Are there subsidies to help pay for my ACA plan?
How do I qualify for financial assistance to reduce the cost of my ACA health insurance premiums?
The Affordable Care Act (ACA) provides financial assistance to help reduce the cost of health insurance premiums for individuals and families who meet certain income requirements. The two main types of financial assistance are premium tax credits and cost-sharing reductions (CSRs). Here’s a guide on how to qualify for these subsidies and reduce your out-of-pocket costs for ACA health insurance:
1. Premium Tax Credits
Premium tax credits are designed to lower your monthly premiums for health insurance purchased through the ACA Marketplace. These credits are available based on your household income and family size relative to the federal poverty level (FPL).
A. Income Eligibility for Premium Tax Credits:
You may qualify for premium tax credits if your household income is between 100% and 400% of the federal poverty level (FPL).
For 2024, this translates to an annual income of approximately:
$14,580 to $58,320 for an individual.
$30,000 to $120,000 for a family of four.
If your income is within this range, you are likely eligible for a subsidy to reduce your monthly premiums.
B. Expanded Subsidies for Higher Incomes:
Recent changes to the ACA (extended through 2025) allow people with incomes above 400% of the FPL to also qualify for premium tax credits. Under this expansion, no one pays more than 8.5% of their household income for their ACA premiums, regardless of income level.
C. How Premium Tax Credits Work:
The amount of your premium tax credit is calculated based on a sliding scale, with those who have lower incomes receiving larger subsidies. The credit is designed to cap your premium payments at a percentage of your household income.
You can choose to apply these credits in advance to lower your monthly premium, or you can receive the credit when you file your federal taxes at the end of the year.
D. How to Apply:
When you apply for a plan through the ACA Marketplace, you’ll be asked to provide information about your income and household size. Based on this information, the Marketplace will determine if you qualify for premium tax credits and show you the amount of financial assistance you’re eligible to receive.
2. Cost-Sharing Reductions (CSRs)
Cost-sharing reductions (CSRs) lower your out-of-pocket costs for healthcare services, such as deductibles, copayments, and coinsurance. CSRs are only available if you choose a Silver-level plan in the ACA Marketplace and meet the income eligibility requirements.
A. Income Eligibility for Cost-Sharing Reductions:
You qualify for CSRs if your household income is between 100% and 250% of the federal poverty level (FPL).
For 2024, this income range is approximately:
$14,580 to $36,450 for an individual.
$30,000 to $75,000 for a family of four.
If your income falls within this range, a Silver plan will give you access to lower out-of-pocket costs.
B. How CSRs Work:
CSRs reduce the amount you pay for healthcare services by lowering your deductible, copayments, and coinsurance.
For example, if you qualify for CSRs, you’ll pay less out-of-pocket when you visit the doctor, go to the emergency room, or fill prescriptions.
Important: You must enroll in a Silver plan to receive CSRs. The reductions won’t apply to Bronze, Gold, or Platinum plans, even if you qualify based on income.
C. How to Apply:
When you apply for an ACA plan, the Marketplace will automatically determine if you qualify for cost-sharing reductions based on your income and household size.
If you qualify, you’ll see Silver plan options with lower out-of-pocket costs, and you can choose the plan that works best for you.
3. Eligibility Based on Household Size
Both premium tax credits and CSRs are based on your household size and combined income. Household size includes:
You.
Your spouse (if you are married).
Your dependents (if you have children or other individuals you claim as dependents on your tax return).
Your total household income will be used to determine your eligibility for subsidies. If your household includes more people, your income eligibility threshold increases, making it possible for larger households to qualify for more financial assistance.
4. Special Considerations for Financial Assistance
Medicaid and CHIP: If your income is below 100% of the FPL, you may qualify for Medicaid in states that have expanded Medicaid under the ACA. If you qualify for Medicaid, you won’t need to purchase an ACA plan, and you won’t be eligible for premium tax credits or CSRs.
Life Changes: If your income or household size changes during the year (for example, you get a raise, lose a job, or have a child), it’s important to update your information in the Marketplace. This will ensure that you receive the correct amount of financial assistance.
5. How to Estimate Your Income for Financial Assistance
To qualify for premium tax credits and CSRs, you’ll need to provide an estimate of your annual household income. Your modified adjusted gross income (MAGI) is used to determine your eligibility. This includes:
Wages or salary.
Self-employment income.
Social Security benefits (excluding Supplemental Security Income, SSI).
Investment income and dividends.
You can update your income estimate throughout the year if your situation changes, ensuring that your subsidies reflect your current financial circumstances.
6. How to Apply for Financial Assistance
To apply for premium tax credits or CSRs:
Visit tsunamihealth.com to start your application.
Provide information about your household size, income, and any existing health coverage.
The Marketplace will calculate your eligibility for financial assistance and display the estimated amount of premium tax credits and cost-sharing reductions you qualify for.
Key Takeaways:
You may qualify for premium tax credits if your income is between 100% and 400% of the federal poverty level (FPL), and expanded subsidies are available for incomes above 400%.
If your income is between 100% and 250% of the FPL, you may qualify for cost-sharing reductions (CSRs), which lower your out-of-pocket healthcare costs, but you must choose a Silver plan.
Your household size and income are key factors in determining your eligibility for financial assistance.
For personalized help determining your eligibility for financial assistance and applying for coverage, schedule an appointment with a Tsunami Advisor here: Schedule an Appointment.
