If you buy health insurance through your state's health insurance Marketplace, you may be able to get some financial help. The health care reform law helps lower the cost of health insurance for families with low to moderate incomes who make too much money to qualify for Medicaid.
There are two main types of financial help: premium tax credits and cost-sharing subsidies.
The amount of tax credit you qualify for depends on your income and the size of your family. In addition, households with lower incomes may qualify for subsidies to help lower the cost of doctor visits, hospital stays, and other types of medical care.
What is a Tax Credit?
Tax credits help lower your insurance premium, or the payments you make each month for a health plan you buy through your state’s Marketplace. You can receive the tax credit in advance by having all or part of the money sent directly to your insurance company. That will lower your monthly bill. You can also pay the full cost of your insurance premium during the year and take your credit instead at tax time.
How Do I Know If I Can Get a Tax Credit?
When you enroll in a plan through your state's Marketplace, you'll enter your income and the size of your family to learn if you can get a tax credit and how much it will be.
How Much Money Can I Make and Get a Tax Credit?
You may be eligible for a tax credit if the amount of money you expect to make in 2018 is in the following income ranges:
- $12,490 to $49,960 for one adult
- $16,910 to $67,640 for a family of 2
- $21,330 to $85,320 for a family of 3
- $24,750 to $103,000 for a family of 4
The less money you make, the more financial aid you can get. These amounts change each year. The income amounts for people who live in Alaska and Hawaii are slightly different.
Can I Get a Tax Credit If I Get Insurance From an Employer?
No. The Marketplace is the only place where this kind of financial aid is available. And, if your employer offers insurance that is considered affordable under the law, you won’t be eligible for a tax credit, no matter your income.
In some cases, however, an employer's plan may not be affordable. If either of the statements below is true for you, you may enroll in a health plan in a state Marketplace.
- None of the health plans available from your employer covers at least 60% of your average health care costs.
- The cost of enrolling in a plan from your employer would cost more than 9.86% of your annual income in 2019.
If one of these statements is true, you may be eligible for a tax credit if your household income falls within the eligibility ranges listed above.
How Do I Get the Money From a Tax Credit?
When you sign up for health insurance in a Marketplace, you'll have a few choices for how you'd like to use the money from a tax credit.
- You can use it in advance. In this case, the government sends a monthly payment to your insurance company to pay part of your premium. You pay the rest of the premium directly to your insurer.
- You can split the money between premiums and a tax refund. You can apply a portion of the credit you’re eligible for toward your premium each month. You get the rest of the credit as a tax refund.
- You can pay all of the premium yourself and apply the tax credit to your taxes. When you file your taxes, you can subtract the full amount of your tax credit from the tax you owe. If you don't owe any taxes, then you'll get a bigger refund.
What Should I Do If My Job or My Income Changes?
If you get a new job that makes you ineligible for the credit or reduces how much you’re entitled to, tell your state's Marketplace. Every Marketplace will have an 800 number, so call and talk with a representative. If you don't, you may have to pay back advance payments made to your insurer from the time you became ineligible.
If your income goes down, call a representative at your state's Marketplace, because you may be able to get a larger tax credit or qualify for Medicaid (if your state expanded the program).
If My Income Qualifies Me for Medicaid, but My State's Not Expanding Medicaid, Can I Get a Tax Credit or Cost-Sharing Subsidy?
It depends on your income level. In general, you may be able to get financial aid to purchase a Markeplace plan if your income for 2019:
- $12,490 to $49,960 for one adult
- $25,750 to $103,000 for a family of four
The amounts for people who live in Alaska and Hawaii will vary.
Unfortunately, people with even lower incomes may find themselves without financial help for health insurance.
What Is a Cost-Sharing Subsidy?
A cost-sharing subsidy lowers your out-of-pocket costs -- the amount you spend whenever you get health care. You can only get this type of subsidy if you purchase a silver-level plan.
Who Qualifies for a Cost-Sharing Subsidy?
You may be eligible for a cost-sharing subsidy if the amount of money you expect to make during the year is near the following income ranges:
- $31,225 for one adult
- $42,275 for a family of 2
- $53,325 for a family of 3
- $64,375 for a family of 4
Note that these are the government’s income guidelines for 2019, so they may be higher next year. If you live in Alaska or Hawaii, the amount you can make and still qualify will be different.
How Do I Get the Money From a Cost-Sharing Subsidy?
You won't get the money from your cost-sharing subsidy directly. Instead, y“your insurance company will charge you a smaller amount of cost-sharing, depending on your income. That lets you pay less when you go for medical services, such as seeing a doctor or filling a prescription. You may have heard rumors that the cost-sharing subsidy was eliminated. Although the federal government is no longer reimbursing insurers for providing cost-sharing reductions, insurers are still required to provide them to those who qualify.