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The enhanced premium tax credits, set to expire at the end of 2025, are credited for record enrollment in the ACA

Oct. 25, 2024 (ACP) -- The �ܼ�����ˮ��̳ is urging congressional leaders to extend enhanced premium tax credits in the Health Insurance Marketplace so millions of Americans can continue to afford coverage.

“For 2024, Health Insurance Marketplace enrollment was at an all-time high, with more than 21 million people finding coverage, almost double the 11 million people enrolled in 2020,” said David Pugach, ACP vice president for governmental affairs and public policy.

According to a May 16 report on KFF, this growth was attributed to a combination of the enhanced tax credits and increased public outreach efforts made available by the American Rescue Plan Act in 2021 and renewed with the 2022 Inflation Reduction Act (IRA). The enhanced tax credits significantly reduced premium payments for Affordable Care Act (ACA) Marketplace enrollees and provided 100 percent premium support for the lowest-income enrollees. Some middle-income enrollees who had previously been priced out of coverage became newly eligible for financial assistance.

The enhancements increased the value of the tax credits available to people with income between 100 and 400 percent of the federal poverty level (FPL) while expanding eligibility for premium tax credits to include individuals with income greater than 400 percent of the FPL.

“Before the tax credits were expanded to include middle-income people, many individuals and families who did not qualify for Medicaid were being priced out of coverage,” Pugach explained. “Now, in 2024, a family of three with an annual income of $103,000, which is four times the poverty level, qualifies for a tax credit that makes comprehensive health insurance coverage more affordable. A 40-year-old couple making $25,000 per year currently pays $0 for a silver plan premium with significantly lowered out-of-pocket deductible costs.”

Another way of looking at how the IRA makes comprehensive health insurance coverage more affordable is to compare what insurance would cost with or without the enhanced premium tax credits and capping of premiums at 8.5 percent of income. Another analysis in KFF based on 2022 insurance rates showed that without the IRA, a 60-year-old couple with an income of $70,000 would have had to pay $1,859 per month (or $22,307 over the course of the year) for a full-price silver plan. However, with the expanded tax credits, the same couple paid an estimated $496 per month (or $5,950 over the course of the year).

The enhanced premium credits are set to expire at the end of 2025.

The expiration of credits will be especially onerous in the 10 states that have not expanded Medicaid eligibility: Alabama, Georgia, Florida, Kansas, Texas, Tennessee, South Carolina, Mississippi, Wisconsin and Wyoming.

“Under Medicaid expansion, people with an income of up to 138 percent of poverty are eligible for Medicaid,” Pugach said. “The enhanced premium tax credits have lowered premiums for ACA Marketplace silver plans down to as low as $0 per month for people with incomes between 100 percent and 150 percent of poverty. As a result, between 2020 and 2024, coverage through the insurance marketplace in non-expansion states grew by 152 percent, while coverage in Medicaid expansion states grew by 47 percent.”

ACP strongly supports making these enhanced health insurance premium tax credits permanent. ACP also supports modifying eligibility requirements for premium tax credits and cost sharing to enhance individual market insurance affordability. “Specifically, the 400 percent FPL premium tax credit eligibility cap should be eliminated, and the amount of premium tax credits for all income levels should be enhanced,” Pugach said.

ACP also supports the Health Care Affordability Act, legislation that would permanently expand eligibility for enhanced premium tax credits for Health Insurance Marketplace coverage. ACP will continue to advocate for the enhanced premium tax credits and will call on ACP members to take action when there is an opportunity to move legislation, Pugach said.

To boost its advocacy efforts, ACP has joined a coalition called Keep Americans Covered that is focused on making health care affordable for millions of Americans.

“Specifically, the coalition is working to preserve the enhanced premium tax credits that have been in law since 2021 and ensure that coverage purchased through the individual health insurance marketplace remains affordable for the more than 20 million Americans who rely on it,” Pugach said. “ACP is a member of this coalition, along with other physician societies and patient, consumer, hospital and health insurance groups who have joined together to call on Congress to reauthorize and extend these tax credits.”

Pugach noted that one constraint to the legislation being passed is that Congress has very few legislative days left this year. “Another challenge is a political one: The health insurance premium tax credits are currently perceived as more of a partisan issue rather than a bipartisan one,” he noted.

As a result, Pugach said, an extension of these tax credits will likely need to be included in a broader bipartisan tax package or paired with other legislation. “While it is possible that legislation could move this year,” he said, “there is a greater likelihood for legislative activity some time in 2025.”

Back to the October 25, 2024 issue of ACP Advocate