Tennesseans claimed $124 million in health care subsidies, yet most eligible for tax credits didn’t sign up

April 05--Tennesseans have picked up more than $100 million in federal tax credits to help pay for health plans bought through the new health insurance marketplace, but that is just a fraction of what they were eligible for during the enrollment period, a new report finds.

The majority of Tennesseans who enrolled in one of the Obamacare plans qualified for federal payment assistance, and together those shoppers took in $124 million in federal tax credits to put toward their premiums in the new exchanges.

But overall, just 16 percent of Tennesseans eligible for such assistance had taken advantage of it by the end of February, a study released last week by the Kaiser Family Foundation shows.

In both Georgia and Alabama, 18 percent of those eligible for a subsidy had actually enrolled in a plan by March.

All of those numbers will grow, perhaps substantially, because of sign-ups that soared as the March 31 application deadline approached.

The Kaiser analysis provides state-by-state breakdowns for the dollar estimate of tax credits shoppers qualified for through Affordable Care Act marketplace plans as of March 1, and shows that just one in five Americans who were eligible for subsidies sought coverage.

In Tennessee, where 62,000 people had signed up for an ACA plan through February, the average subsidy per person was $2,020, the report showed.

The Affordable Care Act allows the federal government to provide subsidies to low- and middle-income people who buy insurance on the exchanges based on how much they make and their family size.

Such subsidies are generally available to people with incomes that range from one to four times the poverty level -- $23,550 to $94,200 for a family of four and $11,490 to $45,960 for a single person.

Those credits are given in advance, based on estimated annual income -- meaning some people may need to pay part of the subsidy back if their tax return shows that their income is higher than what was on their application.

Nationally, 3.5 million people have qualified for a total of $10 billion in tax credits to offset the cost of marketplace insurance coverage as of March 1, the Kaiser study estimated. The majority of those who enrolled in plans have qualified for the tax credit.

The overall totals of subsidies are expected to increase after March's enrollment figures are tallied.

The Congressional Budget Office has most recently projected that 5 million people nationwide will receive tax credits in 2014.

The five states with the most robust "take-up rates" through the end of February -- California, Connecticut, Rhode Island, Vermont and Washington -- saw 30 to 50 percent of those eligible for tax credits enroll.

"If all states were enrolling people at the rate of the five most successful, an additional 3.1 million people would have qualified, with an additional $8.6 billion in subsidies being provided," the report states.

David Yoder, CEO of the Chattanooga-based broker American Exchange, which specializes in selling marketplace plans throughout the country, said the dynamics are not surprising.

"Most of those higher-activity states were actively advertising or trying to reach out to those demographics they knew would benefit the most," Yoder said.

"That didn't happen in Tennessee from a state level at all," Yoder said. "In fact, [state leaders] were throwing obstacles in the way of what little communication [was] direct to consumers, like navigators."

Another key factor, Yoder says, is consumer awareness. Less than 5 percent of American Exchange callers from across the country were aware that subsidies were even available when they called to enroll in a plan, he said.

"It's extremely rare for us to talk with someone who is aware they're going to get some sort of assistance," Yoder said.

At the beginning of enrollment, people were calling because they were eager to get coverage. Toward the end, people were calling to avoid the penalty. Most were "surprised and excited" when they heard subsidies were actually available, Yoder said.

Justin Owen, president of the Beacon Center of Tennessee, a conservative-leaning policy and research institute, says Tennessee's slow uptake shows that people in the state "are showing by their actions" that the law is not good for them.

"The fact that a mere 16 percent of eligible Tennesseans are signing up for Obamacare through the exchanges shows just how unpopular this law is in our state," he said. "They can't even pay people to sign up for a plan."

The money for the subsidies is drawn from a variety of sources, including a Medicare payroll tax increase on high-income earners. Taxes have also been added on medical-device makers and drug companies.

Federal officials also say that the costs are offset by projected savings in Medicare payments.

While enrollment in the federal marketplace officially closed Monday, the deadline has been extended to April 15 for those who had trouble enrolling because of ongoing technical problems with Healthcare.gov.

While the Kaiser report is based on enrollment as reported by the federal government as of March 1, it does not account for individuals who might have selected a plan but have not paid the first month's premium.

Contact staff writer Kate Harrison at kharrison @timesfreepress.com or 423-757-6673.

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