Health insurance can be challenging for people to afford with a lower or moderate income, especially if they aren’t offered health benefits at work. Because of this, the Affordable Care Act (ACA) provides sliding-scale subsidies, lower premiums, and out-of-pocket costs for eligible individuals.
Our independent agents at McKnight & McKnight Insurance solutions answer some FAQs about health insurance marketplace subsidies so you can enroll in the right plan for your budget.
What Are Health Insurance Marketplace Subsidies?
If you don’t have health insurance coverage provided through an employer and aren’t eligible for Medicare or Medicaid, you may qualify for federal financial help, known as a subsidy. These subsidies are designed to cover some of the out-of-pocket and premium costs of your health coverage.
There are two types of subsidies that are available in the marketplace.
- Advanced Premium Tax Credit: reduces monthly premiums
- Cost-Sharing Reductions: minimizes out-of-pocket costs for doctor’s visits or hospital stays
To receive these subsidies, you must enroll in an ACA-compliant plan. Licensed agents at McKnight & McKnight Insurance Solutions can guide you through the process of applying for these plans and subsidies.
If you are unsure if you are eligible for subsidies, call our agents at McKnight & McKnight Insurance Solutions. We will help you decide which plan is best for your budget and insurance needs. Schedule a phone call with us today!
Let’s talk about these subsidies a little more in-depth.
Premium Tax Credit
The premium tax credit reduces your monthly payment for your insurance plan. Marketplace plans are offered in four levels of coverage including bronze, silver, gold, and platinum.
Bronze plans tend to have the lowest premiums
but have the highest deductibles, while platinum plans
have higher premiums but lower deductibles and
out-of-pocket costs.
The premium tax credit can be applied to any plan that you are eligible for.
Who is Eligible for the Advanced Premium Tax Credit?
To receive the advanced premium tax credit, you must meet the following criteria:
- Have a household income at least equal to the Federal Poverty Level (FPL) based on 2022 poverty guidelines
- No access to affordable health coverage through an employer
- Not be eligible for Medicare, Medicaid, or the Children’s Health Insurance Program (CHIP)
- Have U.S Citizenship or proof of residency
- If married, you must file your taxes jointly to qualify
The premium tax credit is based on your household income as defined by the Modified Adjusted Gross Income (MAGI) of you, your spouse, and any dependents.
This includes income such as:
- Wages
- Salary
- Foreign Income
- Interest
- Dividends
- Social Security
What Amount of the Premium Tax Credit is Available?
The premium tax credit limits the amount you must contribute toward the premium for a “benchmark” plan or the second-lowest-cost silver plan that is available for an ACA health plan.
This required contribution is set on a sliding income scale and is based on the Federal Poverty Level guidelines for the year in which you are applying for coverage.
How is the Premium Tax Credit Provided?
Licensed agents at McKnight & McKnight Insurance Solutions are certified to help you navigate your Marketplace insurance options. To receive the tax credit, we will help you apply for coverage through the marketplace. You will need to be prepared with the following information:
- Your date of birth
- Social Security Number
- Address
- Household size
- Citizenship status
- Estimated income for the coming year
After submitting your application, you will receive a determination notice letting you know the amount of the tax credit you are qualified to receive. You then have the option to have the tax credit paid in advance or claim it later when filing taxes.
If you overestimated your income when you applied, you can get the unclaimed premium tax credit as a refundable tax credit when you file your taxes. But if you underestimated your income, you will have to repay some or all of the excess tax credits when you file.
Bob and his team have taken such great care of me. He is so quick to answer any questions I have. I was worried my plan was going to cost more this year and he was able to find me a less expensive plan that meets all my medical insurance needs. It can be so confusing but he makes it super easy.
-Victoria R.
Cost Sharing Subsidies
The second form of financial assistance that you may be eligible for on the Marketplace is a cost-sharing subsidy. Cost-sharing subsidies reduce your out-of-pocket costs due to deductibles, copayments, and coinsurance when you use your covered health care services.
Who is Eligible for a Cost-Sharing Subsidy?
You may be eligible for a cost-sharing subsidy if you have a household income of 100% to 250% of the Federal Poverty Level and are eligible to receive the premium tax credit.
How are Cost-Sharing Subsidies Provided?
Unlike the premium tax credit, which is applied towards any level of coverage, cost-sharing subsidies are only offered to those who enroll in silver plans. When cost-sharing reductions (CSRs) are applied to a silver plan, the deductibles and other costs are similar to that under a platinum or gold plan.
What is the Amount of the Cost-Sharing Subsidies?
Cost-sharing subsidies are determined based on your income. The most generous cost-sharing subsidies are available to those with an income of up to 150% of the Federal Poverty Level.
Learn More > 10 Ways to Reduce Healthcare Costs
Determine What Subsidies You May Be Eligible For
As you can see, premium tax credits and cost-sharing subsidies make insurance more affordable and increase insurance coverage for millions of low to moderate-income Americans.
Still confused? No problem! We are here to make the process simple, fast, and friendly! Contact the licensed insurance agents at McKnight & McKnight Insurance Solutions and we’ll help you find the best plan based on your budget and your unique healthcare needs. Best of all, there is no cost to work with us!
Open Enrollment is just around the corner. If you are looking to enroll for the first time or switch plans, we can help! Schedule a phone call today.
