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Subsidy gaps may explain low young adult enrollment

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Young people who thought they were going to get help paying for their insurance plans through the Patient Protection and Affordable Care Act may be out of luck.

A new study from HealthPocket finds that in major cities, some young people are falling into a “subsidy gap” where they are unable to obtain government subsidies to help pay for their insurance plan despite being within the complete income range specified by PPACA.

And that gap may be contributing to the group’s under-enrollment in PPACA plans.

Premium tax credits for 2014 plans were designed to lower premium costs for people with household incomes between 100 percent and 400 percent of the 2013 federal poverty level ($11,490 to $45,960 per year for an individual). But subsidies are calculated using a complex formula based on the cost of a plan’s premium, and are only available when a baseline plan’s premium exceeds a specific percentage of an enrollee’s monthly income.

“The higher the income level, the higher the percentage of income that must be surpassed to qualify for a subsidy,” HealthPocket researchers said. “If that income percentage is not surpassed by the premium then no subsidy is available for the enrollee.”

HealthPocket looked at plans for young adults in eight major cities — Philadelphia, Miami, Los Angeles, Atlanta, Houston, Detroit, Chicago and Phoenix — and found that in every city examined, young adults under age 35 could not obtain premium subsidies for exchange health plans within the complete income bracket specified by PPACA.

On average the maximum income at which young adults could qualify for a premium subsidy was $31,744. That average is $14,216 below the highest subsidy-eligible income stipulated by the law.

“HealthPocket’s analysis suggests that the premium subsidy design may be an important factor contributing to the under-enrollment of the young adult population, a population targeted for enrollment both for their typically good health as well as their propensity to be uninsured,” the company concluded.

Though young adults make up 40 percent of the uninsured population, according to HHS numbers, just 25 percent of those who have enrolled in coverage under PPACA have been ages 18-34, according to administration numbers.

Bankrate report earlier this week found that a third of uninsured Americans (34 percent) say they don’t plan on buying health insurance, despite the law’s requirement to do so.

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