In 2015, about 84 percent of people who bought health insurance through a state-based exchange or the Federal Health Insurance Marketplace were enrolled in plans with an advanced premium tax credit.1 That’s a substantial portion of enrollees; however, what about those who didn’t get a tax credit?
Who qualifies for premium tax credits under the Affordable Care Act? Why do some people get subsidies to help with health insurance premiums and healthcare costs, while others do not?
The criteria are generally as follows:2
- Your household income must be within 100 and 400 percent of the federal poverty level for your family size. The 2015 federal poverty guidelines used to calculate 2016 subsidies can be found here: aspe.hhs.gov/2015-poverty-guidelines.
- You must buy your health insurance plan from a state-based exchange or the federal Health Insurance Marketplace.
If you fall outside these guidelines, you are unlikely to qualify for a premium tax credit. It’s quite possible you come close but still don’t qualify due to the cost of coverage in your area or factors such as Medicaid expansion—if you live in a state that expanded its Medicaid program and earn up to 138 percent of the FPL, you may not be eligible for subsidies because you are instead eligible for Medicaid.
While those who receive premium tax credits can buy any plan from their state exchange or the federal marketplace (i.e., bronze, silver, gold or platinum), subsidies are based on the cost of the second-lowest cost silver plan (i.e., the benchmark plan) in your area.3 Those who meet the guidelines for an ACA tax credit will pay no more than 2.01 percent to 9.56 percent of their income toward health insurance premiums.4
This is one of many reasons it is important to shop around and compare your coverage options each year: benchmark rates change and impact the amount of subsidy for which you are eligible, thereby influencing what you will pay for coverage. Premiums and subsidies vary nationwide and within a single state.
Cost-sharing reductions, the ‘other’ Obamacare subsidy
Cost-sharing reductions are another type of ACA subsidy. They help lower out-of-pocket healthcare costs including what you pay for deductibles, copayments and coinsurance.
To qualify for a cost-sharing reduction, you must:5
- Have a household income of 100 to 250 percent of the FPL.
- Buy a silver plan from a state-based exchange or the federal Health Insurance Marketplace.
About 56 percent of people enrolled in coverage through a state-based exchange or the federal Health Insurance Marketplace were receiving cost-sharing reductions as of June 30, 2015.6
What can I do if I don’t qualify for a tax credit?
You can estimate your Obamacare tax credit by using a calculator tool or by following the steps outlined here. However, the only way to truly determine your eligibility is by applying for an advanced premium tax credit when buying your coverage or claiming a premium tax credit when filing your taxes.
If you don’t qualify for Obamacare subsidies, including a premium tax credit, you are encouraged to shop around. You have several options available to you through your state’s exchange or the federal marketplace, as well in the private market from the following sources:
- Health insurance producers (i.e., agents and brokers)
- Health insurance carriers
- Healthedeals.com and other websites that sell ACA-compliant health plans and supplemental coverage
Those who live in states that expanded Medicaid and earn up to 138 percent of the FPL can enroll in their state’s Medicaid program.
If you need help selecting the right 2016 coverage or have questions, call 866-278-1464 to speak with an IHC representative.