The Impact of Tax Subsidies in the Federally Facilitated Marketplaces (FFM)

A recent report released by the Department of Health and Human Services (HHS) found that four out of five persons who qualified for tax credits in the Federally-facilitated Marketplaces paid an average of $82 a month in premiums after tax subsidies for their health coverage.

69 percent of individuals selecting plans with tax credits in the FFM have premiums of $100 or less while nearly half had premiums of $50 or less. The tax subsidies averaged $264 per month and reduced enrollee premiums an average of 76 percent.However, the analysis shows wide variations among states in the premiums that people are paying for their new insurance, the amount the government is picking up and the proportion who qualify for the subsidies. For example, enrollees in Mississippi paid an average of $23 in monthly premiums after subsidies while enrollees in New Jersey had the highest post-subsidy premiums averaging $148. Cost sharing expenses, such as deductibles and coinsurance, are additional beneficiary costs and were not included in the report.  In addition, the report did not analyze premiums in State-based Exchanges, such as California, which had by far the most people sign up.

On average, the federal exchanges provided a choice of 47 health plans offered by an average of five insurers.  New York had the highest number of issuers with 16. Florida and Wisconsin had the largest choice as measured by number of plans. However one in five enrollees had a choice of two or fewer insurers, for example there was only one issuer in New Hampshire and West Virginia.  New issuers, including CO-OPs, represented almost 26 percent of all state issuers. The majority of new issuers had Medicaid experience.  On average, an increase of one issuer in a rating area reduced the second lowest cost silver plan premium by four percent.

Nearly half of enrollees chose the lowest cost silver plan and two-thirds chose one of the two lowest cost silver plans.  The HHS report provides analysis of enrollee selection of plans at all metal levels and analyzes premiums by age group in FFMs as compared to State-based marketplaces and Medicaid expansion states.

What does this mean for you if you are participating in the FFM?

• According to the analysis above, the Americans who qualify for tax credits through the new federal insurance exchange are paying an average of $82 a month in premiums for their coverage — about one-fourth the bill they would have faced without the government’s help.
• The government has previously reported that 87 percent of the 5.4 million Americans who chose a health plan through the federal health exchange qualified for some financial help.
• Be careful: As of June 1, the government will need to verify eligibility of subsidies by additional documents to verify their income, citizenship, immigration status and Social Security numbers, as well as any health coverage that they may have from employers. People who do not provide the information risk losing their subsidized coverage and may have to repay subsidies next April.

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