A subsidy is a type of financial aid to help you pay for insurance sold through your state's health insurance Marketplace. Under the Affordable Care Act, there are two types of subsidies:

  • Advanced premium tax credits lower your premium, which is the amount you have to pay each month for health insurance. As the name suggests, you may get this tax credit right away to help lower the cost of coverage each month. You don't have to wait until you file taxes to get it. The level of the subsidy you are eligible for is tied to your income level and the size of your family.
  • Cost-sharing reductions lower how much you pay when you get health care, such as going to the doctor or filling a prescription. This subsidy may lower deductibles, copayments, coinsurance, and total out-of-pocket spending limits for people with incomes that meet specific federal poverty level guidelines.


WebMD Definition Reviewed by Sarah Goodell on October 18, 2016



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