The Affordable Care Act (Obama Care) Subsidies and Eligibility
Are you one of the 11.6 million U.S residents who is missing out on Obamacare subsidies? The Kaiser Family Foundation reported that almost 60% of those who deserved these government subsidies did not get them in 2019. Why? They simply did not sign up for insurance on the health insurance exchanges.
Most persons think the Affordable Care Act (ACA) was intended to assist only the poor. In fact, Obamacare subsidies are intended to help lower- and middle-class Americans living between 100% and 400% of the federal poverty level (FPL). For instance, in 2020 a family of four had an income between $26,200 and $104,800 per annum. American residents in this income range are caught in the trap where they make too much for Medicaid, but not enough to afford private health plans.
Between 2019 and 2029, annual spending on these subsidies under Obamacare is anticipated to grow from $737 billion to $1.3 trillion.
Several criteria determine whether you are qualified for Obama care.
How to Get Your Subsidy
Usually, the subsidy is added to your income tax refund as a premium tax credit. Nevertheless, you can choose to use the credit in advance by applying it toward your monthly premium cost.
If your income increases during the year, your subsidy will be lowered, making your tax bill larger. In this case, you took your credit in advance; you may have to pay back the difference. To avoid that, update your account on the HealthCare.gov website with any substantial income or household changes.
How Much of a Subsidy One Can Get
The subsidy depends on the cost of a Silver health insurance plan. That is one of the four levels of insurance on the exchange and shows how much of your health care costs the plan pays.
- Bronze plans pay 60% of your health care expenses, while you pay 40% overall. They have lower premiums and high deductibles.
- Silver health insurance plans pay 70%, and you pay 30%. Deductibles are lower as compared to Bronze plans, but premiums will be higher (unless you are eligible for subsidies).
- Gold health insurance plans pay 80%, while you pay 20%. Gold plans have a higher premium, but lower deductible as compared to Bronze and Silver plans.
- Platinum plans pick up 90% of healthcare expenses and have very high premiums and low deductibles.
All offer the same ten essential health benefits, provide free preventive care, and comply with the other Affordable Care Act regulations. The variance in coverage will show up in the premiums, deductibles, and copays.
The subsidy depends on the guarantee that you pay no more than a certain percent of your income for the second-lowest Silver health insurance plan. The percentage differs based on your income. So, in 2020, for instance, if your income is between 100% and 133% of the FPL, subsidies will cover any premium costs above 2.06% of your annual household income. If you are at 300% to 400% of the FPL, you will be responsible for premium costs up to 9.78% of your household income, and the government will subsidize the rest.
Here is an example of how it might be calculated:
Example of a Subsidy Calculation
- Cost of the Silver plan = $9,500 a year
- Your income = $50,000
- 78% of your income: 0.0978 * $50,000 = $4,890
- Your subsidy: $9,500 – $4,890 = $4,610
Luckily, the HealthCare.gov exchange figures it all out for you. Your actual subsidy could be much greater or smaller, based on your income, the number of persons in your family, your age, and whether you smoke.
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