If you can’t afford to pay for health insurance premiums, don’t worry. You can get Obamacare premium assistance. Also known as the Advance Premium Tax Credit, Premium assistance provides advance payments that the federal government will pay directly to your health plan. You receive these payments monthly, instead of through your tax return, which you can then use immediately. Unfortunately, this amazing offer is not for everyone. There is a maximum income for which the Obamacare premium assistance applies. Most of the lucky ones fall under the federal poverty level.
Federal Poverty Levels
Also known as the Federal Poverty Guidelines or just FPL, this outlines a list of household income that will determine if you can buy a state health plan or one that is sold through the Federal Health Insurance Marketplace, and then qualify for cost assistance. It also helps determine your eligibility for Medicaid, Children’s Health Insurance Program (CHIP), and other assistance programs that are non-healthcare related.
What you qualify under Obamacare, depends on your situation. If you earn anywhere between the 100 and 400% of the Federal Poverty Guidelines, for example, you may be eligible for the Health Insurance Marketplace’s premium tax credits. Below is a simplified 2013 Federal Poverty Levels at a 100% threshold. You can use the figures for taxes filed after 15 April 2015, for Medicaid and CHIP 2013 and for cost assistance 2014.
- $11,490 for individuals
- $15,510 for a family of two
- $19,530 for a family of three
- $23,550 for a family of four
- $27,570 for a family of five
- $31,590 for a family of six
- $35,610 for a family of seven
- $39,630 for a family of eight
Are there more than 8 people in your family? Just add $4,020 for every additional family member to determine your income as basis for the Federal Poverty Level 2013. The figures change every year, with the assumption that your income could also change. It is highly recommended that you keep track of the changes to determine your eligibility for premium assistance.
Some may think that the Federal Poverty Guidelines have a negative connotation, given that your state of living is categorized as impoverish. But if you earn less than any of the income listed above, you will have access to benefits as outlined by the Obamacare program.
Premium Tax Credits
As previously mentioned, you may qualify for premium tax credits if you earn within or under the Federal Poverty Level. That is, you will get advanced monthly payments if you get a health plan from the Health Insurance Marketplace. This will significantly lower your monthly premiums. Another payment option would be to adjust your tax returns.
How much tax credits you get will be based on your income and the cap on your monthly premium, which can be anywhere from 2 to 9.5% in relation to the total Modified Adjusted Gross Income (MAGI) per member in your household. The cap is also based on the cost of the second lowest Silver plan. How exactly is the tax credit determined?
You can use the table of premium caps that were created based on the Federal Poverty Guidelines, specifically for premium tax credits for Obamacare. It lists minimum and maximum income, and minimum and maximum premium cap. That is, 0 and 133% of FPL gets a cap of 0 to 2% of your income, respectively.
Table of Premiums Caps
Minimum Income (% FPL): 0%
Maximum Income (% FPL): 133%
Minimum Premium Cap (% of Income): 0%
Maximum Premium Cap (% of Income): 2%
Minimum Income (% FPL): 133%
Maximum Income (% FPL): 150%
Minimum Premium Cap (% of Income): 3%
Maximum Premium Cap (% of Income): 4%
Minimum Income (% FPL): 150%
Maximum Income (% FPL): 200%
Minimum Premium Cap (% of Income): 4%
Maximum Premium Cap (% of Income): 6.3%
Minimum Income (% FPL): 200%
Maximum Income (% FPL): 250%
Minimum Premium Cap (% of Income): 6.3%
Maximum Premium Cap (% of Income):8.05%
Minimum Income (% FPL): 300%
Maximum Income (% FPL): 400%
Minimum Premium Cap (% of Income): 8.05%
Maximum Premium Cap (% of Income): 9.5%
Out-of-Pocket Cost Assistance
If you earn anywhere between 100 and 250% of the Federal Poverty Guidelines, you may be eligible for out-of-pocket cost assistance or Cost Sharing Reduction Subsidies (CSR Subsidies) for Silver healthcare plans that you get from the Health Insurance Marketplace. In addition to premium tax credits, this is another way to lower your monthly insurance payments. Of course, this is only applicable if you meet the Federal Poverty Level specified above.
CSR Subsidies will lower the amount you may have to pay on copayments, coinsurance and deductibles. This is made possible by reducing the maximum payments you have to make for a particular policy period. It also increases the actuarial value of your healthcare plan. This refers to the average total of costs for covered benefits that your health insurance covers.
CSR Subsidies, however, are only applicable on covered costs or the cost of in-network services that are included in your plan, such as those listed on essential Health Benefits. To make the most of the out-of-pocket assistance, experts suggest that you buy a Silver plan from a high-end marketplace and then apply the CSR Subsidies. For maximum savings, and for an opportunity to lower your household MAGI, you pair HSA with a high deductible Silver plan.
Do you earn less than 138% if the Federal Poverty Guideline? You may qualify for CHIP, which will prove beneficial if you have children in the family. Under Obamacare, children are covered for 365 days a year if you enroll in CHIP. The program provides low cost to free coverage to children and other members in the family that may qualify. What is even better is that CHIP is not only limited to families who can barely afford health insurance. Parents who earn too much money for Medicaid coverage can still enroll in CHIP, given that children’s health is very important. Under this program, more than millions of kids can get covered.
An important note to remember: if you have limited coverage on Medicaid, do not indicate that you have it when you fill out an application for Health Marketplace. Check “None of the above” instead.
Other benefits that you can get when you meet Federal Poverty Guidelines are assistance programs with eligibility guidelines that are unique, tax credits, and if you are single, you only count under Modified Adjusted Gross Income, instead of Modified Adjusted Gross Income (MAGI), which the head of the household and/or spouse is responsible for. Parents also have to Adjusted Gross Income (AGI) for any dependent they might have.