Do You Qualify for Low Cost Health Insurance? Next Steps if You're NOT ACA Subsidy-Eligible

Sarah Sullivan
June 3rd, 2021 June 3rd, 2021 |
Read time: 7 minutes

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Due to the recently signed American Rescue Plan Act, also known as the “2021 COVID Relief Bill,” more people are eligible for the first time for Affordable Care Act (ACA) premium tax credits if they enroll in an ACA plan on HealthCare.gov (or their state’s Exchange).[1]

The quickest way to figure out if you’re eligible is to utilize an ACA Subsidy Calculator.

ACA Subsidy Calculator

If you do qualify for a premium tax credit it’s important to take action right away during the COVID-19 ACA Special Enrollment Period (through August 15, 2021, in most states). Learn more about next steps if you qualify for an ACA subsidy.

If you do not qualify, we’ll cover why you might still not qualify for ACA coverage or a subsidized plan, and other available health insurance options in the remainder of this article.

You Don’t Qualify for a Subsidy – Why Not and What to do Next

There are a few reasons you either may not qualify for a premium tax credit or not be eligible to obtain coverage from the federal or a state Marketplace.

Family Glitch

Despite the expansion of ACA coverage to millions of people who previously didn’t qualify for a subsidy,[2] the 2021 COVID Relief Bill did not address the Family Glitch.

That means if you have access to affordable self-only group coverage through yours or a spouse’s employer at 9.83% or less of your annual household income, you still don’t qualify to enroll in a plan from the ACA Exchanges (even if your income would otherwise qualify you for subsidies).[3]

Your Income is too Low

It is possible to have an income that is too low to qualify to enroll at HealthCare.gov, and depending on the state you reside in, you may or may not qualify for Medicaid.[4]

One provision of the ACA was to expand eligibility to Medicaid by making it based on income alone and raising the income level to qualify. Unfortunately, 12 states have so far failed to adopt Medicaid expansion, leaving an estimated 4 million non-elderly, low-income adults in the Medicaid coverage gap[5] – with an income too low to qualify for an ACA subsidy, but not low enough to qualify for Medicaid.[6]

If you live in a state that expanded Medicaid as part of the ACA, you could qualify for Medicaid based on income alone if your income is below 138% of the Federal Poverty Level (FPL).[7]

  • In 2020, that means that an annual income of about $17,609 or less for one person or $36,156 or less for a family of four qualifies.[8]

If you live in a state that has not expanded Medicaid (a “non-Medicaid expansion state”), then you could qualify for Medicaid only if your income is below 100% FPL and you meet other eligibility requirements.[9]

  • In 2020, that would mean an annual income of about $12,760 or less for one person, or $26,200 or less for a family of four qualifies.[10]
  • And in practice, according to the Kaiser Family Foundation, the median income limit for parents in non-Medicaid expansion states that qualify is just 41% FPL, or an annual income of $8,905 for a family of three in 2020.[11]
  • Regardless of low-income status, childless adults remain ineligible in nearly all of these states.[12]

What to do next: If you qualify for Medicaid, it’s likely your best health insurance option.

Find out if your state expanded Medicaid or use HealthCare.gov’s “Income Levels + Savings” tool to quickly find out if you could qualify for Medicaid based on income using the current year FPL income limits, state and household size.

You’ll still need to begin the application process at HealthCare.gov or your state’s Exchange to confirm eligibility and apply for Medicaid.

Medicaid Gap: If you live in a non-Medicaid expansion state and fall into the Medicaid Gap, you may be able to qualify for a $0 Silver ACA plan due to the COVID Relief Bill. One provision grants 100% subsidized Silver plans to anyone who collected unemployment benefits for as little as one week in 2021.[13]

These fully subsidized Silver plans for the unemployed are expected to be available July 1, 2021, so check back at HealthCare.gov on or after that date.

Your Income is too High

The 2021 COVID Relief Bill removed the 400% FPL cap on subsidy eligibility and lowered the percent of annual income an enrollee is responsible for paying in ACA premium, from 9.83% to 8.5%.[14] Even though there’s no longer an eligibility cap, your income may still be too high to qualify for a tax credit, as shown in the table below that compares pre and post COVID Relief Bill subsidy eligibility and premium tax credit amounts for a 30-year old at three different income levels.

Premiums, Subsidy Eligibility Before and After the COVID Relief Bill

30-year old Before the Relief Bill After the Relief Bill
$40,000
(313% FPL)
Subsidy Eligible? Yes
Premium Tax Credit: $73
Silver Plan Premium: $328
Bronze Plan Premium: $219[15]
Subsidy Eligible? Yes
Premium Tax Credit: $189
Silver Plan Premium: $211
Bronze Plan Premium: $103[16]
$55,000
(431% FPL)
Subsidy Eligible? No
Premium Tax Credit: $0
Silver Plan Premium: $400
Bronze Plan Premium: $292[17]
Subsidy Eligible? Yes
Premium Tax Credit: $11
Silver Plan Premium: $390
Bronze Plan Premium: $281[18]
$65,000
(509% FPL)
Subsidy Eligible? Yes
Premium Tax Credit: $0
Silver Plan Premium: $400
Bronze Plan Premium: $292[19]
Subsidy Eligible? Yes
Premium Tax Credit: $0
Silver Plan Premium: $400
Bronze Plan Premium: $292[20]

Health Insurance Options If You’re Not Subsidy Eligible

If you do not qualify for a tax credit, what are your options?

While there is no longer a federal tax penalty for going without ACA-qualifying coverage, some states have them. If you live in a state with a tax penalty for going without ACA-qualifying coverage, you’ll want to make sure to enroll in qualifying coverage or be prepared to pay the tax penalty.

Major Medical Insurance

If you go ahead with a major medical plan, since you do not qualify for a subsidy, you have options for where to obtain your policy (and you may be able to find better rates away from the public exchanges).

You can choose to enroll in coverage through:

Learn about the difference between exchange-based health plans and those sold privately. Get individual assistance from a licensed insurance agent. Call 888-855-6837.

Short-Term Medical Insurance

Non-ACA limited benefit health insurance is another option. Also referred to as “short-term medical” plans, these plans are not ACA-qualifying minimum essential coverage and are very different from ACA coverage.

Short-term medical plans:

That said, if unsubsidized ACA plan premiums are more than you can afford, a short-term medical policy may be a better option than going uninsured if you qualify.

Find out how much a short-term policy could cost you.

Compare Short-Term Medical Plans

Summary + Next Steps

Even if you don’t qualify for an ACA premium tax credit or are able to enroll in qualifying coverage from HealthCare.gov, you may still have affordable options.

Not all insurance carriers that have them list their ACA plans on the ACA Exchanges. You may be able to find ACA qualifying plans with lower premiums than unsubsidized ACA Marketplace plans by looking directly at carrier websites or working with a licensed health insurance agent.

Short-term medical insurance is a non ACA-qualifying option that may have lower premiums because they’re based on your health status among other factors, and not all who apply will qualify to enroll.

Want professional help assessing your options? Call 888-855-6837 to speak with a licensed insurance agent today!

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Originally Published On June 3rd, 2021
Independence American Insurance Company and/or Madison National Life Insurance Company, Inc. may underwrite the products referenced on this website. Legal Disclaimers.

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