Let's play a little game called word association. When we say Obamacare, you say Too expensive. When we say Affordable Care Act, you say What's that? When we say health insurance, you say No thanks!
We know how it goes. When you hear talk about healthcare, you tune out. You read something about Obamacare (also called the Affordable Care Act), and your blood starts to boil.
Your frustration might have to do with the politics of the new law. Or that your health plan could change because of it. Or that you have to buy health insurance this year, even though you were fine without it. Whatever you think of Obamacare, we know your biggest concern of all is how to pay for it.
And that's where healthcare subsidies come in. Here's a straightforward explanation of what they are, and how they help you pay for health insurance.
What Are Healthcare Subsidies?
So many Americans can't afford basic living costs, let alone healthcare. To fix that problem, Obamacare can pay for part of your health insurance costs. These healthcare subsidies come in two forms: a tax credit or a cost-sharing reduction.
- Tax Credit
Most Americans who qualify for a subsidy will get it as a tax credit. Here's how it works: Every month you pay a premium to your insurance provider. If you qualify for a tax credit, the government will pay part of the premium for you. They'll send the money directly to your insurance provider, so all you have to do is pay a lower, more affordable premium each month.
Think of a tax credit as getting comped at your favorite restaurant. At the end of a big meal, the manager tells you they value your business so much, they'll pay for your drinks and appetizers. Better yet, your drinks and apps will be on the house every time you come back. Sounds pretty great, right?
That's what it's like to get a tax credit.
- Cost-Sharing Reduction
While the tax credit lowers what you pay in monthly premiums, the cost-sharing reduction (CSR) lowers what you pay for out-of-pocket services. During the year you might see a couple doctors, have a serious illness or injury, or have to pay for expensive prescription drugs. With a CSR, you'll get all these services at a discounted rate.
Getting healthcare services at a reduced price? That's like being a VIP member of your favorite store. Think how much you could save!
How Do I Sign Up For A Subsidy?
Talk to an insurance agent. They'll help you find a health plan through what's called the Marketplace (your agent will explain what that is). Once you sign up for a plan, the government will decide if you're eligible.
What Subsidies Do I Qualify For?
To decide if you qualify for a subsidy, the government looks at your income and the number of people in your household. It's actually very simple:
The lower your household income, the more you'll receive in subsidies.
To receive a tax credit, your household income must fall between 100 and 400% of the federal poverty line (FPL). That's a yearly income of about $12,000 to $46,000 for one person, or about $24,000 to $95,000 for a family of four.
To receive a cost-sharing reduction, your household income must fall between 100 and 250% of the FPL. That's a yearly income of about $12,000 to $29,000 for one person, or about $24,000 to $59,000 for a family of four.
What If My income is Too Low To Qualify For A Subsidy?
Some states have expanded Medicaid to cover more residents. If that's the case for your state, you may be eligible for government-sponsored health insurance with Medicaid.
What If My Income Is Too High To Qualify?
If your income is too high, you can't qualify for tax credits or cost-sharing reductions. But you can still find affordable plans! Start your search with First Quote Health. This website will connect you to an agent who can help you compare the best plans in your area.
If My Household Size Or Income Changes, Will My Subsidy Be Affected?
You can't predict what life throws at you. Say you get married or divorced, have a baby, find a job, lose your job, or get a raise. These changes affect how much you make, or how many people are part of your household. If you have any changes to your income or family size, tell your insurance agent immediately. They'll report the change to the government, and the government will adjust your subsidy amount.
To make sure you get the maximum discount on your healthcare, report any changes to your income or family size right away!
How Do I Get Answers For Other Questions I Have?
Finding a healthcare plan that fits your medical needs is tricky. Figuring out how to pay for it can be even confusing. An expert agent will help you do both: compare your plan options, and find out if you're eligible for a subsidy. Plus, help from First Quote Health (and the agent) is 100% free.
Get started now, and you can find a plan today!