State RegulationsNY specificDifficulty 3/5
An eligible exchange enrollee's premium tax credit is set by reference to the benchmark plan in her area, but she decides to buy a more expensive plan. Under the Affordable Care Act, what is the result?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under the Affordable Care Act, the premium tax credit does not follow the plan the enrollee selects; it is fixed by reference to the benchmark plan, the second-lowest-cost silver plan in her rating area. If she buys a pricier plan, the credit stays the same and she personally pays the extra premium above what the credit covers. Conversely, picking a plan cheaper than the benchmark lets her keep the resulting savings.
Why the other options are wrong
- A) The credit is not canceled for choosing another plan; it simply remains benchmark-based.
- B) Her choice does not reset the benchmark's price; the benchmark is fixed by the local market.
- D) Actuarial value is not adjusted to match; the subsidy is settled through the premium, not the plan's coverage level.
Memory hook
The credit clings to the benchmark; upgrades come out of your pocket.