The Congressional Budget Office estimates that, when the Affordable Care Act is fully phased in, individuals receiving premium tax credits will get an average subsidy of how much per year?

A) $1,000

B) $3,000

C) $4,000

D) $5,000

A) $1,000

Incorrect. Try again!

B) $3,000

Incorrect. Try again!

C) $4,000

Incorrect. Try again!

D) $5,000

Correct.

How the Premium Tax Credit Works:

Eligibility -

• Household income must be between 100% and 400% of the federal poverty level.

• Covered individuals must be enrolled in a “qualified health plan” through an Affordable Insurance Exchange.

• Covered individuals must be legally present in the United States and not incarcerated.

• Covered individuals must not be eligible for other qualifying coverage, such as Medicare, Medicaid, or affordable employer-sponsored coverage.

Credit Amount -

• The credit amount is generally equal to the difference between the premium for the “benchmark plan” and the taxpayer’s “expected contribution.”

• The expected contribution is a specified percentage of the taxpayer’s household income. The percentage increases as income increases, from 2% of income for families at 100% of the federal poverty level (FPL) to 9.5% of income for families at 400% of FPL. (The actual amount a family pays for coverage will be less than the expected contribution if the family chooses a plan that is less expensive than the benchmark plan.)

• The benchmark plan is the second-lowest-cost plan that would cover the family at the “silver” level of coverage.

• The credit is capped at the premium for the plan the family chooses (so no one receives a credit that is larger than the amount they actually pay for their plan).