Advertisement
insurance

How to Qualify for a Government Health Insurance Subsidy

Find out if you're eligible and what changes will take place.

Will I qualify for a government subsidy to buy health insurance under the new health care law, and when do the changes kick in?

Eligibility depends on your income, family size and the cost of coverage in your area. The biggest changes from the health care law take effect on January 1, 2014, when insurers will no longer be able to reject people for coverage or charge higher rates because of their health. The law also sets limits on how much insurers may charge older buyers (for example, premiums for a 64-year-old can be no more than three times as much as they are for a 21-year-old). The law requires individuals to have health insurance or pay a penalty, and it gives people the opportunity to buy coverage on new state health insurance exchanges. Many middle- to low-income people who buy coverage through the exchanges will also get government tax credits to help pay for their health insurance.

You can qualify for this subsidy if your income is less than 400% of the federal poverty level, which is about $46,000 for an individual and $94,000 for a family of four in 2013. The subsidy represents the difference between the amount you’re expected to contribute based on your income and the cost of the benchmark plan for someone your age in your state. If your adjusted gross income is $70,650 for a family of four, for example, you’re expected to pay 9.5% of your income for the benchmark plan’s premiums. If your family’s premiums for the benchmark plan are $12,500, you’d be expected to pay $6,711 of the premium and would get a tax credit worth about $5,790, according to Families USA. You could buy a plan that costs more or less than the benchmark plan, but your subsidy would remain the same. You can run your numbers through the Kaiser Family Foundation’s health insurance subsidy calculator. You will also be able to get details about your subsidy through your state’s health insurance exchange as the sites are launched in the next few months (see HealthCare.gov for more information, including links to state exchanges.)

Advertisement - Article continues below

You can only get the subsidy if you buy your coverage through the exchange, and you can’t get a subsidy if you have an offer of insurance from your employer that meets certain standards. Open enrollment for the exchanges begins on Oct. 1, 2013, for coverage beginning in 2014. The subsidy is sent directly to your insurance company and applied to your premiums when you buy the coverage through the exchange.

A recent study by Avalere Health estimates that 40% of individuals who currently have nongroup health insurance (and 46% of people who are currently uninsured) will qualify for the subsidies, and about two-thirds of young adults (age 30 or under) who are currently uninsured or have nongroup health insurance will be eligible for the subsidies. Many early retirees are likely to qualify, too, especially if their income drops after they stop working (subsidies are only available if you are under age 65). For more information about coverage choices for early retirees under the new health care law, see New Health Insurance Options for Early Retirees.

Advertisement
Advertisement

Most Popular

7 Surprisingly Valuable Assets for a Happy Retirement
happy retirement

7 Surprisingly Valuable Assets for a Happy Retirement

If you want a long and fulfilling retirement, you need more than money. Here are the most valuable retirement assets to have (besides money), and how …
August 3, 2020
Turning 60 in 2020? Expect Lower Social Security Benefits
Coronavirus and Your Money

Turning 60 in 2020? Expect Lower Social Security Benefits

When you file for Social Security, the amount you receive may be lower.
July 30, 2020
How a Second Stimulus Check Could Differ from Your First One
Tax Breaks

How a Second Stimulus Check Could Differ from Your First One

The HEROES Act, which was passed by the House in May, would authorize a second round of stimulus checks. While the new payments would be similar to th…
July 22, 2020

Recommended

Time for an Insurance Review
Coronavirus and Your Money

Time for an Insurance Review

You may need to update your policies in light of COVID-19.
July 30, 2020
Insurance Question: Say Rioters Destroy My Business, Am I Covered?
insurance

Insurance Question: Say Rioters Destroy My Business, Am I Covered?

If you ask your broker, the answer may be no. But don’t just accept that response. Know what your policy covers, and how to protect yourself.
July 29, 2020
HSAs Get Even Better
Financial Planning

HSAs Get Even Better

A health savings account is a powerful, tax-advantaged tool to cover out-of-pocket medical expenses and a smart way to save for medical expenses in re…
July 3, 2020
Applying for Disability Benefits During a Global Pandemic
insurance

Applying for Disability Benefits During a Global Pandemic

It can take months or even years to get approved for Social Security Disability Insurance (SSDI) benefits in the best of times. Needless to say, now i…
June 24, 2020