Beginning in 2014, the government is providing premium tax credits (also referred to as health insurance premium subsidies) to help lower the cost paid for individual health insurance premiums purchased through the public health insurance exchanges.
Individuals will be eligible if their household income is between 100% and 400% of FPL, and who do not have affordable coverage through an employer or government program.
It's estimated that 25.7 million Americans will be eligible for a premium tax credit.
Who are the 25.7 million Americans? And how many will actually take advantage of the discounts?
Premium Tax Credit Eligibility by Income
According to an analysis by Healthy Families, 56% of those eligible for the premium tax credits have incomes at or above 200% of the FPL, and 44% have incomes below 200% of the FPL. For an individual, 200% FPL is $22,980/year in 2013 (see: FPL charts).
Premium Tax Credit Eligibility by Employment Status
Of the 25.7 million people eligible for the premium tax credits, 88% are from a working (employed) family and 12% are unemployed.
Premium Tax Credit Eligibility by Age
Of those eligible for the premium tax credits, the age group most likely to be eligible for subsidies will be young adults aged 35-54 years old, who make up 36%.
Source: Families USA
Will Americans Access the Premium Tax Credits?
Over 25 million Americans are eligible for the premium tax credits. But, just because a person is eligible for a tax subsidy does not mean they will take advantage of it. The Congressional Budget Office forecasts 6 million people will receive subsidized coverage through an exchange in 2014. That’s only 23% of the eligible population.
Why? Many Americans are not aware of the provisions in the Affordable Care Act that can help them. The Congressional Budget Office expects the number of people receiving subsidies to jump to 22 million by 2017 with increased awareness and education.
For more details on how the premium tax credits work, see this article.