Will I qualify for a health insurance premium subsidy?

When you get health insurance coverage in the Marketplace, you may be able to get lower costs on monthly premiums plus be able to get lower costs on deductibles, co-payments, and coinsurance. This all depends on your income and family size.

Pay lower costs for premiums each month

In the Health Insurance Marketplace you may be able to lower the costs of your health insurance coverage by paying lower monthly premiums. You’ll see the amount of savings you’re eligible for when you fill out your Marketplace application. Prices shown for insurance plans will reflect the lower costs.

Advance premium tax credit

These lower costs are handled with a tax credit called the Premium Tax Credit provides a new tax credit to help you afford health coverage purchased through the Marketplace. Advance payments of the tax credit can be used right away to lower your monthly premium costs. If you qualify, you may choose how much advance credit payments to apply to your premiums each month, up to a maximum amount.

If the amount of advance credit payments you get for the year is less than the tax credit you’re due, you’ll get the difference as a refundable credit when you file your federal income tax return. If your advance payments for the year are more than the amount of your credit, you must repay the excess advance payments with your tax return. But these tax credits can be applied directly to your monthly premiums, so you get the lower costs immediately.

Savings depends on income and family size

The amount you save depends on your family size and how much money your family earns. In general, people at the following income levels will qualify to save in 2014. The lower your income, the higher your savings will be. (The amounts below are based on 2013 numbers and are likely to be slightly higher in 2014.

  • Up to $45,960 for individuals
  • Up to $62,040 for a family of 2
  • Up to $78,120 for a family of 3
  • Up to $94,200 for a family of 4
  • Up to $110,280 for a family of 5
  • Up to $126,360 for a family of 6
  • Up to $142,440 for a family of 7
  • Up to $158,520 for a family of 8
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    You may also be able to get lower out-of-pocket costs, depending on your income and family size.

    How to estimate your income

    When you apply for lower costs in the Marketplace, you’ll need to estimate your household income for 2014.

    For most people, you can use your household’s adjusted gross income for this estimate. If you know your 2013 adjusted gross income, use that and take into account any changes you expect in 2014.

    Another way to estimate your income is to add up the following items for all the people in your household, based on what you think they’ll receive in 2014:

  • Wages
  • Salaries
  • Tips
  • Net income from any self-employment or business
  • Unemployment compensation
  • Social Security payments
  • Other kinds of income to include when estimating your 2014 income are: rental income, interest, dividends, capital gains, annuities, alimony, and some retirement and pensions.
  •  

    Modified adjusted gross income

    When you fill out the Marketplace application, a number called “modified adjusted gross income” (MAGI) will be used.

    Modified adjusted gross income is generally your household’s adjusted gross income plus any tax-exempt Social Security, interest, and foreign income you have. It’s used to determine your eligibility for lower costs on Marketplace coverage, and for Medicaid and the Children’s Health Insurance Program (CHIP).

    You don’t have to figure out this income yourself. The math will be done for you when you apply through the Marketplace or your state agency.

    For Medicaid, it also matters if you’ve had a change in household income since your last tax return. When you apply you’ll need to tell us your household income now and also estimate the amount for 2014, taking into account changes that you know about.

    Do I qualify for lower out-of-pocket costs?

    When you get coverage through the Marketplace, you may be able to get lower costs on deductibles, co-payments, and coinsurance. This will depend on your income.

    Savings depend on your income

    Health insurance companies offering coverage through the Marketplace must lower the amount you pay out of pocket for essential health benefits if your household income is below the following amounts. (Incomes below are based on 2013 numbers. They are likely to be slightly higher in 2014. Amounts are different for each family size, up to 8.)

  • Up to $28,725 for individuals
  • Up to $38,775 for a family of 2
  • Up to $48,825 for a family of 3
  • Up to $58,875 for a family of 4
  • Up to $68,925 for a family of 5
  • Up to $78,975 for a family of 6
  • Up to $89,025 for a family of 7
  • Up to $99,075 for a family of 8
  •  
    When you apply for coverage in the Marketplace, you’ll learn if you’re eligible for these savings on out-of-pocket costs.

    Out-of-pocket savings apply only to Silver plans

    Plans in the Marketplace are separated into 4 different categories: Bronze, Silver, Gold, and Platinum. These categories are based on how much of your medical costs you pay and how much the plan pays when you get medical care. They are not based on plan quality. Learn more about plan categories and what they mean.

    If you qualify for out-of-pocket savings, you must choose a Silver plan to get the savings. If you qualify for these savings, you’ll get the out-of-pocket savings benefits of a Gold or Platinum plan for a Silver plan price. You can choose any category of plan, but you’ll get the out-of-pocket savings only if you enroll in a Silver plan.

    You’ll be able to choose your plan category when you fill out your Marketplace application.

    Catastrophic Coverage

    The law also makes available a catastrophic policy for young adults and those exempted from the requirement to obtain insurance due to affordability. Catastrophic plans are less comprehensive and have a lower premium than other coverage. Eligibility to purchase catastrophic coverage is reflected in the calculator, when applicable.

    Premium subsidies may not be applied to catastrophic coverage.

    Click here for premium subsidy calculator

    This tool illustrates health insurance premiums and subsidies for people purchasing insurance on their own in new health insurance exchanges (or “Marketplaces”) created by the Affordable Care Act (ACA). Beginning in October 2013, middle-income people under age 65, who are not eligible for coverage through their employer, Medicaid, or Medicare, can apply for tax credit subsidies available through state-based exchanges.

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