Understanding Obamacare Subsidies and Eligibility

Low- and middle-income families often worry about how they will pay for health insurance. The Affordable Care Act, also known as ACA or Obamacare, provides subsidies to individuals and families who qualify to help make coverage more affordable.

what are tax credit subsidies here?

ACA subsidies are tax credits available to many people whose net income is between 100% and 400% of the Federal Poverty Level (FPL). ACA subsidies go toward paying health insurance premiums for those who would otherwise struggle to afford health insurance.

Reading: How to qualify for aca insurance

In general, people subsidized by ACA are also protected from rising premiums, since ACA subsidies generally increase (or decrease) in proportion to premiums. This helps make health insurance affordable for people with low and middle incomes.

In 2020, 87% of the 10.7 million people who bought health insurance on the Marketplace received premium subsidies from ACA, the Centers for Medicare & medicaid (cms) informed.

obamacare subsidy eligibility

Obamacare offers subsidies, also known as tax credits, that work on a sliding scale. They limit the amount you pay in monthly premiums to a percentage of your annual income. Most people are eligible for subsidies when they earn between 100% and 400% of the fpl.

Please note, however, that the American Bailout Plan Act (ARPA), signed into law on March 11, 2021, provides additional temporary relief to many Americans struggling to find affordable health insurance during economic trauma. and social of the covid-19 pandemic. Over a two-year period, 2021 and 2022, many Americans can take advantage of several provisions of the HARP designed to make health insurance coverage even more affordable than the original Obamacare subsidies. for example under the harp:

no citizen or lawfully present noncitizen without access to other affordable insurance (eg, from an employer, medicaid, or medicare) will pay more than 8.5% of income for a silver plan From the market.
Most people who receive at least one week of unemployment compensation at any time in 2021 will be able to get a silver plan with $0 premiums and cost-sharing reductions.
People who earn 500% fpl and don’t have access to other affordable health insurance can take advantage of certain cost-sharing reductions from Marketplace plans available to people with lower incomes.

if your income is below 138% of the federal poverty level (fpl) and your state has expanded medicaid coverage, you may qualify for medicaid based on your income. If your income falls below the FPL, you may not qualify for subsidies, but you are more likely to qualify for Medicaid. Medicaid is the national health care program for low-income individuals and families.

To qualify for obamacare subsidies you must meet the following criteria:

you currently live in the united states
you are a US citizen or legal resident
is not currently incarcerated
your income does not exceed 400% (or 500% in 2021 and 2022) of the fpl

according to the federal register, the 2021 fpl for an individual is $12,8800. the fpl varies based on the number of members in your household. Alaska and Hawaii have different levels of poverty. the obamacare family income table changes annually as poverty rates are adjusted each year for inflation.

For 2021, the federal poverty guidelines are as follows:

source: healthcare.gov federal poverty levels

use the 2021 federal poverty guidelines to determine if you can lower your premium costs through the obamacare tax credit if you buy insurance from the marketplace for 2022 coverage. use the second and last column of the chart above to see if you are eligible for the obamacare tax credit if you buy insurance from the marketplace for 2021.

how obamacare subsidies work

There are two types of subsidies here.

The most common type is called “advanced premium credits,” which can help pay for ACA health insurance premiums purchased in the marketplace throughout the year. If you qualify based on your projected income for the current year, you can:

take the tax credit throughout the year to pay directly to your health insurer to offset the premium for your coverage, or
pay your premium in full each month and receive your tax credit when you file your taxes.

If you take the tax credit in advance each month (option #1 above) and you underestimate your actual household income, you will owe some of this money in advance at the end of the year. On the other hand, if you overestimate your income, you’ll receive an adjusted tax credit refund when you file your taxes. To avoid this issue, please report changes in your income by updating your Marketplace application online or by contacting the Marketplace call center.

It’s important to know that tax credit subsidies apply to ACA plans you can buy on the Marketplace. not available for ACA-compliant plans offered outside of the Marketplace, catastrophic coverage plans, short-term medical insurance, stand-alone prescription drug plans, or insurance supplements for dental, vision, and health care. critical illnesses. These alternative insurance plans may cost less, but provide fewer benefits than plans on the marketplace, in general.

The second type of subsidy here is called a “cost-sharing reduction (CSR) subsidy.” If you’re eligible, CSR subsidies can lower your out-of-pocket costs for covered services by paying a portion of your deductible, copay, or coinsurance.

things to know about obamacare subsidies

Anyone who is curious about their eligibility for the obamacare subsidy should know the following facts:

Your eligibility for subsidies is based on your income in the year you are covered by your health plan, not on your income as reported on last year’s tax return. This means that you must estimate your income when applying for subsidies.
If you earn more than expected during the year, you may have to pay back some or all of the subsidy dollars applied on your behalf toward your monthly health insurance premiums.
If you earn less than expected during the year, you may be owed additional subsidy assistance, which can be applied when you file your taxes for the year.

obamacare subsidy application

You can apply for obamacare subsidies through the government-run health insurance marketplace in your state or through qualified licensed agents and private online marketplaces that cooperate with the government marketplace. A good source for all your insurance coverage needs is eHealth. We offer online tools to help you determine if you are eligible for obamacare subsidies and marketplace plans available where you live. We also have authorized agents to help you find insurance plans that meet your needs and budget. With 24/7 support and a wide selection of available plans, you can be sure that eHealth is here to help you find and keep the best plans for you and your family.

Please note that the government makes the final determination on your eligibility for a subsidy. While you can shop through eHealth to select a plan, the subsidy comes from the government-run marketplace. If you’re ready to start comparing plans, check out all of your individual and family health insurance options with eHealth.