Health Reform Subsidies
Health Care Subsidies: Who is Eligible?
The passage of the Patient Protection and Affordable Care Act (PPACA) incorporates the use of health care subsidies as a part of health coverage expansion to cover the estimated 49 million Americans who do not have coverage. This article discusses how subsidies will work and who qualifies for them.
What Subsidies are Available?
The goal of the PPACA is to expand coverage to an additional 32 million Americans by 2019 through a combination of regulations, health insurance exchanges, Medicaid expansion, and subsidies, among other solutions.
As a part of PPACA, the federal government is offering subsidies towards purchasing health insurance for individuals and families who qualify. Since PPACA mandates that each person purchase health care insurance, subsidies are viewed by the law’s supporters as an important part of expanding coverage to uninsured Americans.
There are essentially three types of subsidies offered by PPACA:
1. Expanded Medicaid coverage 2. Tax credits for premiums 3. Cost-sharing assistance
Who Can Qualify?
Not everyone is qualified for these subsidies. An estimated 19 million Americans are eligible for aid, which is based primarily on annual individual and household income. Who qualifies for which subsidy is tied to the federal poverty level (FPL).
Expanded Medicaid coverage is offered to individuals who make up to 133% of the FPL. In 2010, the FPL, as calculated by the federal government, is $10,830 for individuals and $22,050 for a family of four. Therefore, many of those who make up to $14,404 a year (individuals) or $29,327 (family of four) qualify for Medicaid.
The premium tax credits are offered to those who make anywhere from 133% and 400% of the FPL, which ranges from $14,405 to $43,320 for individuals and from $29,328 to $88,220 for a family of four.
Finally, the cost-sharing assistance is available for those who make up to 250% of the FPL, which would be $27,075 and $55,125 for families, respectively.
The specific guidelines for who is eligible are more complex and will be largely fine-tuned throughout the year, and may be impacted by the state of residence.
How Much are They Worth?
How much each subsidy is worth is also pegged to yearly income as a percentage of FPL. A rough estimate for the value of the subsidies is below:
Up to 133% of FPL: 2% of income
133-150%: 3-4%
150-200%: 4-6.3%
200-250%: 6.3-8.05%
250-300%: 8.05-9.5%
300-400%: 9.5%
The percentage of income is the maximum amount that one will have to pay, with the federal government paying for the rest.
For example, the most an individual with a subsidy will have to pay per year is $4,116. The less you make, the more your subsidy or tax credit will be. Plus, tax credits here are refundable, which means they are given even if you receive a tax refund.
Note that the federal government covers the cost of a silver plan in an exchange or region. If you want a higher-level plan, you will have to pay the difference between that plan and what the government is providing for the silver plan.
Health insurance subsidies are worth discussing with a specialist in your state, since many of the exact guidelines will be determined at that level. These guidelines, though, should give you a good idea of what you can expect to be offered from this point on from the federal government to help pay for health care. It is important to note that many of the subsidies resulting from health reform will not kick in until 2014.