Health Care Reform Subsidies Explained
by Heather Mosher

Health Care Reform Subsidies Explained

The new Affordable Care Act is set to have options on the marketplace launch this week on October 1st.  Many people are confused about how “affordable” the new health care law really is.  What does this mean to the average American?  Here, we will tackle the different financial assistance options available for families under the Affordable Care Act.

First, we will outline some baseline do/don’ts just to get you thinking:

To qualify for assistance an individual:

  • Must not be offered “Qualified” coverage through an employer.  (In very simple terms, this means you can’t be offered health insurance benefits through your employer that equal 9.5% or less of your annual household income.)
  • Must have household income less than 400% of Federal Poverty Level.  (As a guideline, a household of four has to make under $94,200 annually to qualify.)
  • If you are married, individuals must file taxes jointly.
  • Must apply on the Federally Facilitated Marketplace or Exchange.

Does this fit you? If so, then let’s break it down further.  In terms of assistance, there are many levels under which you can qualify.  Let’s start at the top.

  • 400% – 133% of federal poverty level: Qualifies you for the Advanced Premium Tax Credit.  This form of assistance will help with your monthly insurance premiums.  Let’s say a family of four is eligible for $100 per month in premium tax credit.  That means, whichever health insruance plan they pick, they will pay $100 less per month to the insurance carrier.  The $100 comes direct from the federal government to the insurance carrier and you will pay the remainder of premiums due in that month.
  • 249%-133% of federal poverty level: Qualifies you for the Cost Sharing Subsidy.  This form of assistance will provide the insured with help on lowering out of pocket costs associated with deductible expenses, co-pays, co-insurance, and out of pocket maximums.
  • Medicaid: If you are under 133% of federal povery level, you will be eligible for Medicaid.  Please note that Medicaid eligibility affects each state differently.  Consult with your advisor as to how this works in your state.

The above information should be used as a guideline to start decoding some of the new health care law language.  It is imporant to consult your licensed health insurance agent for advice on your specific situation.  There are many nuances to the new health care laws and it is vitally important to pick a plan and a strategy that works for you and your family.


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