Senate proposal could mean fewer get insurance


March 9, 2011

Consumers Union Urges Senate to Fix “1099 Provision” of Affordable Care Act
Without Penalizing Low & Middle Income Consumers

Senate Plan Could Mean Fewer People Get Health Coverage

WASHINGTON, D.C. – In a letter sent to the U.S. Senate on Tuesday, Consumers Union urged lawmakers to avoid penalizing low and middle income consumers who receive tax subsidies to purchase health coverage under the Affordable Care Act (ACA) in order to finance the repeal of a provision of the law that small businesses find onerous.
While Consumers Union supports the repeal of the controversial “1099 provision,” it opposes efforts to pay for this change by exposing some middle income consumers to a potentially large and unexpected tax liability.
“We fear that this proposal would have a chilling effect on many families’ willingness to use the tax credits to purchase insurance,” said DeAnn Friedholm, director of Consumers Union’s health reform campaign (www.prescriptionforchange.org). “We urge the Senate to find a better way of paying for this change to the law without penalizing those families who can least afford it.”
Under the ACA, consumers will be eligible for tax credits to purchase private health coverage based on their annualized income instead of their income at the time they apply for a tax credit. As a result, an individual who qualifies for a tax credit when they are making a lower income could end up being penalized if they get a higher paying job later in the year. The ACA caps the amount that individuals must pay in this event.
But under a proposal now being considered in the Senate, the cap would be lifted for some consumers and significantly raised for others in order to pay for the 1099 repeal. A similar measure already has been passed in the House
David Butler (dbutler@consumer.org), Kara Kelber (kkelber@consumer.org): 202-462-6262 or Michael McCauley (mccami@consumer.org): 415-431-6747, ext 126