Affordable Care Act (ACA) health insurance tax credit subsidies may be encouraging low-income Colorado residents to splurge on more expensive coverage.
ACA tax credit subsidies help exchange users who earn from 100 percent of the federal poverty level to 400 percent of the federal poverty level pay for exchange coverage. Exchange users who earn more than the cut-off have to pay the full cost of the coverage themselves.
In Colorado, the average cost of coverage increased just 9 percent between 2015 and this year for the relatively high-income, non-subsidized users, to about $248 per month.
The total average premium for subsidy users increased about 15 percent, to $448 per month.
Because the average subsidy amount rose 33 percent — to $311 per month, from $234 — the net amount subsidized users are paying for their coverage out of pocket fell 13 percent, to $137 per month.
In Colorado, the average ACA tax credit subsidy amount is now 26 percent higher than the average monthly premium for the non-subsidized exchange users. In 2015, the average monthly subsidy was just 3 percent higher than the average monthly premium for non-subsidized users.
Exchange plan issuers can offer coverage in four different benefits richness “metal levels,” ranging from lean bronze plan coverage up to generous platinum plan coverage.
In Colorado, the gap between the change in the full cost of coverage and the change in the net amount subsidized users actually pay was biggest for silver-plan users. For silver plan users with subsidies, the full cost of coverage increased an average of 17 percent, to $482, and the net amount the enrollees actually paid fell 13 percent, to $143.
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