ACA tax credits help older adults afford health care

Among people with annual incomes of approximately $60,000 or more (400% of the federal poverty level), those aged 50+ stand to see the greatest cost-savings from health care tax credits that lower monthly payments for consumers. This is according to a new analysis prepared by researchers at the Urban Institute, with funding support from the Robert Wood Johnson Foundation.

Enhanced Premium Tax Credits (PTCs) have reduced monthly premium payments for millions of individuals and families since 2021. The credits, originally approved by Congress in the American Rescue Plan Act, are set to expire in their entirety at the end of 2025.

Urban Institute researchers forecast the expected financial benefits of PTCs among individuals who earn more than $60k per year. Researchers presented the findings by age, income, and location.

Findings show that, among this population:

• The tax credits lowered average out-of-pocket premium payments by 60% for 64-year-olds and 57% for 60-year-olds. Conversely, the tax credits lowered payments for 30-year-olds by just 3%.
• The monetary value of the tax credits varied significantly across age groups. 30-year-olds saw an average credit of $13 per month but 64-year-olds saw an average credit of $654 per month.
• Without the tax credits, an average 60-year-old with an annual income of roughly $60,000 would have to spend 20% of their annual earnings on health insurance premiums. A 60-year-old with an individual income of just over $75,000 would have to spend 16% of their income on premiums.

“Our research finds that the expansion of the enhanced premium tax credits improve Marketplace plan affordability for many across income group, ages, and geographic areas,” said Jessica Banthin, senior fellow at the Urban Institute. “However, if the enhanced credits are allowed to expire after 2025, many Marketplace enrollees, particularly older adults and those in high-cost states, would face extremely high out-of-pocket premiums forcing many out of coverage.”

“Healthcare needs increase with age, and so does the importance of the enhanced premium tax credits,” said Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation. “Without these credits, many older adults would have to spend an unacceptably large share of their income on premiums, resulting in difficult tradeoffs between healthcare and other necessities like food and housing. It is clear that tax credits provide significant financial relief to older adults, and any rollback would impose a substantial burden.”

Read “Enhanced PTCs Help Older Adults and Those in High-Premium States Afford Coverage” here.