Here are answers to some basic questions about the Obamacare tax credits:
Question: I’m a low-income young adult who is allowed under the health law to purchase catastrophic coverage if I can’t find a health plan that’s affordable. Can I use the tax credit toward the purchase of this coverage that I purchase through the marketplace?
Answer: No. Tax credits cannot be used for catastrophic coverage.
Q: Are tax credits the only help that low- and middle-income people get to pay for health coverage?
A: Cost-sharing subsidies will be available to people with incomes up to 250 percent of the federal poverty level that enroll in a Silver plan through the exchange. The subsidies will reduce out-of-pocket spending for deductibles, co-payments and co-insurance, thereby increasing the share of covered benefits for each plan.
The lower your income, the more cost-sharing subsidies you receive. People with incomes between 100 percent and 150 percent of the federal poverty level get the largest cost-sharing subsidies, followed by people making 150 percent to 200 percent of poverty and those earning between 200 percent and 250 percent of the federal poverty level.
Q: What are the federal poverty guidelines?
A: For more information and a complete breakdown, go to the U.S. Department of Health and Human Services webpage at http://aspe.hhs.gov/poverty/13poverty.cfm.
Q: Why do the tax credits only go to people who make poverty-level wages or more? What about people who earn less than the poverty level? Don’t they need help?
A: Because the Affordable Care Act’s “Medicaid expansion” originally extended program coverage to all people with incomes below the poverty line. But the Supreme Court ruled that states could opt out of the expansion. Many Republican-led states did so and kept their Medicaid programs open mainly to people who earn less than the federal poverty level.
That created a “coverage gap” in those states made up of people whose sub-poverty-level wages are still too high to qualify for Medicaid, yet not enough to get tax credits that would help them buy insurance in the new marketplaces. Nationally, about 5.5 million people fall into the coverage gap in the 22 states that aren’t expanding their Medicaid programs, according to Urban Institute, a public policy think tank.
Q: How many people are eligible for the tax credits and who exactly are they?
A: About 25.7 million people are eligible for the new tax credits, according to estimates prepared by the Lewin Group for Families USA, a liberal consumer advocacy group.