower tax credit than they were eligible for will receive a refund; people who received too much credit during the year will owe it back at tax time.
The amount of credit owed back is capped. HCAN wants to protect the cap so families don’t have to worry that a miscalculation of their income will lead to a large repayment. Opponents of the health care law are trying to increase or eliminate the cap. The result would be fewer people with insurance and higher repayments for families.
- The Bottom Line: How the Affordable Care Act Helps America’s Families (Families USA), October 2011.The report describes how, on average, every family will be $1,571 better off in 2019 because of health care reform. State reports here.
- Premium and Cost-Sharing Subsidies in the Affordable Care Act (Community Catalyst), September 2010
- Realizing Health Reform’s Potential: Will the Affordable Care Act Make Health Insurance Affordable (The Commonwealth Fund), April 2011
- All HCAN materials related to affordability