Are You Eligible for a Health Insurance Subsidy?
Posted by: Kyle Dean | June 17, 2013
A lot of media coverage and controversy surrounds the Affordable Care Act. There are so many facets to this new legislation, it's no wonder many are confused about how it will affect them. In fact, an estimated 26 million low and middle-income Americans will qualify for subsidies next year to help them obtain health insurance through their state's insurance exchange, but many are unaware of this provision. Who qualifies and how do the subsidies work?
Who Qualifies?
There are several variables at play for eligibility. First, subsidy recipients cannot already be on a government insurance program, such as Medicare or Medicaid. Secondly, the subsidies are specifically for people who do not have access to an affordable insurance plan through their employment. Proponents of the subsidies say it will really help those in the middle class. Subsidies will be available to people with an annual income up to four times the federal poverty level. That means if the legislation was already in place this year, individuals earning up to $45,960 and a family of four earning up to $94,200 would qualify. It's estimated that almost a third of subsidy recipients will be young adults between 18 and 34 years old.
How Does the Subsidy Work?
Those in need of health coverage will choose between four plan levels through state health exchanges. The four levels are labeled platinum, gold, silver and bronze, and vary based on premium amounts and required out-of-pocket expenses. Subsidies will be associated with the "silver" level plans. Here's an example, according to Families USA, a consumer advocacy group. If a family of four earns $94,200 and purchases a silver plan that requires an annual premium of $12,500, the subsidy would be $3,550. The amount of subsidy is scaled to ensure Americans are not paying more than a specific percentage of their annual income toward their premiums. In the above example, 9.5 percent of the family's income goes toward their health coverage after the subsidy. The government subsidy is paid directly to the insurance company.
Research by the March Kaiser Family Foundation Poll found that only 62 percent of Americans are aware of subsidy provisions and two-thirds of the uninsured admit they do not know how the Affordable Care Act will affect them. However, everyone is required to have health insurance by January 1, 2014, according to the legislation. Failure to obtain it can carry financial penalties.