Tax credits may help 270,000 Utahns afford health coverage in 2014

Nearly 270,000 Utahns probably will be eligible for federal tax credits to help them pay health insurance premiums in 2014, according to a report released Wednesday by Families USA.

About 89 percent of them will be in working families; the largest single age group of those eligible will be younger Utah adults, between ages 18 and 34.

The tax credits are designed for uninsured individuals and families with incomes up to 400 percent of the poverty level who shop for insurance using online exchanges, which will open for enrollment in each state in October.

The credits will vary depending on income. They become available in January and will be paid directly each month to insurance companies. Consumers will then pay the balance due on their premiums.

"The tax credit subsidies are a game-changer: They will make health coverage affordable for huge numbers of uninsured families who would have been priced out of the health coverage and care they need," said Ron Pollack, executive director of Families USA, in a conference call with reporters.

The nonprofit, which advocates for affordable health care, hired The Lewin Group to analyze how many Americans will be eligible for the tax credits. The estimates are based on data from the 2010 Census.

Under the Affordable Care Act (ACA), most Americans who do not have health insurance starting in 2014 will face financial penalties. The tax credits are calculated to ensure people spend no more than a specified percentage of their income on premiums.

Generally, the credits will be available to people who have incomes between 138 and 400 percent of poverty — which in 2013 is between $15,860 and $45,960 for an individual, and between $32,500 and $94,200 for a family of four, according to Families USA.

About 56 percent of eligible Utahns will be in middle class families with incomes between $47,100 and $94,200 for a family of four, the Families USA report said.

The ACA envisioned poor uninsured Americans getting coverage through expanded state Medicaid programs, which provide publicly-funded coverage. Utah Gov. Gary Herbert has not yet decided whether the state will expand its program. The number of uninsured eligible for subsidies could rise in states that opt out of the expansion, according to Families USA.

The federal government is expected to run Utah's exchange for individual consumers. Utah is still negotiating to determine whether it can continue to run its Avenue H as a separate state exchange for the employees of small businesses.

Most consumers who will use the exchanges don't have access to insurance at work. But employees with workplace plans that are not considered affordable can qualify for subsidies to get coverage through the exchange instead.

A plan is considered unaffordable if workers have to pay more than 9.5 percent of their wages to get it, or if it pays less than 60 percent of the cost of covered benefits.

According to a recent national survey, three of out every four people who will likely qualify for subsidies are unaware of the program, Pollack said Wednesday. The Department of Health and Human Services plans to launch an education and outreach campaign to publicize the program, he said. Enrollment eligibility information is also available through the Enroll America website, he said.

More from the Families USA report:

• About 17 percent of eligible Utahns will be Latino. More than three-quarters will be white. Approximately 1 percent will be black and approximately 6 percent will identify themselves as being American Indian, Aleut or Eskimo, Asian or Pacific Islander, or a member of more than one group.

• In Salt Lake County, approximately 95,990 Utahns will be eligible.

• In Utah County, 57,630 people will be eligible.

• In Weber County, 21,030 Utahns will be eligible. —

Go figure

Calculators that estimate whether you will qualify for a federal tax credit under the Affordable Care Act are offered by businesses and groups. They include:

GoHealthInsurance

Henry J. Kaiser Family Foundation

University of California, Berkeley Labor Center —

How the subsidy works

The Affordable Care Act creates four levels of insurance inside online exchanges —platinum, gold, silver and bronze. A silver plan would typically cover 70 percent of health care expenses.

The calculation starts with an individual's or family's income.

The tax credit is set to limit the percentage of income people spend on premiums, based on the cost of the second lowest-cost silver plan available in their state's exchange.

Those with the lowest incomes will pay the smallest proportion of their incomes on premiums.

For example:

A family of four with an income of $47,100 a year would not have to pay more than 6.3 percent of its income toward premiums.

So if premiums were $12,500 for the second lowest-cost silver plan in the state's exchange, the family would get a tax credit of $9,530.

If consumers want a pricier plan, they will pay the difference between its cost and the designated silver plan. If they pick a cheaper plan, they will still receive the credit based on that silver plan, so they will pay less out-of-pocket on premiums.

Sources: Families USA report, Congressional Research Service Report