The Affordable Care Act (ACA) introduced tax subsidies to help Americans afford private health insurance. There are specific guidelines that need to be met before a health care subsidy will be awarded, and the amount varies based on family size and income. It’s very important to understand what subsidized insurance means and to know when you might qualify for a health care subsidy.
Who Qualifies for a Health Care Subsidy
The tax credit that is applied to your health insurance is based on your family size and adjusted gross income (AGI). As part of the Marketplace application, you need to provide last year’s AGI from your tax return and estimate your household income for the year in which you’re seeking coverage. The tax credit amount is based on your estimated income, so it is important to update the Marketplace if your income changes during the year.
Those who earn between 100 percent – 400 percent of the federal poverty level will qualify for assistance with monthly premiums in the Marketplace if they don’t have access to other affordable insurance. Those who earn between 100 percent – 250 percent of the federal poverty level will also qualify for assistance with cost sharing, such as copayments and deductibles. For 2015, the federal poverty level is $24,250 for a family of four.
The only way to find out your exact health care subsidy amount is to complete the application. However, there is an insurance calculator that will help you estimate what your 2015 subsidy will be. Keep in mind that it is only an estimate.
Once you complete your application, you will automatically be reviewed for eligibility for Medicaid and the Children’s Health Insurance Program (CHIP). Many states expanded Medicaid eligibility in 2014 and 2015, so you may be eligible even if you were declined before. If you are not eligible for these programs, you will be told what subsidy, if any, you qualify for when you purchase Marketplace health insurance.
If You Don’t Qualify for a Health Care Subsidy
Not everyone will qualify for a tax subsidy for health insurance. Those who make more than 400 percent of the federal poverty level earn too much to qualify for assistance. Those who have access to affordable health insurance outside the Marketplace – from an employer, for instance – will also not qualify for a subsidy.
Unfortunately, some Americans will not qualify for a subsidy because they make less than the federal poverty level. As the ACA was envisioned, every state would expand Medicaid to cover these citizens. However, some states did not expand Medicaid coverage, meaning that some residents make too much for Medicaid and not enough for a federal health care subsidy.
Those who cannot afford insurance at all should seek an exemption to avoid being charged a tax penalty for lack of coverage. A local community health center may be able to provide basic care for a reduced charge. To find a community center near you, visit the Find a Health Center page.
For most Americans, the ACA provided a new way to access affordable health insurance. With the health care subsidy available to reduce costs, thousands of Americans are now able to afford health insurance. Unfortunately, not all Americans will qualify for a subsidy, especially in states that did not expand Medicaid. As a result, some will still struggle to find affordable coverage.
To learn about calculating income for health care subsidy eligibility, read The ACA and Social Security Income.