Subsidized or Penalized

Subsidized or Penalized: A new study brings into sharper focus one of the Affordable Care Act’s central provisions: The tax credits extended to people to help them purchase coverage beginning next year.  The analysis by the left-leaning advocacy group Families USA estimates that nearly 26 million people will be eligible for the new subsidies.  According to their report, 88 percent of those qualifying for the tax credits will be from working families.  However, when all is said and done, those subsidies will run up a tab of about $350 billion by 2019.  Additionally, experts raise the point that those who are not eligible for the subsidies – and even some of those that are – may still wind up paying more for their coverage due to other major provisions of the law, including, new minimum essential health benefits requirements and restrictions on age-rating bands.  Separately, a new survey found that the IRS penalty levied against people who remain uninsured next year will not have the intended effect on consumers’ purchasing decisions.  When asked if the IRS penalty would motivate them to shop for a health plan when the exchange marketplaces open for enrollment this October, two-thirds of respondents answered “No.”  While many may balk at the penalty now, which in 2014 will be the greater of $95 per individual or 1 percent of total household income, that pill might not be as easy to swallow in a couple of years, when the penalty balloons to either 2.5 percent of total household income or $695 per person in 2016.

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