The Times West Virginian

April 7, 2013

Report: Health-insurance tax credit could help many West Virginians

By Jessica Borders
Times West Virginian

FAIRMONT — According to Families USA, the new health-insurance tax credit could provide many West Virginians with affordable coverage to meet their needs.

Families USA’s recent report, titled “Help is at Hand: New Health Insurance Tax Credit in West Virginia,” discovered that in 2014 approximately 142,000 low- and middle-income residents in the state will be eligible for tax credits through the Affordable Care Act to help them cover the costs of health insurance.

Families USA, a national not-for-profit, non-partisan organization, works to bring the voice of health-care consumers to both federal and state health-care policy debates. This entity, headquartered in Washington, D.C., was started about 30 years ago.

Kathleen Stoll, director of health policy at Families USA, is one of the authors of the West Virginia study, which was released March 28. The organization is creating reports for all 50 states, which are being made available online at www.familiesusa.org.

The Lewin Group, a very respected nonpartisan consulting firm that works with insurers as well as consumers, provided the data analysis, she said. The group made predictions about 2014 using the data in its Health Benefits Simulation Model.

Families USA worked with the organization Enroll America to conduct a focus group around the country to find out how many uninsured and underinsured people will be eligible for help through the Patient Protection and Affordable Care Act, which President Barack Obama signed into law in March 2010.

They learned that about 80 percent of the individuals who will be able to apply for the health insurance tax credits didn’t know about them, Stoll said.

The state reports will educate the public and raise awareness between now and October, when people can begin to apply for the tax credits, she said. The benefits will start taking effect in January 2014.

“They’re very generous premium tax credits,” Stoll said, and will make a difference in helping people afford health insurance.

She explained that the tax credits protect families and individuals from spending more than a certain percentage of their household income on health insurance premiums, and that percentage is on a sliding scale based on income. The largest credits will go to people with the lowest incomes.

For instance, a family of four that makes $35,300, which is at 150 percent of the federal poverty level, would get a $11,090 tax credit over the course of the year. They would still have to spend money out of their own pocket to cover their remaining health-insurance costs, Stoll said.

“For that family, maybe for the first time being able to afford insurance is a reality for them,” she said. “It’s not something that’s way beyond their reach.”

While the premium tax credit is calculated based on the silver, or mid-level, reference plan, a family or individual still has a choice of health-insurance plans, Stoll said.

People can buy a plan that is more or less comprehensive, but they still get the same size credit, she said. What changes is the dollar amount that they have to add out of their own paycheck.

Families eligible for Medicaid can’t apply for the tax credits. Although it is not a certainty, the report assumes that West Virginia will expand Medicaid to include people with incomes that are below 138 percent of the federal poverty level, instead of the current 100 percent, Stoll said.

This is why the study looks at West Virginians who earn between 138 and 400 percent of poverty as being eligible, she said. Those percentages come out to between $15,860 and $46,960 for individuals and between $32,500 and $94,200 for families of four.

In West Virginia, most of the people that will be eligible for the tax credit — about 89 percent — are in working families, Stoll said. The report states that 55 percent of eligible people are in working families with incomes between $47,100 and $94,200, which is 200 to 400 percent of poverty.

Young West Virginians — those between 18 and 35 years old — will account for 35 percent of the people that are eligible.

The report also breaks down the information by groupings of counties.

It shows that 12,410 residents of Doddridge, Harrison, Marion and Taylor counties will be able to apply for the tax credits. About 44 percent of those eligible earn below 200 percent of poverty, and nearly 59 percent are between 200 and 400 percent of poverty.

Almost 90 percent of the eligible people in this area are employed, and around 10 percent don’t work. The biggest age group of those eligible is people 18 to 34, who make up 35 percent of those who can apply.

To get these premium tax credits, people must purchase health insurance in the state’s new health insurance marketplace, or “exchange,” Stoll said.

She said people don’t have to be uninsured to qualify for the credits. Whether they can move over to the new marketplace and get the tax credits depends on what the offer of employer-based insurance looks like for them.

“People who have an affordable offer of good coverage with their employer will stay there,” Stoll said.

But persons who have a bare-bones plan or are having to spend a lot out of pocket for their coverage will have the choice to move over to the marketplace, she said. That includes workers who spend more than 9.5 percent of their income to be part of their employer’s health insurance plan, or people who get less than 60 percent of their benefits covered.

Although it’s called a tax credit, it’s really a premium subsidy and is advanceable and refundable, Stoll said. People don’t have to wait until they file their taxes to be reimbursed, and even those who don’t owe any taxes can still get the subsidy.

She said individuals and families can start getting their insurance in January. They have to pay their share, but the rest of the cost of the premium is paid by the federal government month by month.

“It’ll be there for them when they need it to help pay for insurance,” Stoll said.

Families USA often collaborates with West Virginians for Affordable Health Care. This Charleston-based organization does research and public education on health care reform and represents the interest of consumers in the health care reform debate, said executive director Perry Bryant.

West Virginians for Affordable Health Care does a lot of public education and speaks to various groups across the state about the Affordable Care Act and what it means.

“The tax credits are significant and will help to make premiums much more affordable,” he said.

Bryant said the credits are a great opportunity for low- to middle-income uninsured people to get health-insurance coverage. Depending on how good of a job the state does with enrollment, West Virginia has the potential to reduce the number of uninsured people by half.

“I don’t think many people realized that being uninsured is more than an inconvenience,” he said.

Individuals and families without insurance are sicker and die at younger ages than those with insurance. The tax credits will give them the security and health care they deserve, Bryant said.

He pointed out that there’s an initial six-month enrollment period for these premium tax credits from October through March. If people miss this opportunity, they’ll have to wait for the next enrollment period, which is during a six month window in the fall of 2014 with coverage beginning the following January.

Bryant said the health-insurance marketplaces will provide a wealth of information to public.

“It will allow individuals to easier compare insurance options and to see what exactly the cost is to them,” he said.

Email Jessica Borders at jborders@timeswv.com or follow her on Twitter @JBordersTWV.