Are you having trouble affording health insurance? Health insurance can be so expensive that many low and middle income people can’t afford it without help.
The Affordable Care Act provides for subsidies to help low and middle-income people afford health insurance. You might be able to get help paying for health insurance premiums, as well as help paying costs like coinsurance, copays, and deductibles once you have health coverage.
The Affordable Care Act created these health insurance subsidies because the law’s individual mandate requires people to have health insurance, get an exemption certificate, or pay a penalty. People who don’t have health insurance through their job or a government program like Medicare or Medicaid have to buy health insurance or pay a tax penalty.
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, for the lowest income folks, enrolls them in Medicaid. Most often, Medicaid is provided for free to the people who qualify for it. 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. (You’ll learn more about this later.)
- Premium Tax Credits: The second program, for both low and middle-income folks, provides money each month to help pay a portion of your monthly health insurance premiums. It's like getting a discount on the price of health insurance. This money is sent from the government directly to your health insurance company on your behalf—you never actually get the money yourself. You’ll still have to pay your share of your health insurance premium each month, though.
- Decreased Cost Sharing: Also for low income people, the third program decreases your out-of-pocket expenses like deductibles, copays and coinsurance when you actually use your health insurance. For example, if you bought a health insurance policy that says you have to pay a $50 copay each time you see the doctor, your cost-sharing subsidy might decrease that copay to, say, $30 each time you visit the doctor. Since the insurance company pays for more of your health care expenses, the effect of the cost-sharing subsidy is like getting a free upgrade on health insurance.
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. Some low income people will get both premium tax credits and decreased cost sharing.
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 state’s exchange, the exchange will determine if you’re eligible for a premium tax credit, decreased cost sharing, or Medicaid.
If you’re eligible, the exchange will arrange for the premium tax credit to go directly to your health insurance company each month so you’ll owe less each month for premiums. The exchange will also tell your health insurance company if you're eligible for the cost-sharing subsidy so your insurer will lower your out-of-pocket costs.
Learn how to find your state’s health insurance exchange.
Will I Qualify for Help Paying for Health Insurance?
Eligibility for a health insurance subsidy like the premium tax credit or decreased cost sharing 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 can look up this year’s FPL here.
You’ll qualify for the premium tax credit if your income is between 100 and 400 percent of last year’s FPL. To qualify for a subsidy in 2014, use the 2013 levels: an individual with an income range of $11,490-$45,960, couples with incomes from $15,510-$62,040, and a family of three earning from $19,530-$78,120.
The closer you are to poverty level, the more subsidies you’ll get. You’ll qualify for the decreased cost-sharing subsidy if you choose a silver-tier plan from the exchange and your income is between 100 and 250 percent of last year’s FPL. To qualify for decreased cost sharing in 2014, you’ll use the 2013 FPL guidelines: an individual earning from $11,490-$28,725, couples with incomes from $15,510-$38,775, and a family of three earning from $19,530-$48,825 would qualify for help paying their deductible, copayments, and coinsurance costs.
What Will Disqualify Me From Getting a Health Insurance Subsidy?
You won’t qualify for a health insurance subsidy if you can get affordable health insurance by other means. For example, if you could get affordable health insurance through your job, but you’d rather have a health plan purchased through your health insurance exchange, you won’t qualify for a subsidy.
The law makes an exception about this if the health insurance your employer offers is lousy, or if the coverage isn’t affordable. In this case, the Affordable Care Act defines "affordable" as health insurance that costs you less than 9.5 percent of your income. If the health coverage available through your job doesn’t provide minimum value, in other words it doesn’t pay an average of 60% of covered costs, then it won’t disqualify you from getting a subsidy just because it’s available.
However, if you choose to enroll in employer-offered health insurance even though it’s not affordable or doesn’t provide minimum value, then you won’t be eligible for a subsidy as long as you’re enrolled in that health plan. The government isn’t going to give you help paying for health insurance if you already have job-based health insurance.
You won’t qualify for a subsidy if you’re eligible for government-sponsored health insurance such as the Children’s Health Insurance Program, the Veterans Administration, Medicare or Medicaid. Note that you don’t have to be enrolled in these programs to be disqualified for subsidies; just being eligible for one of these programs is sufficient to disqualify you.
You won’t qualify for a subsidy if you’re in prison or if you’re not living in the United States legally.
If you’re married, your tax filing status must be “married filing jointly” in order to qualify for a subsidy. You won’t qualify for a subsidy if your filing status is “married filing separately.”
Ridiculous as it sounds, you won't qualify for a subsidy if your income is less then 100 percent of FPL. That's right; the poorest of the poor don't get premium tax credit or cost-sharing subsidies.
The lawmakers who wrote the Affordable Care Act intended that everyone earning less than 133 percent of FPL get Medicaid. However, the Supreme Court ruled that the federal government couldn't force states to give all of those people Medicaid. This means each state can decide whether or not it will provide Medicaid to everyone earning less than 133 percent of FPL, or limit it to only the people who qualified for Medicaid under the older, stricter criteria.
If your state has chosen not to expand its Medicaid program and you're living below the poverty line, you won't be eligible for help paying for health insurance. Instead, consider taking advantage of a Community Health Center that provides primary care services regardless of your ability to pay. Find your nearest Community Health Center.
Where Can I Learn More?
Learn more about the premium tax credit health insurance subsidy.
Learn more about decreased cost sharing to reduce your deductible, copays, and coinsurance.
Learn more about the subsidy for your out-of-pocket maximum.
Learn more about getting Medicaid.
Learn more about Community Health Centers for the uninsured.