An estimated 3,473,000 Californians will be eligible for new tax cuts beginning in 2014 that will significantly reduce the cost of private health insurance for those individuals and families. The historic tax cut in the health reform law, which is estimated to reduce nationwide income taxes by more than $110 billion in 2014 alone, will be provided through tax credits through a new health insurance exchamge, to offset a portion of the cost of health insurance premiums. Californians’ savings will be approximately $13.8 billion in just that first year.
Those are among the key findings of a report for California released today by the health care consumer group, Families USA, which commissioned The Lewin Group to use its economic models to estimate how many individuals in the state would benefit from the new premium tax credits.
The report was released on a conference call earlier today with Health Access California, the statewide health care consumer advocacy coalition, and Congressman Henry Waxman, chairman of the U.S. House Energy and Commerce Committee, which has oversight responsibility over the federal health law. The report also highlights the importance of the new laws signed by Governor Schwarzenegger last week that creates a new health insurance exchange, which will administer these tax credits and subsidies.
Titled “Lower Taxes, Lower Premiums: The New Health Insurance Tax Credit in California,” the report also states that the vast majority of Californians who will be eligible for the premiums tax credit—94 percent—will be in working families.
· Approximately 2,928,200 people—the majority of those who will be eligible for the credits—will be in families with a worker who is employed full-time.
· Another 343,300 people will be in families with a worker who is employed part-time.
The new tax credit targets middle-income families. (Those who are under or near the poverty level will get coverage through Medicaid instead). For families of four, the tax credits—provided on a sliding scale—are focused on families with annual incomes between $29,327 and $88,200.
· People with annual incomes at or above 200 percent of the federal poverty level—$44,100 for a family of four in 2010—will constitute nearly two-thirds (62 percent) of the people who will be eligible for a premium tax credit.
· Because the size of the tax credit is determined on a sliding scale based on income, however, more than half the dollars from the tax cut (60 percent) will be targeted to families with incomes below 200 percent of the poverty level.
Families USA calls this “the largest middle-income tax cut in history.”
There are about 1,741,200 uninsured Californians who will be eligible for the tax credits, and another 1,731,800 eligible people who are currently insured but are still struggling to afford coverage.
Between the new federal law and the new bills just signed by Governor Schwarzenegger, Californians who buy coverage as individuals will see radical improvements in their ability to get quality and affordable coverage. The new exchange will not just be where Californians can access these new credits and subsidies to better afford coverage, but it will give us the combined bulk purchasing power to bargain for a better price and value for their dollars. Many Californians will get hundreds, if not thousands of dollars of relief from high premiums through the new credits. Others will get the group discount that now only goes to large employers and CALPERS, but that now will be available to individuals and small businesses.
The report for California with extended discussion of the eligibility program can be found on the Families USA website at http://www.familiesusa.org/assets/pdfs/health-reform/premium-tax-credits/California.pdf
A description of the report’s methodology can be found in the national report, available at http://www.familiesusa.org/assets/pdfs/health-reform/Premium-Tax-Credits.pdf