Characteristics of Those Eligible for Cost-Sharing Reductionsand Premium Tax Credits Under the Affordable Care Act

1 Characteristics of Those Eligible for Cost-Sharing Reductions and Premium Tax Credits Under the Affordable Care ActCharacteristics of Those Eligible for Cost-Sharing Reductions and Premium Tax Credits Under the Affordable Care ActLinda J. Blumberg and Erik WengleFEBRUARY 2015In addition to premium tax credits that reduce the cost of premiums for modest-income individuals and families purchasing insurance in the nongroup marketplaces established under the Affordable Care Act (ACA), purchasers with income below 250 percent of the federal poverty level (FPL) are eligible for cost-sharing reductions (CSRs) that reduce their direct out-of-pocket costs when receiving care. This additional form of financial assistance increases the actuarial value (AV) of eligibles’ insurance plans. From a baseline of 70 percent AV (typical for a silver plan), CSRs can increase AV to 94 percent for those with income above Medicaid eligibility levels but below 150 percent of FPL, to 87 percent for those with income between 150 percent and 200 percent of FPL, and to 73 percent for those with income between 200 percent and 250 percent of FPL. These CSRs can play an important role in increasing effective access to medical care for low-income individuals, significantly reducing deductibles, co-payments, co-insurance and out-of-pocket maximums.Approximately 13.8 million people will be eligible for both CSRs and premium tax credits in 2016, and another 9.4 million will be eligible for premium tax credits alone (table 1). Those eligible for both forms of assistance are most likely to live in the South, be single adults without children, and be White, non-Hispanic. They have lower incomes than their counterparts eligible for premium tax credits alone (by policy design) and are more likely both to be young adults and to report being in fair or poor health. The annual value of the CSRs per eligible person is estimated to be $479 in 2016, ranging from an average of $693 for those with income below 150 percent of FPL to $217 for those with income between 200 percent and 250 percent of FPL.In-BriefTimely Analysis of Immediate Health Policy IssuesIn addition to premium tax credits, the ACA created cost-sharing reductions (CSRs) to further assist low-income people afford the out-of-pocket costs of obtaining care. CSRs help offset the cost of co-pays, deductibles and co-insurance.Who Qualifies?Of those eligible for CSRs:Cost-Sharing Reductions: The ACA Benefit Few People Talk About48.9%single adults without children47.9%live in the South$By 2016, if the 13.8 million people eligible for CSRs enroll in marketplace plans, they would save an average of $479 per year.60.0% White, non-Hispanic Timely Analysis of Immediate Health Policy Issues2 Characteristics of Those Eligible for Cost-Sharing Reductions and Premium Tax Credits Under the Affordable Care ActTable 1. Characteristics of Individuals Eligible for Cost-Sharing Reductions and Premium Tax CreditsEligible for premium tax credits and cost-sharing reductionsEligible for premium tax credits onlyTotal Number of People Eligible13,787,0009,441,000Income Relative to the Federal Poverty Level< 100 percent of FPL3.6%NA100 percent to 150 percent of FPL28.9%NA150 percent to 200 percent of FPL35.6%NA200 percent to 250 percent of FPL31.9%NA250 percent to 300 percent of FPLNA40.5%300 percent to 350 percent of FPLNA32.8%350 percent to 400 percent of FPLNA26.7%Region of residenceNortheast12.0%14.7%Midwest18.4%20.3%South47.9%39.0%West21.6%26.0%Family statusMarried couple with children22.8%33.8%Married couple without children16.0%20.3%Single adult with children12.4%10.0%Single adult without children48.9%35.9%Race and ethnicityWhite, non-Hispanic60.0%69.8%Black, non-Hispanic13.6%10.4%Hispanic18.1%12.5%Other 8.2%7.4%SexMale51.0%51.9%Female49.0%48.1%AgeChildren (under age 18)3.0%18.2%Adults (ages 18 to 64)97.0%81.8%Ages 18 to 3035.3%24.1%Ages 31 to 4020.3%19.8%Ages 41 to 50 19.7%22.4%Ages 51 to 6424.7%33.8% Self-reported health statusExcellent, very good or good85.1%90.2%Fair or poor14.9%9.8%Average total health expenditures ($)4,6934,382Average value of CSR per person if taken ($)479 NA Income < 150 percent of FPL693 NA Income 150 percent to 200 percent of FPL518 NA Income 200 percent to 250 percent of FPL217 NA Source: Urban Institute Health Insurance Policy Simulation Model, 2015. Reform simulated in 2016.Note: NA = not applicable. FPL = federal poverty level. CSR = cost sharing reduction. Timely Analysis of Immediate Health Policy Issues3 Characteristics of Those Eligible for Cost-Sharing Reductions and Premium Tax Credits Under the Affordable Care ActIntroductionThe ACA provides two forms of financial assistance for modest-income individuals who purchase health insurance coverage through the nongroup marketplaces and who do not have access to adequate and affordable coverage through an employer (as determined by the ACA). The firs