Enhanced Premium Tax Credits Help Older Adults and Those in High-Premium States Afford Coverage

The Issue

Enhanced Premium Tax Credits (PTCs) have reduced monthly premium payments for millions of individuals and families since 2021. The credits, originally approved by Congress in the American Rescue Plan Act, are set to expire in their entirety at the end of 2025.

Key Findings

Urban Institute researchers forecast the expected financial benefits of PTCs among individuals who earn more than $60k per year. Researchers sorted the findings by age, income, and location.

• The tax credits lowered out-of-pocket premium payments by 60% for 64-year-olds and 57% for 60-year-olds. Conversely, the tax credits lowered payments for 30-year-olds by just 3%.
• The monetary value of the tax credits varied significantly across age groups:
  • 30-year-olds saw an average credit of $13 per month but 64-year-olds saw an average credit of $654 per month. 
• Without the tax credits, a 60-year-old with an annual income of roughly $60k would have to spend 20% of their annual earnings on health insurance premiums. A 60-year-old with an individual income of just over $75,000 would have to spend 16% of their income on premiums.

Conclusion

Researchers conclude that enhanced premium tax credits improve healthcare plan affordability for millions of people in America, across income group, age, and geographic area. If the tax credits expire, many individuals would see out-of-pocket healthcare costs increase significantly. 

 

About the Author/Grantee

The nonprofit Urban Institute is dedicated to elevating the debate on social and economic policy. For nearly five decades, Urban scholars have conducted research and offered evidence-based solutions that improve lives and strengthen communities across a rapidly urbanizing world. Their objective research helps expand opportunities for all, reduce hardship among the most vulnerable, and strengthen the effectiveness of the public sector. Visit the Urban Institute’s Health Policy Center for more information specific to its staff and its recent research.