Helping Consumers Understand the New Premium Tax Credit
May 13, 2013
Survey data show that the largest barrier to health coverage is difficulty finding a plan that families can afford. Beginning in 2014, the Affordable Care Act (ACA) introduces major reforms, including the start of a new advance payment Premium Tax Credit designed to lower the cost of coverage for qualified families purchasing in the new Health Insurance Marketplaces (exchanges). While employer-provided coverage receives significant tax preferences, tax credits for individual or non-group health insurance have not been used in a broad way. What’s more, the advanceable and refundable features of the new tax credits introduce new elements that most consumers haven’t previously encountered. Taken together, these facts raise the possibility that consumer confusion might be a barrier to using this new program to enroll in affordable coverage. To better understand how consumers will respond to the new tax credits, our study explores consumer responses to a new Premium Tax Credit “explainer” or brochure.