Implementing Healthcare Reform

The Patient Protection and Affordable Care Act

Provisions Impacting Self-Funded Employers and their Employees
 

ASSISTANCE FOR LOW-INCOME WORKERS

Premium Assistance Tax Credits

Individuals and families with incomes between 100% - 400% of the Federal Poverty Level (FPL) and who are covered by an exchange plan are eligible for advanceable, refundable tax credits, paid to the issuer, against the cost of their healthcare coverage. The payment of credits will begin in 2014.

Low-income workers with access to minimum essential coverage through their (or their dependent’s) employer, are only eligible for a Premium Assistance Credit (for use in purchasing an exchange plan only) if:

  • They have incomes between 100% - 400% of FPL; and
    • Their contribution for coverage exceeds 9.5% of their income; or
    • Their (or their dependent’s) employer’s cost-sharing contribution is less than 60%

Premium Assistance Credit amounts will be the lesser of:

  • The monthly cost of coverage of the taxpayer and any dependents; or
  • The excess of:
    • The monthly premium amount of second lowest cost Silver Plan available in the individuals rating area; over
    • 1/12 of the product of:
      • The taxpayer’s household income; and
      • The applicable percentage for their income tier on a sliding scale basis between premium percentages as displayed in the following table:

    Income Tiers

    Initial Premium Percentage

    Final Premium Percentage

    100% up to 133%

    2.0%

    2.0%

    133% up to 150%

    3.0%

    4.0%

    150% up to 200%

    4.0%

    6.3%

    200% up to 250%

    6.3%

    8.05%

    250% up to 300%

    8.05%

    9.5%

    300% up to 400%

    9.5%

    9.5%

    Beginning in years after 2014, the initial and final applicable percentages shall be adjusted to reflect the excess of the rate of premium growth for the preceding year over the rate of income growth for the preceding year.

    Out-of-pocket maximums for 2014 will be calculated as such:

    Federal Poverty Level

    Maximum Premium
    as % of Income

    Maximum Annual Premium
    by Family Size

    1

    2

    3

    4

    100%

    2.0%

    $217

    $291

    $366

    $441

    133%

    2.0%

    $288

    $388

    $487

    $587

    133.01%

    4.0%

    $570

    $766

    $963

    $1,160

    150%

    4.6%

    $739

    $994

    $1,1250

    $1,505

    200%

    6.3%

    $1,365

    $1,836

    $2,307

    $2,778

    250%

    8.05%

    $2,180

    $2,932

    $3,685

    $4,438

    300%

    9.5%

    $3,184

    $4,284

    $5,583

    $6,483

    350%

    9.5%

    $4,245

    $5,711

    $7,178

    $7,563

    400%

    9.5%

    $4,245

    $5,711

    $7,178

    $8,644

    For years after 2014, the percentages would be adjusted to reflect any percentage by which premium growth exceeded income growth.

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    Maximum Cost-Sharing

    Individuals and families with incomes between 100% - 400% of the Federal Poverty Level will have reduced out-of-pocket maximums; with plans receiving Federal subsidies amounting to the difference between the standard maximum level and the allowable reduced maximums of their beneficiaries.

    The applicable out-of-pocket maximums are reduced by the following amounts:

    • 100% - 200% of FPL – maximums are reduced by 2/3
    • 200.01% - 300% of FPL – maximums are reduced by 1/2
    • 300.01% - 400% of FPL – maximums are reduced by 1/3

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    (Please note: This document was produced by the Self-Insurance Institute of America to provide an overview of the Patient Protection and Affordable Care Act, as modified by the Health Care and Education Reconciliation Act. It does not cover every aspect of the legislation, and certain provisions of the law may change or be modified by additional rules and regulations. This document does not constitute legal or tax advice.)