First off, why should you care about the federal poverty level (FPL)? Because it is used to help determine your eligibility for both Affordable Care Act (ACA) tax credits, and cost-sharing reductions.
Did I lose you? If so, don’t worry!
If you’re just trying to figure out whether or not you qualify for a subsidy for health insurance, you can simply go to the federal ACA Marketplace or your state’s ACA Exchange and begin the enrollment process.
If you want a better understanding of the FPL, we’ve got you covered.
In the remainder of this blog post, we’ll discuss:
- Two ways to determine your % FPL: using your income to calculate your % FPL, and viewing a quick reference chart for minimum qualifying income limits.
- What exactly are the federal poverty guidelines and who sets them?
- How does the federal poverty level factor when determining your subsidy amount?
- 400% FPL, 200% FPL, and 100% FPL and why they’re important.
- Non-ACA health insurance options if you don’t qualify for a subsidy and unsubsidized premiums are unaffordable.
The Basics of the Federal Poverty Level and Qualifying for ACA Subsidies
What is the federal poverty level? (Definition)
The federal poverty level (also referred to as “federal poverty guidelines”) is one measure of poverty within the United States.
These guidelines are released annually by the U.S. Department of Health and Human Services (HHS) and are used to determine financial eligibility for federal programs and benefits, including:
- Children’s Health Insurance Program (CHIP)
- Migrant Health Centers
- Community Health Centers
- Family and Planning Services,
- ACA Subsidies
The federal poverty guidelines are established for and apply to the 48 contiguous states and the District of Columbia. Alaska and Hawaii each have their own set of poverty guidelines.
2020 Federal Poverty Level
As previously mentioned, the FPL and your “modified adjusted gross income” or “MAGI”, relative to it is what determines your eligibility for ACA subsidies.
The federal poverty guidelines are on a one year lag when it comes to determining ACA (also referred to as Obamacare) health coverage subsidies. So when the “2020” FPL is referenced, that’s going to determine subsidies for ACA 2021 plan year health insurance, 2021 FPL will determine Obamacare 2022 plan year subsidies and so on.
2019 Federal Poverty Level – Annual Household Income
|Number of People in Household||48 Contiguous + D.C.||Alaska||Hawaii|
|More than 4||+$4,480 per person||+$5,600 per person||+$5,150 per person|
How do you use the numbers in the table above? You calculate your % of FPL using your MAGI and the income level associated with the size of your household.
If you prefer to skip the math, you can jump right to the income limits chart (below) to see if your income level qualifies you for one or both ACA subsidy.
Let’s look at a couple of examples to get a better understanding of how to calculate your percent of the FPL.
How to calculate your percentage of FPL (generally)
To generally calculate where you fall in terms of percentage of FPL you’ll follow these steps:
- Find the annual income threshold that corresponds with the number of people in your household from the table above.
- Divide your modified adjusted gross income (MAGI) by the number from the table.
- Carry the decimal two places in your result.
- Add a percentage sign, and you have your answer.
Example 1: You are a single individual residing in Iowa with a MAGI of $25,000. The 2020 annual poverty level for a one-person household is $12,760.
- Divide: $25,000 ÷ $12,760 = 1.959
- Move the Decimal Point: 1.959 x 100 = 196
- Rounding up, you’re at 196% of the federal poverty guidelines and may qualify for a premium tax credit in 2021. You could qualify for a cost-sharing subsidy as well if you purchase a silver plan.
Example 2: You are married with three kids living in Illinois, and your household’s MAGI is $150,000. The 2020 poverty level for a five-person family or household is $30,680.
- Divide: $150,000 ÷ $30,680 = 4.889
- Move the Decimal Point: 4.89 x 100 = 489
- Rounding up, you’re at 489% of the federal poverty guidelines and are unlikely to qualify for a subsidy.
These are general estimates (especially if you’re just using a rough AGI estimate in your calculations). Your actual subsidy amount will be determined when you apply for coverage through HealthCare.gov or your state-based health insurance exchange.
