01. How did the Affordable Care Act expand affordable private insurance coverage?
Under the federal Affordable Care Act (ACA), starting in 2014, individuals meeting certain eligibility criteria with income not in excess of 400% of the federal poverty level (FPL) can qualify for federal Premium Tax Credits to lower the cost of private insurance. The Premium Tax Credit is refundable, meaning it is not only a credit against any tax due; it can be paid to an eligible taxpayer if it exceeds the amount of any tax due. It is also advanceable, meaning it can be paid out in advance during the tax year. The Advance Premium Tax Credit (APTC) is an estimated amount based on expected income for the tax year that the IRS pays directly to the insurance carrier to lower the enrolled individual’s monthly premium costs. A Premium Tax Credit can only be used to lower the costs of private insurance meeting the criteria to be Qualified Health Plans (QHP) that are purchased through an Exchange (also called a Marketplace). The ACA created a federal Marketplace but also allows states to use their own state-based Marketplaces instead.
Massachusetts is one of just 12 states with a state-based Marketplace. The Commonwealth Health Insurance Connector Authority (the Health Connector) is the Massachusetts state-based Marketplace. Individuals can purchase QHPs through the Health Connector with or without help paying the costs. For individuals with income not in excess of 300% FPL, Massachusetts has lowered the costs of a subset of QHPs by supplementing the federal Premium Tax Credits with added state-funded premium and cost-sharing subsidies in order to create ConnectorCare coverage and make it as affordable as a predecessor Massachusetts program called Commonwealth Care. Individuals with income over 300% FPL but not over 400% FPL may purchase QHPs through the Health Connector and qualify for federal Premium Tax Credits under the ACA but do not qualify for the added state subsidies and other state-defined features of ConnectorCare.
In 2019, nine carriers offered over 50 non-group QHPs in the Health Connector. In April 2019 about 55,000 people were enrolled in unsubsidized QHPs and another 17,000 with income between 300% and 400% FPL were enrolled in QHPs with APTCs. This compares to 211,000 people enrolled in one of the five ConnectorCare plans. The Health Connector also offers dental plans, and plans for small businesses.
The ACA also created a Medicaid option for adults not previously eligible for Medicaid. In 2014, Massachusetts began covering working age adults 21-64 with income up to 133% FPL in a MassHealth program called CarePlus. A Table in Appendix 4 compares CarePlus and ConnectorCare.