According to a research brief issued on Feb. 9 by the Department of Health and Human Services or HHS, about 6.5 million people who qualify for subsidies on the federal exchange received a tax credit worth $268. This same report also found that most people pay around $105 per month in premiums after applying their subsidies. The Affordable Care Act was designed to provide low-cost health insurance options to millions of families nationwide, and so far, the system seems to be working.
Qualifying for Credits
The HHS reported that more than 80 percent of the people who signed up for health insurance through the federally facilitated marketplace qualified for some kind of cost assistance. Chances are good that you can get help. Under the ACA, those who earn between 100 and 400 percent of the federal poverty line should receive an advance premium tax credit to help reduce the cost of monthly premiums.
- In 2015, the federal poverty line or FPL for the 48 contiguous states is $11,770 for an individual and $24,250 for a family of four. Alaska and Hawaii have different poverty standards.
- Essentially, you add $4,160 per person in your household after the initial $11,770. Families of six, for example, would meet the FPL guidelines with an income of $32,570.
- The government awards subsidies to people who earn between one and four times the FPL amount. If you have a family of four, then your range is $24,250 to $97,000.
- Tax credits are prorated based on percentage. In other words, you get a higher subsidy the closer your income is to the FPL.
You can find calculators online to estimate the amount of your assistance, but the easiest way to find out how much you can get is to visit the federal exchange and supply your information. The website will tell you just how much your subsidy is and what you can do with it.
Most people pick the least expensive bronze plan because it typically reduces their monthly premium costs significantly. However, you can apply a federal subsidy to any plan on the marketplace. Premium plans include higher premiums but cover a higher percentage of services. If you can afford to apply your subsidy to a more expensive plan with a better long-term investment, then you could save thousands in medical care costs over your lifetime.
Finding Affordable Coverage
The marketplace isn’t your only option for finding health insurance, but it is the only place that offers cost assistance in the form of premium tax credits. The Health and Human Services Department notes that subsidies reduce the cost of premiums by about 72 percent, and many people can find a plan that costs less than $100 per month. If you want to take advantage of subsidies, then now’s the time to see if you can still sign up through the exchange.