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Typical PPACA exchange users may be broke

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The typical public exchange plan user may have a household income low enough to qualify for substantial premium subsidies – and even cost-sharing reduction subsidies.

Paul Houchens, an actuary at Milliman, looks at exchange qualified health plan (QHP) users in a presentation he prepared for the Indiana chapter of the Healthcare Financial Management Association.

Consumers who buy eligible individual QHP coverage through a Patient Protection and Affordable Care Act (PPACA) exchange may qualify for PPACA premium subsidies. They also may qualify for cost-sharing reduction subsidies, or subsidies that help reduce a consumer’s out-of-pocket costs.

In Indiana, the federal poverty level income is $19,790 for a three-person family.

PPACA premium subsidies go to people with incomes of either 100 percent or 133 percent of the federal poverty level up to 400 percent of the federal poverty level. Cost-sharing subsidies go to QHP buyers with incomes under 250 percent of the federal poverty level.

In Indiana, the typical QHP buyer who has silver-level coverage is paying just $86 out-of-pocket in premiums per month after taking the premium subsidies into account. That compares with an average of $69 for all states with exchanges run by the U.S. Department of Health and Human Services (HHS).

The average total Indiana QHP premium is $424 per month.

Given how high the premium subsidies is relative to the actual cost of the coverage; the net premium cost HHS has reported for Indiana suggests that a “large majority of marketplace enrollees” in Indiana and other HHS exchange states have income below 225 percent of the federal poverty level, Houchens says.