Nevada consumers fire away with questions on Affordable Care Act

With Week No. 1 of the new individual insurance mandate under their belts, Nevada consumers have plenty of new questions about how the Affordable Care Act works.

We’ll jump right in with a discussion about how much you can make and still qualify for the federal premium tax credit.

A year-end story on insurance premiums drew a comment about the credit from a reader who didn’t identify himself. His concern: When he tried to enroll in a state exchange plan in November, he said a navigator told him income guidelines for getting the federal advanced premium tax credit were wrong.

Our reader, a 40-year-old nonsmoker, said an exchange navigator told him $34,470 is the most you can make in Nevada as a single and still reap the credit.

That’s quite a bit lower than initial estimates, and it might mean trouble for middle-income earners who were counting on the subsidy to help them pay for coverage.

“Show me anyone who earns $35,000 a year that can afford a continual $275-a-month health insurance policy,” our reader wrote.

So we did a little digging, and we found it’s not just your income that nets you the subsidy. How much your plan costs also counts. In Clark County, where plans are relatively inexpensive, that could mean no tax credit for thousands of locals who expected the break.

“The language (U.S. Health and Human Services) and many of the exchanges have used to describe who qualifies for subsidies has been very misleading, and in many states that we’ve studied, large groups of younger Americans will not qualify for subsidies,” said Jonathan Wu, CEO of consumer-finance website ValuePenguin.com. “Many who do may only receive very small tax credits as well.”

That could be a surprise for consumers who have been told people are eligible for a subsidy if they make less than 400 percent of the poverty level, or $45,960 for a single and $94,200 for a household of four.

The thing is, just because you are eligible doesn’t mean you will qualify. To get the credit, your monthly premium payment on a benchmark silver plan also must be more than 9.5 percent of your earnings, said CJ Bawden, spokesman for the state exchange.

That’s a bigger problem locally than it is in other parts of Nevada, said Wu, whose analysis ended up in The Washington Post as a county-by-county comparison on the Affordable Care Act.

In Clark County, the benchmark premium starts at $195 a month for a 27-year-old. Compare that to $374 a month in Eureka or White Pine counties, which have less competition and higher prices.

Because premiums here are so much smaller, younger Clark County residents won’t qualify for the tax credit if they bank more than $28,913 a year. On the other hand, a 27-year-old in Eureka County could make $35,000 a year and get a $97-a-month tax credit to defray coverage costs.

Age also factors in, Wu said, because your premiums grow as you get older. So, older locals are likelier to meet the income threshold and see a credit.

A 55-year-old in Clark County making $45,000 a year would find a monthly benchmark silver premium of $414, with a $60 tax credit to drop the actual cost to $354.

The upshot? Healthy, young people in particular might not enjoy the subsidies some experts say they need to encourage them to buy coverage.

But Bawden said the issue won’t necessarily derail enrollment among younger enrollees, and the subsidies are important as “equalizers” in the market so people pay about the same amount for coverage wherever they live.

“Young individuals (in Clark County) don’t get a tax credit because their premiums are cheaper,” Bawden said. “They’re receiving the product at a lower price than other individuals.”

■ Tim Plaehn of Gardnerville, featured in a November Review-Journal article about insurance premiums, had additional questions for us. First, how much has the state spent on the Silver State Health Insurance Exchange, and how much does that break down to per enrolled person?

Technically, Tim, there’s no state money at stake here. That’s because the exchange’s launch is funded through federal grants (although Nevada taxpayers do ultimately help pay for Washington’s spending).

The exchange landed about $75 million in grants to cover its costs through 2014. If the exchange signs up the 118,000 people it forecasted by March 31, that would be $636 per enrollee.

The exchange isn’t there, though. Its latest stats, released Tuesday, showed 10,547 paid enrollments. That should rise as enrollment continues through spring; but as of now, that comes out to $7,111 per enrollee.

Tim also wanted to know this: If higher enrollment is important to the viability of the system, why does the state not move all state government employees to the exchange? If the exchange is such a good deal, government employees and officials should lead by example, especially those who work on the exchange project.

Bawden of Nevada’s insurance exchange said signing up all state workers through the marketplace would “give a large boost in enrollment.”

The latest numbers from the state’s Employment, Training and Rehabilitation Department showed 38,200 state employees in November.

Bawden said the issue is that state workers already are offered plans that meet the minimum essential coverage rules under the Affordable Care Act. Plus, employee premium contributions fall below the law’s affordability thresholds.

That means state workers wouldn’t qualify for the premium tax credit that the exchange is designed to provide.

Have a question or comment you’d like to run by Obamacare Explained? E-mail jrobison@reviewjournal.com, or tweet @J_Robison1.