Treasury Finalizes Regulations On Tax Credits To Help Make Health Insurance Affordable For Middle-Class Americans
- Makes Coverage Affordable. Starting in 2014, millions of Americans will get help to purchase private health coverage through an Affordable Insurance Exchange. To make coverage affordable, the level of support is tailored to individuals’ needs.
- Provides a Substantial Benefit. The Congressional Budget Office estimates that, when the Affordable Care Act is fully implemented, individuals and families who qualify for assistance will receive premium tax credits of over $5,000 per year on average.
- Builds on What is Best in the Existing Health Care System. The Affordable Care Act includes crucial safeguards to ensure that the coverage purchased on an Affordable Insurance Exchange with the premium tax credits will supplement – not supersede – existing employer- and government-sponsored health programs. This allows Americans to keep the coverage they have.
- Includes Special Protections For Married Couples. The final regulations include a new taxpayer-friendly rule aimed at addressing the concern that individuals who marry during the year could receive reduced tax benefits.
How the Premium Tax Credit Works
Premium Tax Credit Calculation: Three Examples
|Example 1: Family of Four with Income of $50,000, Purchases Benchmark Plan
The premium tax credit is generally set based on the benchmark plan. The family’s expected contribution is a percentage of the family’s household income.
|Example 2: Family of Four with Income of $50,000, Purchases Less Expensive Plan
If a family chooses a plan that is less expensive than the benchmark plan, the family will generally pay less.
|Example 3: Family of Four with Income of $50,000, Parents are between the ages of 55 and 64
Because premiums are generally higher for older individuals, the premium tax credit also is higher for these individuals.