The Affordable Care Act created government subsidies to help low and middle-income people pay for health insurance. These subsidies help pay for monthly health insurance premiums, as well as costs like coinsurance, copays, and deductibles once you have health coverage.
What Kind of Financial Help Can I Get?
There are three different programs for people who need help paying for health insurance.
- Medicaid: The first program, if you have a very low income, enrolls you in Medicaid. Most often, Medicaid is provided for free to those who qualify. Eligibility varies from state to state, so you won’t know for sure if you qualify until you apply. In many states, the rules for Medicaid eligibility have been changed by the ACA, so even if you’ve applied before and been turned down, you should apply again through your state’s health insurance exchange.
- Premium Tax Credits: The second program, if you have either a low income or moderate income (up to four times the poverty level), pays a portion of your monthly health insurance premiums. It's like getting a discount on the price of health insurance because the subsidy pays part of your cost. This subsidy money is sent from the government directly to your health insurance company on your behalf—you never actually get the money yourself. Although this makes health insurance much more affordable, unlike the Medicaid option above, you’ll likely still have to pay something toward the cost of your health insurance each month (note that some states do charge modest premiums for Medicaid enrollees with income above the poverty level). Premium tax credits are based on keeping the after-subsidy cost of the second-lowest-cost silver plan available, but they can be applied to any metal-level plan.
- Decreased Cost Sharing: For those with fairly low or modest incomes, the third program decreases your out-of-pocket expenses like deductibles, copays and coinsurance when you use your health insurance (this is available to people who earn up to 2.5 times the poverty level). For example, if you bought a health insurance policy that would otherwise require you to pay a $50 copay each time you see the doctor, your cost-sharing subsidy might decrease that copay to $30 each time you visit the doctor. The decreased cost-sharing program also limits the out-of-pocket maximum you’ll pay if you end up using your health insurance a lot. Since the insurance company pays for a larger percentage of your health care expenses, the cost-sharing subsidy is like getting a free upgrade on health insurance. Cost-sharing subsidies are only available on silver plans, and are automatically included in all of the available silver plans if your income makes you eligible for them. For those not eligible, the plans that include cost-sharing subsidies don't show up in the available options.
How Do I Get Help Paying for Health Insurance?
You can apply for a health insurance subsidy, as well as for Medicaid, through your state’s health insurance exchange. When you apply for health insurance through your health insurance exchange, the exchange will determine if you’re eligible for a premium tax credit, decreased cost sharing, or Medicaid.
Will I Qualify for Help Paying for Health Insurance?
Eligibility for a health insurance subsidy is based on comparing your income to the federal poverty level. Federal poverty level changes every year, and is based on both your income and your family size.
You’ll qualify for the premium tax credit if your income is between 100 percent and 400 percent of last year’s FPL (with last year being relative to the year in which your coverage will take effect; people applying for 2018 coverage will use 2017's FPL to determine subsidy eligibility). Note that in states that have expanded Medicaid, the lower threshold for subsidy eligibility is 139 percent of the poverty level, as people below that threshold qualify for Medicaid instead.
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