Health Insurance Subsidies: How to Know if You Qualify

Don’t assume you can’t afford health insurance. If you purchase health insurance through the Health Insurance Marketplace, you may qualify for premium tax credits and cost-sharing reductions. Open enrollment is happening between November 1 and December 15, so this is the time to see if you qualify.

Step One: See If You’re Eligible to Use the Marketplace

To be eligible for health insurance subsidies, you must be eligible to use the Marketplace. You can use the Marketplace if the following are true:

  • You live in the United States.
  • You are a U.S. citizen or national.
  • You are not incarcerated.
  • You do not have Medicare coverage.

Step Two: See If You Qualify for Subsidies

Premium tax credits reduce the monthly premium you have to pay to maintain coverage. Cost-sharing reductions reduce the amount you pay out of pocket for care.

In order to qualify for premium tax credits and cost-sharing reductions, you must enroll in a Marketplace plan. Additionally, you won’t qualify for subsidies if you have access to an affordable job-based plan that provides minimum essential coverage.

To see how much assistance you can get, you will need to provide information about your household size and your expected income. If you end up earning more than you expected, you may have to pay back some of your premium tax credits when you file your taxes, so it’s important to make an accurate estimation. Update your information if your income or household size changes. 

Most people use the following method to estimate their income:

  • Start with your adjusted gross income (line 7 of IRS Form 1040) for your most recent federal tax return.
  • Add tax-exempt foreign income, Social Security benefits or interest, if you have any. However, don’t include Supplemental Security Income.
  • Adjust your income for any changes you expect for the following year. For example, if you are expecting a raise, a new job, or additional sources of income, you should add this.

If this method doesn’t work for you – for example, if you recently switched jobs – you can use a more suitable method to estimate your income.

You are considered eligible for premium tax credits if your estimated income falls between 100 and 400 percent of the federal poverty level (FPL) for your household size. Within this range, people with lower incomes will receive larger credits.

The FPL is adjusted each year, and some states may use different amounts. In 2019, the FPL for a household size of one to four was:

  • $12,490 for individuals
  • $16,910 for a family of two
  • $21,330 for a family of three
  • $25,750 for a family of four

If you don’t qualify for assistance, you can still use the Marketplace to buy a plan, or you can buy a plan outside the Marketplace.

Step Three: Pick a Plan and Enroll

The best way to see exactly how much you’ll pay is to pick a plan. You may need to supply documentation, including proof of income. You will see the available plans and your expected costs, and you can select a plan that matches your needs and budget. 

If you live in California, Colorado, Connecticut, Idaho, Maryland, Massachusetts, Minnesota, Nevada, New York, Rhode Island, Vermont, Washington of the District of Columbia, you can use your state’s healthcare exchange to enroll in a 2020 health insurance plan. Otherwise, you can use the federal site at HealthCare.gov. If you need help, a licensed insurance agent can assist you.  Request a quote here.

Sources
  • https://www.healthcare.gov/

  • https://www.healthcare.gov/glossary/federal-poverty-level-fpl/

  • https://www.irs.gov/affordable-care-act/individuals-and-families/eligibility-for-the-premium-tax-credit

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