Helping Consumers Understand the New Premium Tax Credit

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 nature of these new tax credits introduce new elements that most consumers have not 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.