What is the income requirement to qualify for ACA subsidies?
How much income do I need to earn to qualify for subsidies that help pay for ACA premiums?
To help lower the cost of health insurance, the Affordable Care Act (ACA) offers financial assistance in the form of premium tax credits to eligible individuals and families who purchase coverage through the Marketplace. The amount of subsidy you qualify for depends on your household income and family size in relation to the federal poverty level (FPL). Here's what you need to know about income thresholds for subsidies:
1. Income Range to Qualify for Premium Tax Credits
To qualify for premium tax credits, your household income generally needs to fall between 100% and 400% of the federal poverty level (FPL). For 2024, the FPL varies based on family size:
For an individual: Your income should be between $14,580 and $58,320 per year.
For a family of four: Your household income should be between $30,000 and $120,000 per year.
If your income falls within these ranges, you are likely eligible for premium tax credits to help reduce the monthly cost of your health insurance premiums.
2. Household Size and Income Thresholds for 2024
The income limits for premium tax credits are based on the federal poverty level and adjust annually. Here are the income ranges that qualify for subsidies in 2024:
Household Size100% of the FPL400% of the FPL1 Person$14,580$58,3202 People$19,720$78,8803 People$24,860$99,4404 People$30,000$120,0005 People$35,140$140,560
Important: Income is calculated as modified adjusted gross income (MAGI), which includes wages, self-employment income, Social Security benefits, unemployment, and any other taxable income, minus certain deductions like student loan interest and contributions to retirement accounts.
3. Expanded Subsidies Beyond 400% of the FPL
In recent years, the ACA has temporarily expanded access to premium tax credits to individuals and families with incomes above 400% of the FPL, allowing them to qualify for subsidies if the cost of their Marketplace plan exceeds a certain percentage of their income. Specifically:
You may still qualify for premium tax credits if the cost of the benchmark Silver plan (the second-lowest-cost Silver plan) in your area is more than 8.5% of your household income.
This expansion was part of the American Rescue Plan Act and extended through 2025 by the Inflation Reduction Act.
4. How Premium Tax Credits Are Calculated
The amount of your premium tax credit is based on a sliding scale, meaning those with lower incomes receive larger subsidies, and those with higher incomes receive smaller subsidies. The formula takes into account:
Your household income as a percentage of the FPL.
The cost of the benchmark Silver plan in your area.
The percentage of income you’re expected to contribute toward your premiums (this percentage increases as your income rises).
5. Income Below 100% of the FPL
If your income is below 100% of the federal poverty level and your state has expanded Medicaid, you may qualify for Medicaid instead of Marketplace coverage.
If your state hasn’t expanded Medicaid, you may not be eligible for Medicaid or premium tax credits. However, you can still apply for coverage through the Marketplace, and you might qualify for Medicaid or Children’s Health Insurance Program (CHIP) based on other eligibility criteria.
6. Cost-Sharing Reductions (CSRs)
In addition to premium tax credits, you may also qualify for cost-sharing reductions (CSRs) if your income is between 100% and 250% of the FPL. CSRs help lower your out-of-pocket costs for healthcare services, including deductibles, copayments, and coinsurance.
To receive CSRs, you must choose a Silver-level plan from the Marketplace.
7. Special Considerations for Self-Employed Individuals
If you’re self-employed or have fluctuating income, you’ll need to estimate your annual income carefully when applying for Marketplace coverage. You can update your income throughout the year if it changes significantly, which may affect the amount of financial assistance you receive.
8. How to Apply for Premium Tax Credits
You can apply for ACA coverage and premium tax credits through tsunamihealth.com.
During the application process, you’ll provide information about your household income, family size, and current health coverage. The Marketplace will calculate whether you qualify for subsidies and provide an estimate of how much financial assistance you can receive.
Key Takeaways:
To qualify for premium tax credits, your household income generally needs to be between 100% and 400% of the federal poverty level (for 2024, this is $14,580 to $58,320 for an individual).
Recent changes to the ACA allow individuals with incomes above 400% of the FPL to qualify for subsidies if the cost of their Marketplace plan exceeds 8.5% of their income.
Cost-sharing reductions (CSRs) are available if your income is between 100% and 250% of the FPL and you enroll in a Silver-level plan.
For personalized help determining your eligibility for premium tax credits and cost-sharing reductions, schedule an appointment with a Tsunami Advisor here: Schedule an Appointment.
