Beginning in 2014, nearly half a million Minnesotans will be eligible for health care premium tax credits to help pay for private health insurance under health care reform enacted in March, Kathleen Stoll, director of Health Policy and deputy executive director of Families USA, said during a teleconference Thursday that included U.S. Sen. Al Franken, a champion of quality health care in Minnesota.
The Patient Protection and Affordable Care Act (Affordable Care Act), will extend health coverage to millions of Americans by expanding Medicaid to those with the lowest incomes and by creating a tax cut to help low- and middle-income individuals and families afford private coverage. These tax cuts will be provided in the form of new, refundable tax credits that will offset a portion of the cost of health insurance premiums.
A Families USA report released Thursday showed that more than 460,000 Minnesotans would be eligible for the tax credit. It's estimated that the tax credits, which are based on a sliding scale, will provide $1.8 billion in tax relief and premium assistance in 2014. The tax cuts are geared toward middle class families with an average household income between $30,000-$90,000.
"More than half the people eligible have insurance but are really struggling to afford coverage," Stoll said.
"For a family of four with an annual income of $35,000 a year, that family doesn't have to spend more than 4 percent of their annual income to purchase quality health insurance," Stoll said. "That family doesn't have to spend more than $1,400 to get a quality health insurance plan; $1,400 gets them a $15,000 plan. This will enable hard-working families in Minnesota to afford health premiums that right now really stretch the family budget. It will ease families' burdens of health care costs."
Major highlights of the tax credit are three-fold: It's advanceable, meaning those eligible will not have to wait until April 15 until the following year to get the benefit of the tax credit - they can get the credit as they pay for the insurance; it's refundable, meaning people with a limited tax liability where the tax credit exceeds that liability would get the credit refunded to them; and it works on a sliding scale so among those eligible for coverage, a higher tax credit will be provided to those people in greatest need.
Franken, D-Minn., used a three-legged stool analogy in reference to the Affordable Health Care Act, calling it a plan with three important interconnected parts, including changes to insurance plans so insurance is fair and more secure, an insurance mandate to prevent people from waiting to obtain coverage until they get sick, and affordability - "you can't require people to have insurance unless it's affordable," he said. "This helps the uninsured and the underinsured."
Franken said it's important for states to be able to provide quality health care to all its residents, regardless of income. The Affordable Care Act, because it works on a sliding scale, will ensure low-income families will receive more support when it comes to obtaining health care, he said.
"These tax credits will be crucial because even now Minnesota is struggling to cover low-income residents," Franken said. "Families have had to make some tough choices in recent years and the truth is Minnesotans are falling through the cracks. That includes tens of thousands of children, and we can't allow that.
"These trends are deeply troubling to me because Minnesota has prided itself as a national leader in high quality health care," he added. "All Minnesotans should be outraged that they're at risk of being left behind."