Government subsidized health insurance is coverage that is made available to individuals and households with incomes that fall below the federal poverty level. There are a number of different forms of subsidized insurance, but the two that are perhaps the best known are Medicaid and the Children’s Health Insurance Program (CHIP).
In addition to these, there are plans available in the Health Insurance Marketplace that come with premium tax credits which help to reduce the monthly cost of paying for a private plan. This is also a form of subsidized coverage.
Medicaid and CHIP are the most widely used programs in the United States offering free or reduced cost coverage to individuals and families making low incomes. They also assist the elderly, people with disabilities, and pregnant women with their healthcare needs. Medicaid has recently been expanded in a number of states throughout the country so that more people below specific income levels can now qualify to receive benefits.
Individuals and families applying for health insurance through Medicaid must meet a set of basic criteria that might vary slightly depending on the state in which you live. The requirements are largely similar, but the specific rules might differ.
In order to ascertain whether or not you qualify for Medicaid coverage, factors such as your annual income, family status, the size of your household and disability status are all considered. Your state may also have additional qualifications requirements to determine eligibility.
If you live in a state where the Medicaid program has been expanded, the standard for eligibility is made somewhat simpler in that qualification is based only upon your income level. That income must fall below 138% of the federal poverty line in order make you eligible for the Medicaid program.
If you live in a state that has not expanded their Medicaid program, then eligibility requirements can vary wildly. Some states, like Texas, exclude any adults without dependent children unless they are disabled, while others have simply set higher income requirements.
Children’s Health Insurance Program (CHIP)
The Children’s Health Insurance Program has been established to provide coverage to families with children up to the age of 19 years and pregnant women who have incomes that are too high to meet the Medicaid eligibility requirements yet don’t make enough to afford to purchase insurance from a private insurer. Much like Medicaid, the rules for eligibility may vary greatly across the country as the states have the power to set their own income eligibility standards.
In order to qualify, your income must be up to or above 200% of the federal poverty level. This is the standard in 46 states and the District of Columbia. Among these, 24 provide coverage to children of families who meet an annual household income of 250% of the federal poverty level or above. The Medicaid matching rate is applicable in those states that expanded their coverage to above 300% of the poverty line. In this case, each state has the discretion to continue eligibility for children that still qualify for CHIP.
New Changes to Medicaid and CHIP
There have been some expansions made to both Medicaid and the Children’s Health Insurance Program under the Affordable Care Act. These new options include restoring Medicaid and Children’s Health Insurance Program coverage to children and expectant mothers who are living in the United States legally.
The provisions have also been extended to make pregnant women eligible for coverage through CHIP for prenatal services. Children of public employees may now also qualify for CHIP regardless of family income, whereas prior to the enactment of the Affordable Care Act this was not the case.
Government Subsidy Programs
Medicaid and the Children’s Health Insurance Program are just two examples of government subsidized insurance. There are other plans for those who may not qualify for Medicaid or CHIP due to their income being too high, however. These programs can also help reduce the costs of your monthly premiums while providing you with comprehensive insurance that meets the standards of minimum essential coverage under the Affordable Care Act.
For those individuals and families that do not qualify for Medicaid or CHIP, they must purchase private insurance or else face penalties that will be assessed come tax time. This is why there are subsidy programs in place to help these Americans get the coverage they need and avoid the fee. These forms of financial assistance are not a loan and the money that you receive is not expected to be repaid.
There are two types of subsidy programs being offered at this time. The first is the Advanced Premium Tax Credit which is designed to reduce the monthly premiums you need to pay in order to maintain proper coverage.
The second option is the Cost Sharing Reduction Program which was established to lower all out of pockets costs that you are responsible for during a one-year period of your policy. These costs include deductibles, co-payments, and other expenses that you pay for healthcare services.
Much like with Medicaid and the Children’s Health Insurance Program, eligibility is determined by your income in relation to the federal poverty level and the size of your family. There is also an additional factor that considers the price of health insurance in the region of the country where you currently reside.
Subsidies are granted to those who make up to four times the federal poverty level, which equals out to approximately $46,500 for individuals and $95,000 for a family of four. There are additional income standards that could help you qualify if you make much less then that each year. For individuals making $29,000 or under and families of four with an income of $59,000 or under, subsidy programs may also be available to help you pay for health insurance.
Receiving a subsidy is the considered same thing as earning income by the IRS and must be reported on your taxes. Anyone participating in a subsidy program will receive a 1095 form that provides all of the information necessary for reporting that money at tax time.