2.6 million Texans can get health coverage tax credit

Posted Friday, Apr. 12, 2013  comments  Print Reprints

Eligible for tax credit

Harris County will have the most residents eligible for the health insurance credit, followed by the Dallas and Fort Worth areas.

Harris (Houston): 446,850

Dallas: 291,960

Tarrant/Parker: 191,330

Bexar (San Antonio): 168,880

Hays/Travis: 113,170

State: 2.6 million

Source: Families USA

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Some 2.6 million Texans, including 191,330 in Tarrant and Parker counties, will be eligible for tax credits to help offset the cost of health insurance next year, according to a report from Families USA released Thursday.

The premium tax credit, as well as other federal help with deductibles, co-pays and other out-of-pocket costs, is expected to bring $21.7 billion to $31.5 billion into the state over its first four years, according to estimates from the Texas Department of Insurance.

The credit will be available on a sliding scale for those buying policies and making less than four times the poverty level, or $46,000 for an individual and $94,200 for a family of four, according to Families USA, a national consumer health advocate.

The benefit will begin in January as the tax credit is passed through to insurance companies to offset monthly premiums.

Texans may begin signing up for a health insurance plan through the federal exchange beginning Oct. 1.

Under the Affordable Care Act, all Americans will have to buy health insurance by next year or face a penalty.

Workers in group plans are ineligible for the tax credit unless the plan cost exceeds 3.3 to 9.5 percent of wages, depending on income level, or unless the employer picks up less than 60 percent of the cost of the covered benefit.

The credit is designed to make private health insurance more affordable, said Ron Pollack, executive director of Families USA.

"The tax credit subsidies are a game changer," he said. "They make healthcare coverage available for a huge number of families who have been priced out of the market for the care they need and for those with coverage having trouble affording it."

The report is based on census data.

Affecting middle class

One key finding is that people with annual incomes of 200 to 400 percent of the poverty level -- between $47,100 and $94,200 for a family of four in 2013 -- will constitute more than half the Texans eligible for the premium tax credit.

Also, 88 percent of those who qualify in the state are employed either full time or part time.

"This reaches deeply into the middle class and moderate-income families," Pollack said. "It substantially diminishes the remaining insurance cost families have to bear to purchase insurance."

Broken down by county, the report shows that most of those eligible in Tarrant and Parker counties -- some 61 percent -- are under age 34. The second-largest group -- 28 percent of those eligible -- is 35 to 54.

Families USA also broke down the data by race, showing that in Tarrant and Parker counties, 45 percent of those who could receive the tax credit are Anglo, while 36 percent are Hispanic and 11 percent are African-American. Statewide, about 48 percent of those eligible are Hispanic.

People on Medicare or Medicaid will also not be eligible. U.S. Rep. Lloyd Doggett, D-Austin, said that if Texas does not expand its Medicaid program under healthcare reform, an additional 422,000 Texans may be able to use the tax credit.

But in a loophole created when the Supreme Court allowed states to decide whether to expand Medicaid, anyone making beneath the poverty line will not be eligible.

"Those who are poor but are below the poverty level will not have a means to gain health insurance without Medicaid expansion," Doggett said. "That's why it's so important that we find an alternative in the event that this Legislature concludes and no action has been taken on Medicaid expansion."

How it would work

The new tax credit will mostly help Texans in a few industries -- healthcare, restaurants, hotels, retail, food services, construction, manufacturing, tourism and hospitality -- said Anne Dunkelberg, associate director of the Center for Public Policy Priorities in Austin. Those companies hire most of the 6.1 million uninsured people in the state, she said.

Another form of help for families making less than 250 percent of the poverty level will be federal aid for out-of-pocket costs like co-pays and deductibles, Dunkelberg said.

Also, an insurance exchange for small-business owners is in development, she said.

"There will be lots of leveling-out of prices in the small-group market," she said. "In 2014, no one can be turned down for insurance or be charged more because of pre-existing conditions."

While no one knows how premiums will be priced on the exchanges, Families USA provided two hypotheticals to show how the tax credit would work.

A single person making $23,000 a year could pick an insurance plan that would cost $5,000 a year in premiums. The out-of-pocket cost for the monthly premium would be about $1,450, or $121 a month.

A $3,550 tax credit would cover the rest.

A family of four has an annual income of $35,300. It picks a plan costing $12,500 in premiums a year and would pay about $1,410 for the plan, or $118 a month.

An $11,090 tax credit would cover the rest.

As part of a free service, tax preparer H&R Block is providing an assessment of how much a taxpayer could receive in premium tax credits, as well as how big a fine that person would have to pay for not buying insurance.

The credit will be based on 2012 tax figures unless the customer reports a change in income level at the time insurance is bought.

Teresa McUsic's column

appears Saturdays.


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