ACA subsidies you’re eligible for based on your percent FPL
Health insurance subsidies and eligibility for other public health insurance are determined based on a percentage of FPL as follows:
|Percent FPL||Subsidy or Program Eligibility|
|100 to 400% FPL||ACA Premium tax credits if you enroll in any metal level plan from the ACA Marketplace|
|100 to 250% FPL||ACA Cost-sharing reductions if you enroll in a Silver metal level health plan from the ACA Marketplace|
|Below 138% FPL||If you’re in a state that expanded Medicaid, you qualify for Medicaid|
|Below 100% FPL||If you’re in a state that did not expand Medicaid, you qualify for Medicaid|
If your income does not qualify you for a subsidy and you’re considering going without coverage, consider a lower-premium non-ACA policy like short term health insurance instead.
These plans cover few, if any, essential health benefits, and typically do not cover preventive care or pre-existing conditions. They’re not guaranteed-issue like ACA plans are, so you’ll have to qualify in order to enroll.
Compare short term medical costs and benefits.
400% FPL and Medicaid Expansion
As you can see from the table above if your MAGI is at 400% or less of the FPL you qualify for a subsidy if you purchase health insurance at the ACA Marketplace…
You qualify at 138% if you live in a state that expanded Medicaid as part of the ACA and at 100% if you live in a state that did not expand Medicaid.
What is Considered Low Income When Enrolling in the ACA?
If you don’t want to take on a mathematical story problem to find out what your % FPL is you can also use the minimum income limits quick reference chart below.
Obamacare Income Limits 2020
Locate the number of people in your household and see if your income could qualify for one or both of the ACA federal subsidies:
- Blue = You could qualify for a premium tax credit (enroll in any ACA metal level plan through an ACA public Exchange).
- Green = You could qualify for a premium tax credit and cost-sharing reduction (if you enroll in a Silver metal level health plan through an ACA public Exchange).
Minimum Income Limits to Qualify for 2021 ACA Subsidies
(48 Contiguous States + D.C.)
Number of People in Household
Additional percentage breakouts are included in the chart above since other federal programs use different percentages to determine eligibility, such as 200% FPL.
If your income is higher than the minimum income limits included on the table, you likely will not qualify for a subsidy and will have to pay fully for your health insurance. If your income is lower, you may qualify for Medicaid.
If unsubsidized ACA insurance premiums are unaffordable, you may want to consider a non-ACA insurance option with a lower premium and less coverage rather than going without any health insurance.
Non-ACA Health Insurance: Short Term Medical
Short term health insurance is one non-ACA option that could provide you coverage for unexpected illnesses or injuries for 30 to 364 days depending on your state (or possibly up to 36 months depending on the policy renewal rules in your state).
Plans typically provide benefits for hospital room and board; emergency room, anesthesiology and surgical care; diagnostic services (x-rays, lab tests and analysis); ambulance and surgical services; doctor office visits.
Some benefits of short term medical plans include:
- Monthly premiums are 31.5% less than unsubsidized major medical insurance premiums on average, $124 per month compared to $393 (2016).
- There’s no open enrollment period so you can apply year-round in most states.
- Plans are highly customizable so you don’t have to pay for coverage you don’t need.
- No provider network limitations mean you can visit your preferred healthcare provider.
Some drawbacks of short term medical plans include:
- They are not guaranteed-issue, you must be approved by the carrier in order to enroll.
- They are not considered minimum essential coverage and have less coverage than major medical plans.
- Pre-existing conditions are not covered.
See if a short term medical plan is available for you and start comparing costs and coverage.
Summary + Next Steps
You don’t need to know calculus to figure out if you qualify for a federal premium tax credit and possibly a cost-sharing reduction if you purchase ACA-qualifying health insurance from the federal Marketplace or your state Exchange.
Just use our ACA subsidy calculator or begin your ACA quote from the federal or a state Exchange to get access to subsidies you qualify for.
If you don’t qualify for a subsidy and ACA premiums are unaffordable, don’t go uninsured.
Instead, consider applying for a non-ACA health policy like short term medical insurance to help cover some of your medical costs. Get a quote to find out if plans are available in your area and compare costs.
If you need one-on-one help determining your subsidy eligibility and health insurance options, call 888-855-6837 to work with a licensed agent.
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