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Monday, September 01, 2014         

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Cashing in on health care reform

More than 112,000 Hawaii residents will qualify for tax credits beginning in 2014

By Kristen Consillio

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An estimated 112,400 Hawaii residents will qualify in 2014 for new tax credits intended to offset the cost of private health insurance.

The program, under the nation's health care reform law, could result in $432 million in tax reductions for Hawaii residents that year, according to a report released today by Washington, D.C.-based Families USA, a nonpartisan consumer health advocacy group, which strongly supports health care reform.

The program caps the amount individuals and families have to spend on health insurance premiums and allows consumers to choose from a range of health plans varying in price and coverage.

The amount of the tax credit is based on a sliding income scale but is meant to benefit middle-income households with annual incomes up to four times the federal poverty level. For family of four, that translates into annual income of up to $101,440. Individuals can make as much as $49,840 a year.

Residents with lower incomes will get larger tax credits.

HOW TO BENEFIT

Two cases of benefits individuals and families can receive from the premium tax credits:

» A 45-year-old woman, no children, annual income of $25,300 (more than 200 percent of the federal poverty level): If the annual premium for the average midrange plan is $6,000, the most the 45-year-old woman would pay out of pocket in annual premiums would be about $1,594, or about $133 a month, with the balance paid by a tax credit of $4,406.
» A family of four (two adults, two children under age 18) with annual income of $38,040 (150 percent of the federal poverty level): If the annual premium for the average midrange plan is $15,000, the most the family would pay annually in premiums is about $1,522, or about $127 a month, with $13,478 covered by tax credits.

"Any type of credit would help, especially with the cost of living here," said Aiea resident May Stevens, who once paid as much as $600 a month for health insurance coverage for her family of four.

The report found that roughly 35,300 uninsured and 77,000 insured Hawaii residents would be able to use the credits to help pay a portion of their premiums in health insurance exchanges that will be established by 2014.

The exchanges require health insurers to offer a variety of health plans that vary in cost and coverage and disclose how premium revenue is being spent. It also prevents insurers from denying coverage to people with pre-existing conditions or from charging excessive premiums. Plans must meet minimum benefit requirements to participate.

"While Hawaii is unique and many full-time workers have coverage, many of these workers' family members will be helped by the new premium tax credit," said Kathleen Stoll, deputy executive director of Families USA.

"People who have lost their jobs, been laid off, will be helped."

Hawaii's Prepaid Health Care Act requires that employers provide health insurance to employees who work 20 hours or more a week, though residents with employer-based coverage also could qualify for the tax credits depending on income and out-of-pocket premium contributions. If the out-of-pocket cost is more than 8 percent of their household income, the family or individual could get a tax credit. Low-income families eligible for Medicaid do not qualify for the tax credits.

The credits will be applied directly to a health plan. Individuals and families can choose any plan available through the exchanges and pay the difference if they choose more expensive coverage with greater benefits than a typical midrange plan.






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