For a majority of U.S. citizens enrolled in health coverage through the Affordable Care Act (ACA), subsidies and tax credits help keep their monthly premiums affordable.
But this is not true for a vast number of enrollees who are considered middle-income, many of whom are struggling to afford ACA plans, according to a new study.
Data showed that there is a substantial decline in affordability between people that earn $45,000 a year and $50,000 a year, also referred to as the “subsidy cliff,” a study by the Kaiser Family Foundation found. For example, in 21% of the counties represented in the data, a person 40 years of age who makes $50,000 a year would pay more than 10% of their income for the lowest-cost plan in the marketplace.
The state with the lowest average premiums for middle-class people was Rhode Island, meaning 40-year-olds making $50,000 would pay about 5% of their income for premiums. On the other end of the spectrum was Wyoming, where it would cost the same individuals about 14% of their income.
Middle-income people, or those earning 400% of poverty level, are not eligible for subsidies. Therefore, as premiums have increased significantly in the past five years, the number of unsubsidized enrollees has fallen in turn. Between 2015 and 2018, subsidized enrollees rose from 8.7 million to 9.2 million, yet unsubsidized enrollees fell from 6.4 million to 3.9 million.
In the KFF study, affordability of ACA plan premiums varied by geographic location, age of the enrollee and income of the enrollee. The biggest challenges of affordability came for older adults with incomes just above the subsidy cutoff and who live in rural areas, where premiums are highest.
In order to help this struggling demographic, the Trump administration recently made changes to short-term insurance plans to provide another option for those not eligible for subsidies. These plans generally have lower premiums than ACA-compliant coverage but do not have to cover the same benefits. Some experts have warned that short-term plans could attract healthy individuals, thus driving up premiums for those with pre-existing conditions left under ACA-compliant coverage.
KFF researchers suggest that expanding premium tax credits to enrollees earning over 400% of poverty level would offer significantly more assistance.
In addition, several legislative proposals aim to provide lower premium options. For example, last month progressive Democrats introduced a bill that would allow people as young as age 50 to buy into Medicare.