One of the ways the Affordable Care Act (ACA), or Obamacare, was able to provide low-cost health insurance for those in need was through the use of government subsidies, or financial assistance. The idea was to help low-income Americans reduce their out-of-pocket expenses so that everyone could enjoy health insurance coverage, including the estimated 30 million Americans that were uninsured at the time Obamacare was enacted. Naturally, there has been a learning curve associated with this massive healthcare reform. If you’re not sure what subsidies exist under Obamacare or which ones may apply to you, here is a breakdown of what is available.
There are several different types of subsidies that you may be eligible to take advantage of when you enroll in a health insurance plan through Obamacare. For individuals or families that fit into certain low-income brackets, Obamacare has provided federal funding to expand Medicaid, including the CHIP program. Some states have opted out of this expansion, however, while others have elected to increase their contributions in order to provide further coverage and services for residents. Medicaid is available to select groups, including children, seniors, and pregnant women, that also meets financial eligibility requirements. For low-income individuals and families, the subsidies offered through Medicaid and CHIP could provide essential and affordable preventive care, along with other healthcare services.
Also available are premium tax credits designed to lower the out-of-pocket cost of health insurance premiums. Eligibility for such credits is based on your household income and you must fall between 100% and 400% of the federal poverty level to qualify. If you are eligible to take advantage of premium tax credits, you can either choose to have these subsidies sent to your insurance provider up front as a way to lower your monthly premiums throughout the year, or they can be retroactively applied through an adjustment to your income tax return.
Finally, you should look into cost sharing reduction subsidies. Like premium tax credits, these subsidies are meant to lower out-of-pocket expenses, although they do not apply to premiums and only apply to silver plans for people who fall into the bracket of 100% to 250% of the federal poverty level are eligible. Cost sharing reduction lowers your personal expenses by helping you to cover costs like co-pays, deductibles, and coinsurance payments. In addition, you could see your maximum for out-of-pocket expenses reduced, so that benefits kick in sooner within a given period.
Of course, only those who purchase health insurance through Obamacare can qualify for these subsidies. If you receive insurance benefits through your employer or you elect to purchase your policy privately rather than going through your state health insurance exchange, you will not be able to take advantage of these government subsidies. Since they are based on income, it is likely that anyone looking to take advantage will not be able to afford private insurance anyway, and will not have access to employer-sponsored health benefits (which are usually the cheapest option).
If you’re still unsure about whether you qualify, you can find online calculators to help you determine your eligibility. You might also want to speak to marketplace representatives to find out which subsidies will be most advantageous if it turns out you qualify for more than one.
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