The impact of actions taken by Trump — as off our press time – f should have little if any impact on you if you buy your insurance from your employer. However, for individuals insured under the ACA, the impact of Pres. Trump’s executive orders will impact individuals differently based on your income level.
One of the biggest subsidies of the ACA is the tax credit, and nothing done so far has changed the formula for calculating the tax credit offered individuals to help keep the cost of health care down. Tax credits are available for individuals and family groups who’s income is below 400% of the Federal Poverty Level, with the largest tax credit going to those earning closest to the poverty level.
The tax credits are determined by a formula that takes into account a “benchmark” premium and a sliding scale that caps how much someone at a certain income level pays for that premium. At the lowest end of the scale, an individual or household at around 100% of the federal poverty level will pay 2% of their income for that benchmark premium, and those at the highest end, 400% of the poverty level, will pay no more than 9.5% of their income.
Most people won’t pay more
So, if you buy your insurance in the marketplace and the rate the insurance company charges goes up, you still don’t pay any more, because the amount you pay is capped, based on your income. That’s the way it works now, even with Trump’s most recent changes.
Who will pay more?
Households that earn more than 400% of the poverty level that buy their insurance from the marketplace will hurt the most. Those earning 400 to 500% of poverty level are the core of America’s Middle class and they’ll get hit the hardest.
These are individuals in the market because they don’t have employer-sponsored coverage. Without a subsidy, as the cost of insurance goes up, they pay more – dollar per dollar. These are about 17% of individuals who buy their insurance in the marketplace. These are individuals who earn more than $47,520 per year and families of four earning more than $98,400 per year.
Not on the exchange – read this
So you don’t buy your insurance on the marketplace? You’ll pay, however indirectly. As insurance rates goes up for people on the exchange, the amount the tax credit the government gives them goes up. Remember they don’t pay more – what they pay is capped as a percentage of their income – leaving U.S. taxpayers to pick up the bill.
“We think the federal government might end up paying more,” said Chet Burrell, president of CareFirst BlueCross Blue Shield.” “We’re already getting word from other analyses that this could increase federal outflows.”
So follow the flow – the federal government based on Trump cutting the Cost Sharing Reduction (See “What Trumps Executive Orders Did) will save the United State $7 billion – the amount being paid to the insurance companies, but in turn the insurance companies are raising their rates. And, because the amount the insureds pay is capped, the federal government gives them a bigger tax credit. The government – i.e. the citizens – actually end up paying more.
The nonpartisan Congressional Budget Office forecast ending cost-sharing reductions would increase the federal deficit by $194 billon over a decade.
