Understand the Health Insurance Subsidy

The whole health subsidy change is new to American and most people.  There are many questions on how it works and whether a person is eligible.  Your answers are below!   Keep in mind that the health reform bill which created the health subsidies is 1000's of pages....none of them easy or fun to read.    Our goal at HealthSubsidy.net is to take all that information and simplify it so that real people can understand their options.   A quick lay of the land.  On this page, we'll hit the big ticket items that touch on the health subsidy universe with links to additional detail on each topic.  Let's get into it!

Eligibility

In general, the subsidy will be available for individuals and families (not through group health insurance) who are citizens of the United States.  There are three important considerations to look at in terms of eligibility.  There other constraints and rules (it was a product of Congress after all) but these are the big three. 

Up to 400% of the Federal Poverty Level

The subsidies are designed to help people afford health insurance for those that make up to 400% of the Federal Poverty Level.  You can access those numbers here and the qualification will have a look back period.  For example, 2012 (your April 2013 Tax Filing) income will drive 2014 eligibility.  Below between 133% and 150% of the FPL, you may qualify for no cost Medicaid depending on your State.  From that baseline up to 400% of the FPL, you will likely be eligible for a health subsidy.  Above 400% of poverty, there will be NO subsidy.   More detail on the 400% Rule

 

How much Health Subsidy can you Expect

9.5% of your income becomes a factor

So let's say you qualify based on the 400% Rule of the FPL?   How much will you receive.  There are two considerations here.  First, how much is the underlying health insurance plan premium itself.  This is driven by your age, area, and family make up.  The second factor is the 9.5% Rule.  Basically, the law states that you shouldn't have to pay more than 9.5% of your MAGI (Marginal Adjusted Gross Income) towards health insurance.  For example, if you make $1000 monthly in MAGI, your health insurance shouldn't be more than $95/monthly.  As you go down the scale, the percentage actually drops lower than 9.5%.  If your health insurance is $400/monthly, your expected subsidy would be $305/monthly or more than $3600 annually.  We recommend using our Health Subsidy Calculator (props out to Kaiser Foundation) for an estimate and the Health Subsidy Quoting page will show actual numbers starting Oct 1st 2013.   

How will the health subsidy actually work

Keep in mind that there may be differences by State but the health subsidy is expected to process this way.  You will run your quote through our Partner (eff Oct 1st 2013 or later).  Part of this process will ask for income information.  The system will automatically determine whether you qualify for a health subsidy and show the net premium by plan.  You can then apply for coverage right through our Quoting partner (at no additional cost to you) and you will only pay the net difference.  The health subsidy is all handled automatically starting the first month that you actually have the coverage.  There may be some tax time considerations if your income increased or dropped significantly (the 400% and 9.5% rule above) but the process is fairly automated.  That's great news!  

Which plans can you enroll in with the Subsidy

The health subsidy will be based on the Silver Metallic plan (see Health Exchange plans and Metallic plans).  Each State will have different options to qualify with the subsidy which you can find in our Health Subsidy Quote page when the Exchange is live (Oct 1st 2013).   If you qualify for a subsidy, there will be very little reason not to get a qualified Exchange plan.  If you do not qualify for a subsidy, you're best options will likely be off the Exchange or to keep your Grandfathered plan (a plan unchanged with effective date prior to 10/23/2010).  More detail on Exchange Plans and Grandfathered Plans.

We've covered a good 90% of the health subsidy but there will be many questions squeezed into that remaining 10%.  Please feel free to email us your question today!   

Find Subsidy Updates and Articles

 



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. 


Health Subsidy Calculator



 
 

 


 

  

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