With the government shutdown now in its fourth week, the point of contention remains Americans’ health care premiums, which are still set to skyrocket next year. Congressman Gabe Evans (R-CO) says he is opposed to extending the Biden-era tax credits that keep monthly costs low for working-class Coloradans, because, he claims, someone making $500,000 a year could still qualify for a tax credit.
Isabel Cruz, policy director for the Colorado Consumer Health Initiative, disputes Evans’ claim.
“While there is no income limit, the program sets a cap of 8.5% of income that people have to pay towards their premiums,” says Cruz. “For someone making $500,000, that would be $42,500. No premium is that high, so they would not qualify for any subsidies. Also, not extending the enhanced premium tax credits [ePTCs] will lock the very middle-income folks he’s referring to (over $62,600 for an individual or $128,600 for a family of 4) out of any support.”
Health insurance premium tax credits were established under the Affordable Care Act and were originally available for households with incomes between 100% and 400% of the federal poverty level (FPL), which ranges from $32,150 to $128,600 for a family of four. During the pandemic in 2021, Democrats passed Biden’s American Rescue Plan Act, which included the enhanced premium tax credit provisions that eliminated the 400% FPL income cap, while requiring that those earning more than that amount pay 8.5% of their income towards their monthly premiums. The following year, in the Inflation Reduction Act, Democrats extended the expiration date of those credits to the end of 2025.
Evans made his claims during his Oct. 7 appearance on Ryan Schuiling’s KHOW 630 talk show.
“Well, let’s talk about the Inflation Reduction Act, because that’s one of the smoke and mirrors things that the Democrats are pulling out right now,” said Evans. “When they ramrodded some of their signature pieces of legislation through, when they had the House, the Senate, and Biden as the president, one of things that they did was they removed the income cap to qualify for a federal subsidy to co-pay for health care. So when the Democrats talk now about, oh, we’re trying to have affordable health care for everyone, what they’re really saying is they want to continue the Biden era, COVID era policy, by which somebody that’s making $500,000 a year can still go get a subsidy to help pay for health care. And as we all know, federal subsidies, that money doesn’t just grow on trees, that’s coming from the pockets of hardworking Americans. And so the question a lot of Republicans have been asking is why should somebody that is making 70 or $80,000 a year pay to go subsidize somebody that’s making solid six figures, two, three, four, $5 [hundred],000, because that was something that the Democrats ramrodded onto the American people under Biden during COVID.”
Cruz also pointed to research proving her point about middle-income families losing their subsidies. An issue brief from the Bipartisan Policy Center released last week notes that “expiration of the enhanced PTCs will result in higher premiums for several populations. For example, a family of four with a household income of $45,000 with a $0 premium in 2025 will see their premiums increase to $1,607 a year. Also, a 60-year-old couple with an annual income at 402% of FPL (about $85,000) could pay a yearly premium of $22,600 in 2026, or about a quarter of their annual income, instead of 8.5% of their income [$7,225] (as established under enhanced PTCs).”
The second example of the 60-year-old couple making just over the 400% FPL limit illustrates the so-called “subsidy cliff,” where another dollar of income eliminates a family’s tax credit entirely, which the ePTC prevents. It does so on a sliding scale, so as income increases, the subsidy decreases. The other factors include age, number and age of any dependents, and regional cost-of-living differences.
Tax premium calculators available on the websites of the state health exchange and the Kaiser Family Foundation show no possible age and zip code combination that would allow a Coloradan with a half million dollars of income to receive subsidized insurance.
Data show that the ePTCs especially help older adults aged 55-64 (who don’t yet qualify for Medicare), self-employed and gig workers, and people in rural communities.
Evans’ office did not respond to a request for an example of a scenario in which a Coloradan making half a million dollars per year would qualify for a premium tax credit. This article will be updated with any response received.
Editor’s note: This story first appeared on the Colorado Times Recorder website.
