The Federal Poverty Level and Health Insurance Subsidies

The FPL or Federal Poverty Level is about to become common knowledge to most Americans, especially the 60% expected to qualify for health subsidies.  These numbers which are generated by the Federal Government to determine poverty levels based on income and eligibility for many social safety nets will dictate where billions of dollars of health subsidies go.  Let's take a look at the FPL and understand its new importance.

A quick introduction to the Federal Poverty Level numbers

The FPL are numbers which reflect annual income levels by family type.  The numbers are increased with each additional family member added.  The base numbers are 100% of the Federal Poverty level.  The base numbers increase each year based on CPI or the Consumer Price Index which is a well-used representation of inflation.  Otherwise, the numbers would "buy" less and less with each year due to inflation.  So why is the FPL so important to health insurance now? 

400% rule for health subsidies

The FPL always drove eligibility for Medicaid, Healthy Families, and other Federal safety net medical programs but the range has now been expanded with the ACA Health Reform bill.  A core tenant of the bill is that eligible people up to 400% of the FPL will receive subsidies towards specified health plans available as of Jan 1st 2014 (with actual quoting and enrollment available Oct 1st 2013).  This means that a person would multiply 4 times the FPL number that applies to him or her (single, family of four, etc) to determine if they are eligible for a health subsidy.  Our health quote engine will automatically calculate this for you with entry of your income  and family census data starting October 1st, 2013.  Some people who make under 150% of the FPL will likely be eligible for fully paid Medicaid.   So what will you get if you make under 400% of the Federal Poverty Level?

The 9.5% Rule

Qualifying for a subsidy is based on the 400% rule but the amount of health subsidy you can receive is based on your income and the cost of subsidy-eligible health plans.  In general, you will not need to spend more than 9.5% of your income on health insurance premium.  If the eligible health plan costs $1200 for a family of four and the family makes $50K/annually, this family should not have to spend more than $495/monthly.  They will then receive a health subsidy of $705/monthly towards their health plan premium right away. 

Health plan subsidies up to 250% of poverty

In addition to health subsidy towards monthly insurance premium, people that make between 150% and 250% of the FPL will also be eligible for plan benefit upgrades at no additional cost.  There will be some differences from State to State on how this works but you can expect that your out of pocket for medical bills will be less due to this 150-250% FPL qualification. 

Key points on the Federal Poverty Level and health subsidies

Qualification is generally expected to be your prior year's income and it's based on your MAGI or Modified Adjusted Gross Income.  This will likely include passive forms of income.  If you lose your eligibility status, you may be required at tax time to return the received subsidies (let's say your income jumped from 350% of the FPL to 500% of the FPL during the prior year.  

2013 Federal Poverty Guidelines



48 Contiguous States and DC

Note: The 100% column shows the federal poverty level for each family size, and the percentage columns that follow respresent income levels that are commonly used as guidelines for health programs.

 Household Size

 100%

 133%

 150%

200% 

 300%

400% 

 1

$11,490

$15,282

$17,235

$22,980

$34,470

$45,960

 2

15,510

 20,628

23,265

  31,020

46,530

62,040

 3

19,530

 25,975

29,295

  39,060

58,590

78,120

 4

23,550

 31,322

35,325

  47,100

70,650

94,200

 5

27,570

 36,668

41,355

  55,140

82,710

110,280

 6

31,590

 42,015

47,385

  63,180

94,770

126,360

 7

35,610

 47,361

53,415

  71,220

106,830

142,440

 8

39,630

 52,708

59,445

  79,260

118,890

158,520

 For each additional person, add

$4,020

 $5,347

$6,030

  $8,040

$12,060

$16,080


Alaska

 Household Size

 100%

  133%

 150%

200% 

 300%

 400%

 1

$14,350

$19,086

$21,525

$28,700

$43,050

$57,400

 2

19,380

25,775

29,070

38,760

58,140

77,520

 3

24,410

32,465

36,615

48,820

73,230

97,640

 4

29,440

39,155

44,160

58,880

88,320

117,760

 5

34,470

45,845

51,705

68,940

103,410

137,880

 6

39,500

52,535

59,250

79,000

118,500

158,000

 7

44,530

59,225

66,795

89,060

133,590

178,120

 8

49,560

65,915

74,340

99,120

148,680

198,240

 For each additional person, add

$5,030

$6,690

$7,545

$10,060

$15,090

$20,120


Hawaii

 Household Size

 100%

 133%

  150%

 200%

 300%

 400%

 1

$13,230

$17,596

$19,845

$26,460

$39,690

$52,920

 2

17,850

23,741

26,775

35,700

53,550

71,400

 3

22,470

29,885

33,705

44,940

67,410

89,880

 4

27,090

36,030

40,635

54,180

81,270

108,360

 5

31,710

42,174

47,565

63,420

95,130

126,840

 6

36,330

48,319

54,495

72,660

108,990

145,320

 7

40,950

54,464

61,425

81,900

122,850

163,800

 8

45,570

60,608

68,355

91,140

136,710

182,280

 For each additional person, add

$4,620

$6,145

$6,930

$9,240

$13,860

$18,480

Source: Calculations by Families USA based on data from the U.S. Department of Health and Human Services

 



Los Angeles, Family of 4
making $60K.
  Subsidy=$8,388*


Iowa, Single Adult making $30K
Subsidy=$4,222*

*Based on age, expected costs, and other assumptions according to Kaiser Calculator.  Actual subsidies will vary and official subsidy amounts will be available Oct 1st, 2013. 


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