One of the primary aims of the Affordable Care Act (ACA) was to make health insurance more affordable and accessible for millions of Americans. To accomplish this goal, the ACA introduced subsidies designed to lower the cost of healthcare for eligible individuals and families. This article will explain how these subsidies work, who is eligible, and how to apply for them.

Types of Subsidies under the ACA

The ACA offers two main types of financial assistance: Premium Tax Credits and Cost-Sharing Reductions.

1. Premium Tax Credits lower your insurance premium, the monthly fee you pay to have health insurance. These tax credits are available to people with incomes between 100% and 400% of the Federal Poverty Level (FPL).

2. Cost-Sharing Reductions decrease the out-of-pocket costs you pay during a policy period for charges like deductibles, coinsurance, and copayments. These reductions are available to people with incomes between 100% and 250% of the FPL.

Eligibility for ACA Subsidies

Your eligibility for both types of ACA subsidies depends on your income and the size of your household. The Federal Poverty Level (FPL), which is updated yearly, serves as the benchmark for determining eligibility. As of my last update in September 2021, for an individual to be eligible, the annual income must be between $12,880 (100% FPL) and $51,520 (400% FPL). For a family of four, the range is $26,500 (100% FPL) to $106,000 (400% FPL).

However, please check the latest FPL as it may have changed. Additionally, you must not be eligible for public coverage, like Medicaid, Children’s Health Insurance Program (CHIP), Medicare, or satisfactory job-based health coverage.

Applying for ACA Subsidies

You can apply for ACA subsidies when you purchase a plan through the Health Insurance Marketplace during the Open Enrollment Period or a Special Enrollment Period if you qualify. 

When you fill out a Marketplace application, you’ll find out if you qualify for these subsidies based on your estimated income and household size for the upcoming year. The savings are calculated automatically, and you can choose how much advance credit to apply to your premiums each month.

The ACA’s subsidy system plays a vital role in ensuring more Americans have access to affordable health insurance. By understanding how these subsidies work and who is eligible, you can potentially unlock significant savings and ensure you and your family are covered. Remember, while navigating healthcare coverage can be complex, you’re not alone – numerous resources and professionals can guide you through this process.