Health Care Pro
Here is our video on how subsidies work:
- Live in the U.S.
- Are a U.S. citizens, U.S. national, or are otherwise lawfully present in the U.S.
- And you are not currently incarcerated
- Don't have access to affordable employer-based insurance...
You may qualify for premium tax credits to help you pay for health insurance under Obamacare.
If you meet these requirements, and your total household income is between 100 and 400% of the Federal Poverty Level (or FPL), you will likely be eligible to receive a premium tax credit to reduce the cost of your health insurance.
These subsidies are set on a sliding scale tied to the price of the second-least expensive silver plan available in your area. So, if you were to buy that plan, what you would spend each month to purchase it cannot exceed a defined percentage of your income.
It’s confusing, so here’s an example:
If you wanted to buy the second least expensive silver plan available in your area, and your monthly income was 133% of FPL, you would be earning about $1,273 per month in 2013.
At that income level you could spend no more than 3% of your income – about $38 per month – to buy that second least expensive plan. The government subsidy pays the rest of your monthly premium.
If that second least expensive silver plan cost $400 a month, your subsidy would be worth $362 ($400 - $38). And, you could use that $362 subsidy to buy a more expensive Gold plan (for example).
But you would have to cover the difference. So, if the gold plan cost $450, you’d have to pay $88 a month for it: ($450 Gold Plan – $362 subsidy = $88 per month).
As your income increases, so does your share of the cost for the monthly premium.
So, if your income rises to 400% of FPL – about $3,832 per month in 2013 - you could spend no more than 9.5% of your monthly income – about $364 - for that same plan; the second least expensive silver plan.
So if the second least expensive silver plan available in your area costs $300 a month, and you earn 400% of FPL, there is no subsidy for you.
But, if the second least expensive silver plan available in your area costs $500 a month, the government would pay the difference between the $500 plan and your $364 cap.
In that scenario you would pay $364 per month for your health insurance plan, and the value of your subsidy would be $136; ($500 - $364 = $136).
Now, if there also happened to be a bronze plan available for $400 a month, you could enroll in that plan and get the same $136 subsidy. In that case, your plan would cost you $264 per month $400 plan - $136 subsidy = $264).
Or, if you wanted a Gold plan that cost $600 per month, you would – once again – apply your $136 per month subsidy and pay $464 per month for your health insurance policy.
Health Care FAQ
, FAQ's on Obamacare/ACATurboTax Employee
Under the Affordable Care Act (also known as Obamacare), you may be eligible for help paying for health insurance with the new premium tax credit, which many people are calling a subsidy.
You can qualify for financial assistance if:
• Your income falls between 100% and 400% of the Federal Poverty Level; and
• You are not eligible for Medicare, Medicaid, or the Children's Health Insurance Program (CHIP); and
• Your employer does not offer affordable coverage.
Depending on your income and family size, the financial assistance can lower your health care premiums and/or lower your out-of-pocket costs, such as co-pays and deductibles.
When you apply through the online marketplace, which opened October 1, you'll find out your exact costs and savings. You can also find out if you qualify for Medicaid coverage under the new, expanded 2014 rules. Find your health insurance marketplace.
Want to get an idea of your future insurance costs and subsidy? You can get a quick estimate here.