As congressional Republicans push for repealing and replacing the Affordable Care Act, the Internal Revenue Service has found Americans rely on the financial aid more than ever to afford coverage on the federal and state marketplaces.
An IRS audit of 2015 individual tax returns found that five million returns claimed a total of $18 billion in premium tax credits, an increase of more than 60% from 2014. About 5.7 million returns received advance premium tax credits totaling $20 billion, up 66.4% from the prior year, according to a May 30 IRS report.
A premium tax credit helps pay exchange plan premiums and is paid when the taxpayer files a return. An advanced premium tax credit goes directly to a taxpayer's insurance company at the start of a new coverage year.
The increased use of premium tax credits stems from higher marketplace enrollment and improved enrollee understanding of how to claim the ACA's separate cost-sharing subsidies, which further reduce costs for lower-income consumers, according to a Health Affairs analysis of the report. Marketplace enrollment jumped by about 25% in 2015 from 2014.
But it's unclear how much longer Americans will be able to count on the financial aid. The House Republicans' repeal-and-replace bill would substitute less-generous, age-based premium tax credits for the ACA's tax credits, which are based on income, geographic location, and actual local premium costs.
In addition, President Donald Trump repeatedly has called for ending federal payments to insurers for the ACA's cost-sharing subsidies, and has considered using them as a bargaining chip to get Democrats to support legislation that will repeal the ACA.
