“..But compared to middle and upper-income employees, low-income workers are often offered less robust coverage, get less employer help with their premiums, and must pay a greater share of their income toward health care costs. Among workers with job-based coverage, those with income below 200 percent of the poverty line spend 14 percent of their income on premiums and out-of-pocket costs, on average. That’s far more than people between 200 and 400 percent of poverty, who spend 7.9 percent of their income, and people over 400 percent of poverty, who spend only 4.5 percent (Exhibit 1).
Average percent of income spent on premiums and out-of-pocket costs, 2017
Notes: Combined premiums and out-of-pocket expenses of people in families with employment-based coverage, 2017. FPL = Federal poverty level.
Source: Claxton, G, Sawyer, B, Cox, C. How affordability of health care varies by income among people with employer coverage. Peterson-KFF Health System Tracker. [Internet]. 2019 April 14. Available from: https://www.healthsystemtracker.org/brief/how-affordability-of-health-care-varies-by-income-among-people-with-employer-coverage/
Some low-income workers are actually worse off with an offer of employer-sponsored coverage than without one because it locks them out of premium tax credit (PTC) eligibility in the ACA’s health insurance Marketplaces, a prohibition known as the “firewall.”
Under the ACA, the worker’s share of the employee-only premium must not exceed 9.86 percent of family income (in 2019), irrespective of the cost of family coverage, and the plan must cover at least 60 percent of expected medical costs. When an employer’s coverage offer meets that low federal bar, the ACA’s firewall provision makes low-income workers and their family members ineligible to receive a PTC for Marketplace coverage. However, employer coverage that meets the ACA standard may be more expensive and less comprehensive than Marketplace coverage. For example, under the ACA standard, a worker making $18,000 (about 150 percent of poverty) could pay up to nearly $1,800 toward premiums for single coverage in an employer plan. But if allowed to purchase a benchmark Marketplace plan, the worker’s expected contribution, net of the PTC, would be less than $750 (4.15 percent of income in 2019).
Out-of-pocket costs for low-income workers also can be much higher in a typical employer plan than in the Marketplace, after accounting for income-based cost-sharing reductions (Exhibit 2). To enable more low-income workers to purchase affordable coverage, policymakers should consider eliminating, modifying, or working around the firewall, as well as more far-reaching changes..”
“Beyond The Firewall: Pathways To Affordable Health Coverage For Low-Income Workers, ” Health Affairs Blog, December 3, 2019.DOI: 10.1377/hblog20191127.362854