Webinar Q&A: Everything You Wanted to Know About Cost Sharing and Tax Credits in 2016
ACE TA Center
The following questions and answers come from the December 10, 2015 ACE TA Center webinar, Everything You wanted to Know About Cost Sharing and Tax Credits in 2016.
In regards to PTC, if the person can't afford the Employer plan and they want a plan through the Marketplace, what are they supposed to do if the plan costs too much because they didn't receive the PTC?
In regards to the PTC, if the person can't afford the Employer plan and they want a plan through the Marketplace, what are they supposed to do if the plan costs too much because they didn’t receive the PTC?
An individual may apply for PTC with any level plan purchased through the Marketplace. Cost-sharing reductions (CSRs) are only available with Silver level plans.
You will need to check with your ADAP or local RWHAP insurance assistance program. Because ADAPs have to make sure the plans they support are cost-effective, some ADAPs will only support particular plans (e.g., only Silver level plans). However, not every program has the same requirements. Check with your ADAP or local RWHAP insurance assistance program to see if they recommend and/or support specific plans. As a reminder, if you are eligible for cost-sharing reductions (CSR), you must enroll in a Silver-level plan.
CSRs are calculated during the Marketplace application process. This means that the reductions will be included in the health plan in the form of discounted prices. Once someone has applied for coverage, and their eligibility for CSRs and tax credits has been determined, they don’t need to do anything further to get their CSRs.
No. PTCs are only available to individuals with an income between 100% - 400% FPL. In states that have expanded Medicaid, individuals under 100% FPL would be eligible for Medicaid. In states that have not expanded Medicaid, clients should check with their local Ryan White program to see what options are available (options vary by location).
The premium tax credit (PTC) is designed to make up the difference between the maximum individual contribution (cap) and the total premium amount for a Silver plan. For example, an individual with an income between 133% and 150% of the Federal Poverty Level will pay a premium amount between 3% - 4% of their income. See slide 14 of the presentation for more details on those caps.
However, even though the PTC amount is based on the cost of a Silver plan, an individual can use their premium tax credit to purchase any Marketplace plan, including Bronze, Gold, and Platinum plans.
PTCs and CSRs are federal subsidies to assist eligible Marketplace enrollees with premiums and out-of-pocket costs. RWHAP client caps and discounted sliding scale fees, however, are only relevant when the RWHAP is the primary payer (i.e., the client is uninsured). When RWHAP is the primary payer, client caps and discounted sliding scale fees will not be affected by the Affordable Care Act.
7. In regards to PTC, if the person can't afford the Employer plan and they want a plan through the Marketplace, what are they supposed to do if the plan costs too much because they didn't receive the PTC?
If the individual’s job-based plan is considered affordable and meets minimum standards for affordability and coverage, s/he is not eligible for tax credits or cost sharing reductions through the Marketplace.
Employer insurance is considered affordable if the employee’s share of the premium for the lowest priced plan available (for the employee only, not their family), is 9.66% or less of their household income. A health plan meets minimum standards for coverage if it’s designed to pay at least 60% of the total cost of medical services for a standard population, and if its benefits include substantial coverage of inpatient hospital and physician services.
If an individual is offered job-based coverage that provides minimum value for coverage and is considered affordable, they are not eligible for a premium tax credit.
The percentage of income that individuals are required to contribute toward health insurance premiums vary according to Federal Poverty Level. Refer to slide 14 of the presentation. At a cost of 10% of income (for an employer plan that meets minimal essential coverage), the individual will have the option to purchase health insurance through the Marketplace and be eligible for PTC, as long as the individual’s income is between 100%-400% FPL.
9. In regards to the PTC, if the person can't afford the Employer plan and they want a plan through the Marketplace, what are they supposed to do if the plan costs too much because they didn’t receive the PTC?
Individuals who have to pay more than 8.05 percent of their household income to get the lowest-priced coverage available to them (either through the Marketplace or an employer) are exempt from the requirements to obtain coverage or pay the penalty.
To learn more about exemptions from health coverage, including income related exemptions, and how to apply for an exemption, go to https://www.healthcare.gov/health-coverage-exemptions/forms-how-to-apply/.
To see which exemptions an individual may be eligible for and how to apply, use this tool at https://www.healthcare.gov/exemptions-tool/#/.
If the client had coverage in 2014 and did not file a 2015 federal tax return, he or she will not be able to get a PTC for a 2016 plan and will have to pay the full cost for a Marketplace health plan.
However, if the client got coverage for the first time in 2015 (or is applying for coverage for the first time for 2016) then he/she is still eligible for the PTC.