The Ultimate Guide to Health Insurance Subsidies
Health insurance subsidies: they’re controversial and confusing, but they could be your ticket to more affordable coverage. In this simple guide, we break subsidies down into simple terms so you can make smarter health care choices. Read on to find out what health insurance subsidies are, how they work, and if you qualify for them.
What Are Health Insurance Subsidies?
A subsidy is money the government will pay towards part or all of your health coverage, depending on your income. There are two types of health insurance subsidies you may qualify for:
The premium tax credit subsidy covers a portion of your monthly health insurance payment (a.k.a. your premium). Based on your eligibility, you could pay as little as $1 a month for a health plan!
The cost-sharing subsidy makes using your health plan more affordable. It lowers the expenses you have to cover when receiving care, including your deductible, copay / coinsurance, and sometimes your out-of-pocket maximum.
INSIDE TIP: it is possible to qualify for both types of subsidies! In fact, if you qualify for a cost-sharing subsidy, you’re automatically eligible for a premium subsidy, as well.
Subsidies are distributed based on the federal poverty level (FPL), which compares your income and family size to other American households. People who make between 100 and 400 percent of the FPL are eligible for a premium subsidy. In 2016, that was almost half of the U.S. population! Cost-sharing subsidies are available to people under 250 percent of the FPL. Not sure where on the scale you are? Read on to find out how to determine your subsidy eligibility.
Note: If your income is below 100 percent, you’re eligible for Medicaid, a federal health care program for low-income families.
Where Do I Get Health Insurance Subsidies?
You have to enroll through HealthCare.gov or your state exchange to receive a subsidy. This is where you submit the information Uncle Sam needs to determine how much assistance you need. If you submit your application directly to an insurance company, you will have to pay full-price for your plan. You can use Stride to get a subsidy estimate and a tailored plan recommendation. Once you find a plan you like, we’ll get you enrolled through an on-exchange application.
How Do I know If I Qualify?
To receive help covering your health insurance, you have to meet a few requirements:
Income: Your estimated annual income largely determines the subsidy type(s) and amount you’ll receive. It’s very important to calculate this number correctly for maximum savings, so be sure to follow our nifty income estimator guide.
Family size: The government takes into account how many people your household income has to support; this includes your spouse and any children you claim as dependents on your taxes. In 2017, a single person would have to make less than $48,240 to receive a subsidy, but a family of four could make up to $98,400.
Filing status: If you are married, you’ll have to file your taxes jointly to qualify for a subsidized health plan. Couples who file separately are not eligible. This is because the government allocates subsidies on a household level and reconciles those amounts at tax time. When you file separately, it’s too difficult to ensure you got an accurate subsidy amount.
Citizenship status: You do not have to be a U.S. citizen to qualify for subsidized health care. Immigrants with green cards, employees or students with visas, and refugees can all apply. Get the full list of eligible immigration statuses here.
Location: How much you pay for health insurance depends on where you live. Since the cost of living, local legislation, and number of insurance providers vary from state to state, so will your subsidy.
What Happens at Tax Time?
Unless you have a supernatural ability to predict the future, there’s a good chance you won’t perfectly estimate your annual income on your application. Don’t worry—everything gets sorted out at tax time. If you make more money during the year than you expected (woohoo!), you’ll repay a portion of your subsidy. If you make less, you’ll receive a refund.
Get Started with a Subsidy Estimate
Health insurance can be a hefty financial investment. In 2017, the average family paid around $12,000 on full-price premiums alone! However, without health insurance, surprise medical bills can cost tens of thousands of dollars, leaving you with a difficult choice: invest heavily in a health plan, or run the risk of exorbitant health costs?
Fortunately, there’s a good chance you will qualify for a health insurance subsidy, especially if you’re self-employed; most Stride members qualify for $3,000 a year in health insurance savings! A health insurance subsidy gives you the security of quality coverage without requiring an arm and a leg. Want to see if you’re eligible? Get started here, and be sure to reach out to our award-winning support team with any questions that come up.