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A Powerful Anti-poverty Pairing: the EITC and the Affordable Care Act

A Powerful Anti-poverty Pairing: the EITC and the Affordable Care Act

Earlier this month, Brookings published a report estimating the overlap between households claiming the Earned Income Tax Credit (one of this nation’s largest anti-poverty programs) and those likely eligible for subsidized health insurance through the Affordable Care Act. The report looks into important workforce and demographic characteristics of this population that may help focus outreach and enrollment efforts, especially during the recently extended enrollment period.

The analysis reveals that 7.5 million people residing in households that claim the Earned Income Tax Credit are likely eligible for subsidies. Forty-four percent of those (3.3 million people) live in the South. Nearly 60 percent of those households are clustered within the South’s largest metropolitan areas.

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Before we get too far into this analysis, let’s look at how closely these populations overlap. Consider this scenario:

A married couple (non-smokers) in Durham, NC (zip code 27705) earns a gross income of $35,775 in 2014.

  • Neither spouse is eligible for employer-sponsored health insurance coverage
  • The ages of the couple are 30 and 35.
  • Occupations:
    • Spouse 1: Home health aide: current median wage is $9.39 in Durham (equating to roughly $18,780 per year)
    • Spouse 2: Food preparation and serving related: current median wage in Durham is $9.07 per hour (equating to roughly $18,140 per year).
  • The couple’s two daughters are currently enrolled in the state’s CHIP program (NC Health Choice)
  • This household’s income is exactly 150 percent of the 2014 poverty level (which makes them eligible for financial assistance on the health insurance Marketplace)

According to the Center on Budget and Policy Priorities’ interactive EITC estimator, this family would be eligible for a $2,824 EITC (which is refundable) for the 2014 tax year. 

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According to the Kaiser Family Foundation’s Marketplace Calculator, this couple would be eligible for an estimated $416 per month in premium tax credits which can be used to lower the cost of a plan. This would cover 78 percent of their monthly costs if they were to enroll in the second-lowest-cost silver plan. After assistance, the estimated monthly premiums would be $120 per month.

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In addition to identifying the geographic concentration of EITC filers eligible for financial assistance, Brookings also crunched the numbers on the top five largest industries and occupations of this group by state. In the South, these tax filers are clustered into seven primary industries and occupations. The top five occupations for these EITC filers include: construction, extraction; building and grounds cleaning/maintenance; production; transportation and material moving; food prep and related services; office and administration; and sales. The top five industries include: retail trade; manufacturing; health care; construction; administrative services; accommodation and food services; and other.

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As we discussed in our last blog post, nonprofit agencies across the nation are in a rush to identify as many people as possible who are potentially eligible for the tax-penalty Special Enrollment Period. With this new data in hand that focuses on EITC eligible households, we hope these agencies can focus their efforts on targeted outreach to tax filers who have yet to see the substantial support they could receive to have the security of affordable health insurance. We know some agencies are already conducting targeted outreach efforts. In Durham, for example, local partners are reaching out to local businesses that represent the industries and occupations listed above to provide education and enrollment services to their employees.

Brookings also provided detailed racial demographic characteristics of the EITC eligible population. These figures closely correlate with overall state population figures, but do vary widely across the South. In West Virginia, 90 of EITC filers eligible for subsidized insurance are white. Meanwhile in Mississippi, 54 percent of this population is Black, and 49 percent of the likely eligible are Hispanic in Texas. 

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Targeted outreach to populations eligible for a Special Enrollment Period

As we discussed in our last blog post, nonprofit agencies across the nation are in a rush to identify as many people as possible who are potentially eligible for the tax-penalty Special Enrollment Period. With this new data in hand that focuses on EITC eligible households, we hope these agencies can focus their efforts on targeted outreach to tax filers who have yet to see the substantial support they could receive to have the security of affordable health insurance. We know some agencies are already conducting targeted outreach efforts. In Durham, for example, local partners are reaching out to local businesses that represent the industries and occupations listed above to provide education and enrollment services to their employees.