Health Insurance Premium Credits Under House-Passed H.R. 3962

Chris L. Peterson
Specialist in Health Care Financing

Thomas Gabe
Specialist in Social Policy

This report describes the premium credits—"affordable premium credits"—to help certain individuals pay for health insurance in H.R. 3962, the Affordable Health Care for America Act, as passed by the U.S. House of Representatives on November 7, 2009. 

Under H.R. 3962, a "Health Insurance Exchange" would begin operation in 2013 and would offer private plans alongside a public health insurance option and not-for-profit, member-run health insurance cooperatives. The Exchange would not be an insurer; it would provide eligible individuals and small businesses with access to insurers' plans, including the public option and cooperatives, in a comparable way. Individuals would only be eligible to enroll in an Exchange plan if they were not enrolled in Medicare, Medicaid or, for full-time employees, their employer's coverage. 

Only within the Exchange, credits would be available to limit the amount of money some individuals would pay for premiums. For example, a family of three at 133% of the federal poverty line (FPL)—that is, with 2009 annual income of $24,352—would be required to only pay 1.5% of their income toward premiums ($365 annually) toward a Basic plan in the Exchange, 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 12% of their income ($8,789 annually) in premiums for a Basic Exchange plan, if the proposed premium subsidies were currently in effect. 

Although the Exchange and the premium credits would not be available until 2013 under H.R. 3962, 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: R40878
Price: $29.95

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