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Health Tax Credits Missed By 2.5m US Taxpayers

by Mike Godfrey, Tax-News.com, Washington

06 October 2016


The US Department of Health and Human Services (HHS) has provided new analysis showing that some 2.5m US taxpayers currently buying their individual health insurance coverage outside the Health Insurance Marketplace may be eligible for the Affordable Care Act's premium tax credit (PTC).

The refundable PTC assists taxpayers on low or moderate incomes with paying their Marketplace health insurance premiums. Individuals may elect to receive the PTC as a lump sum credit on their annual federal income tax return, or, under the advance PTC arrangement, have the credit paid directly to their health insurance provider during a year as partial payment for their monthly premiums.

On October 3, together with its new data, HHS encouraged individuals, and especially those whose incomes may qualify them for the PTC, to evaluate Marketplace options during upcoming Open Enrollment for 2017 health insurance coverage.

"More than 9m Americans already receive financial assistance through the Health Insurance Marketplace to help keep coverage affordable, but today's data show millions more Americans could benefit," said HHS Secretary Sylvia Burwell. "We encourage everyone to check out their options on HealthCare.gov or their state Marketplace and see if they qualify for financial assistance. Marketplace consumers who qualify for financial assistance usually have the option to buy coverage with a premium of less than USD75 per month."

HHS analysis estimated that about 6.9m individuals currently purchase health insurance in the off-Marketplace market. Of those, about 1.9m either have incomes that would qualify them for Medicaid or place them in the Medicaid coverage gap, or are ineligible to purchase Marketplace coverage due to immigration status. It could be expected that around half of the remaining 5m individuals who could enroll in Marketplace qualified health plans would qualify for the PTC.

However, it was added, many individuals remain unaware of the financial assistance available to them through the Marketplace. For example, a recent Commonwealth Fund survey found that only 52 percent of uninsured adults were aware of the PTC.

HHS therefore confirmed that, during the upcoming Open Enrollment, it will be placing new emphasis on making sure people currently buying individual market coverage off-Marketplace know their options.

TAGS: individuals | Insurance | tax | law | insurance | tax credits | health care | legislation | United States | individual income tax | Health Insurance

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