Health Insurance Premium Credits in Senate-Passed H.R. 3590

Chris L. Peterson
Specialist in Health Care Financing

Thomas Gabe
Specialist in Social Policy

This report describes the "premium assistance credits" to help certain individuals pay for health insurance in H.R. 3590, the Patient Protection and Affordable Care Act, as passed by the Senate on December 24, 2009. 

Under the bill, state-established "American Health Benefit Exchanges" would have to be established in every state by January 1, 2014. Exchanges would not be insurers, but would provide qualified individuals and small businesses with access to insurers' qualified health plans in a comparable way. 

Only for purchase of coverage within an exchange, advanceable, refundable premium assistance credits would be available to limit the amount of money some individuals would pay for premiums. For example, a family of three just above 133% of the federal poverty line (FPL)— that is, with 2009 annual income of $24,352—would be required to pay approximately 4% of its income toward premiums ($963 annually, if the proposed premium subsidies were currently in effect). A family of three just under 400% FPL ($73,240), where the premium subsidies end, would be required to pay no more than 9.8% of its income in premiums ($7,178 annually, if the proposed premium subsidies were currently in effect). 

Although the premium credits would not be available until 2014 under the bill, the illustrations provided in this report are based on current (2009) FPLs, to reflect how the premiums families would pay compare to their current income levels. 

Relative affordability of health insurance premiums individuals and families might face within health insurance exchanges would likely vary from exchange to exchange based on a host of factors, including enrollees' age, the health of the people actually enrolled in the plan, the varying prices paid by plans for medical goods and services, the breadth of the provider network, the provisions regarding how out-of-network care is paid for (or not), and the use of tools by the plan to reduce health care utilization (e.g., prior authorization for certain tests). Examples shown in this report depict a range by which premiums might reasonably be expected to vary based on enrollees' age, and variation in medical costs across geographic areas, for purposes of illustration only. Actual premiums would likely vary among health insurance exchanges based on a wide range of factors other than those depicted in this report. 


Date of Report: February 3, 2010
Number of Pages: 27
Order Number: R40935
Price: $29.95

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