Broadened eligibility for the Premium Tax Credit (PTC) first included in a COVID-19 relief package and extended the following year is helping drive more individuals to enroll in an Affordable Care Act (ACA) marketplace healthcare plan, according to the Treasury Department.
On September 10, Treasury’s Office of Tax Analysis released a report on ACA insurance coverage from January 2014 through May 2024. Acting Treasury Assistant Secretary for Tax Policy Aviva Aron-Dine told reporters Monday ahead of the report’s public circulation that while the Department of Health and Human Services issues coverage statistics monthly, Treasury’s analysis incorporates IRS data, such as from information returns, to show unique enrollments over past decade.
“That includes people who’ve had marketplace coverage continuously since 2014, people who use the marketplaces for a few months between jobs, and people who’ve gone back and forth several times between the marketplaces and other sources of coverage,” Aron-Dine clarified.
In total, 49.4 million unique individuals obtained coverage through the ACA. Although the ACA was enacted in 2010, 2014 was the first year for enrollment and the year with the highest amount of enrollees. However, the number of enrollees increased “slightly” in 2020 at the beginning of the COVID-19 pandemic and then increased “more robustly” in 2021.
Generally, low- and middle-income individuals can claim the PTC, a refundable tax incentive designed to lower heath insurance costs, if they obtain health insurance coverage through the ACA marketplace. As explained by the IRS in a set of FAQs last updated in February (FS 2024-04), the PTC scales off income, meaning those with lower incomes gain a larger credit.
Marketplace enrollees can choose to have their credit amount estimated and paid to their insurance companies to lower monthly premiums. Alternatively, the entire PTC value can be claimed during tax season. Regardless, a Form 8962, Premium Tax Credit (PTC), must be completed and attached to one’s tax return for the applicable year.
A key contributing factor behind the significant increase described by Treasury in the number of new enrollees since 2021 is the American Rescue Plan Act (P.L. 117-2), a COVID-19 relief package signed by President Biden that included expanded PTC eligibility. Specifically, through the end of 2022, the PTC could be claimed by those with household incomes exceeding the original limit of 400% of the federal poverty line (FPL). For those claimants, the maximum income percentage was set at 8.5%, meaning households at or above 400% of the FPL would need to spend up to 8.5% of their income to receive a PTC. The bill did not adjust the income eligibility floor of 100% of the FPL.
These changes to the PTC were initially only applicable to 2021 and 2022, but the Inflation Reduction Act (P.L. 117-169) extended the provisions through 2025.
Per Treasury’s report, 18.2 million taxpayers enrolled in an ACA plan for the first time since January 2021. After the open enrollment period for 2024, the number of covered individuals reached an “all-time high of 20.8 million,” the Department announced in a press release.
Treasury said the expanded PTC has helped reduce premiums to $10 or less per month for four in five customers, citing information from the Department of Health and Human Services. As shown in the report, enrollments “vary greatly” by state. Aron-Dine said Massachusetts and Vermont, which have had their own state-level PTCs, saw higher-than-average enrollment.
The report illustrates “just how many people have a stake in decisions that are made about the marketplace’s future, starting with whether Congress extends the Biden-Harris Premium Tax Credit improvement before premiums spike in next year’s open enrollment,” she said.
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