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Tax credits could mean substantial discount through federal health insurance exchange

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WINSTON-SALEM, N.C. — A family of four in the Triad with a household income of $50,000 would pay an average of $282 a month for mid-level coverage through a federal health exchange launching Jan. 1, according to data released Wednesday by the U.S. Department of Health and Human Services.

That would represent a 66 percent premium discount once tax credits are applied, compared to the $826 that family would have paid on average before the health exchange. Statewide, the discount would be 68 percent for that family of four.

The agency released the data for the 36 states in which it will either run the exchange, as in North Carolina, or assist in a state-federal partnership. Enrollment in the exchanges begins Tuesday and last for six months.

According to nonprofit advocacy group Families USA, more than 896,000 North Carolinians — including more than 176,000 in the Triad and Northwest North Carolina — will be eligible for tax credits that are projected to make insurance premiums more affordable.

“In state after state, consumers will see increased competition in the health insurance marketplace, leading to new and affordable choices for consumers,” DHHS said in a statement.

The agency lists an average of 22 quality health plans for North Carolina participants ages 21 to 64, with four levels of coverage options – bronze, silver, gold and platinum – and 16 rating areas for the state. Young adults will have the option of purchasing a lower-cost “catastrophic” plan.

The premium cost for ages 21 to 64 in the 16 North Carolina rating areas can be found at http://aspe.hhs.gov/health/reports/2013/MarketplacePremiums/longdesc/nc.htm.

Coverage options will vary by county. It was not immediately clear which rating areas covered the Triad and Northwest North Carolina. The Kaiser Family Foundation, a nonpartisan research organization, plans to offer the rate by zip codes on its website,www.kff.org.

Where participants live, the plan they pick, family size, age, tax credits based on income and even tobacco use will affect the rate cost.

The plans cover the same benefits and cap annual out-of-pocket expenses at $6,350 for an individual, $12,700 for families.

The main differences come from required deductibles and copayments. Bronze covers 60 percent of expected costs; silver, 70 percent; gold, 80 percent; and platinum, 90 percent. Bronze plans have the lowest premiums and the highest cost sharing.

For a Triad resident age 27, the lowest bronze premium cost before the tax credit is $167 a month compared with $224 for silver, $260 for gold and $105 for catastrophic. Applying the tax credit, the cost for the second lowest silver plan drops to $145 a month and to $84 for the second lowest bronze plan.

The age is a key demographic for the exchanges because it is the age where parents’ health insurance can no longer provide coverage.

For a North Carolinian age 27, the lowest bronze premium cost before the tax credit is $186 a month compared with $237 for silver, $283 for gold and $123 for catastrophic. Applying the tax credit, the cost for the second lowest silver plan drops to $145 a month and to $88 for the second lowest bronze plan.

The tax credits will be available to uninsured individuals and families who have incomes between 138 percent and 400 percent of the federal poverty level standards. For individuals, the current income range is $15,860 to $45,960; for a family of four, the current range is $32,500 to $94,200.

Also eligible are employees who pay more than 9.5 percent of their wages to participate in an employer’s health plan, and whose employer plan pays less than 60 percent of the cost of covered benefits.

Dan Mendelson, president of the market analysis firm Avalere Health, said the focus on premiums is too narrow. “The analysis doesn’t account for cost sharing,” Mendelson said. “This is a limitation.

“Consumers are going to need to shop. Sometimes, a silver offering doesn’t cost much more than a bronze.”

He added two other caveats: Be ready for significant cost sharing, and check carefully that your doctors and nearby hospitals are in the plan’s network.

Blue Cross Blue Shield of North Carolina estimated in August that 1.2 million residents could be beneficiaries of the health exchange. It is one of two insurers planning to participate whose rates have been approved by the state Insurance Commission. The other is Coventry Health Care of the Carolinas.

Both insurers have plans to participate in the individual market, while Blue Cross alone plans to participate in the small group market.

DHHS said that premiums nationwide will be about 16 percent lower than originally expected – with about 95 percent of eligible uninsured people living in states with lower than expected premiums – before taking into account financial assistance.

The analysis pegged the national average for an individual at $328 a month for the silver policy before subsidies are factored in. That’s less than the average $392 projection drawn from earlier data released by the nonpartisan Congressional Budget Office.

“For millions of Americans, these new options will finally make health insurance work within their budgets,” Kathleen Sebelius, secretary for the U.S. Department of Health and Human Services, said in a statement.

Several nonprofit agencies, including Community Care of N.C., have received federal financing to assist individuals with navigating the health exchange. Others in the Triad include Southside United Health Center of Winston-Salem, High Country Community Health of Boone, Medical Resource Center for Randolph County Inc. of Asheboro and Randolph Hospital Inc.

What makes the health-exchange marketplace and tax credits a political football in North Carolina is that the federal law was created with the expectation that individuals and families below 138 percent of the poverty level would be covered by Medicaid through state expansions of that program, and thus not eligible for the tax credit.

Gov. Pat McCrory and the General Assembly decided against expanding the state’s Medicaid program because of their concerns about the program’s operation and efficiency.

“There is no clear political pattern to these premiums,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation. “Some conservative, anti-Obamacare states have lower-than-average premiums, and some pro-Obamacare states have higher-than-average premiums.”

A spokesman for U.S. Senate Republican leader Mitch McConnell, R-Ky., said premiums that are “lower than projected” are not the same as “lower than they are now.”

“The White House is making every effort possible to spin the bad news that seems to come every day, but the American people know that even this rosy scenario is not what they were promised when Democrats were ramming this bill through Congress on a party-line vote,” McConnell spokesman Don Stewart said in a statement.

For more information about the exchanges, go to www.HealthCare.gov or call (800) 318-2596.

The Associated Press contributed to this article.