Health insurance can be expensive, and that’s one of the reasons why the government passed the Affordable Care Act (ACA) back in 2010. The purpose of the ACA is to provide all Americans, including those with lower incomes, with affordable, accessible, and quality health coverage. The government makes affordability possible with two types of discounts available to lower-income individuals and families: the Premium Tax Credit and Cost-Sharing Reductions.
Premium Tax Credit
The Premium Tax Credit is a type of subsidy, or "discount", that is applied to your monthly insurance rate, and paid for by the government as part of Obamacare and health care reform.
To qualify for the Premium Tax Credit, your income must be at or below 4x the Federal Poverty Line. Refer to the graphto see the household size and income ranges for Premium Tax Credit eligibility.
Within these ranges, the lower your income, the more you will save on your monthly health insurance rate. In other words, those with lower incomes receive a higher Premium Tax Credit. If your income falls below these levels, you may be eligible for Medicaid depending on the state you live in. Check with the Federal Health Insurance Marketplace or your state’s exchange to learn more.
If your income falls closer to the middle of these ranges, you may also be eligible to save on out-of-pocket costs. Keep reading to learn more about Cost-Sharing Reductions.
Cost-Sharing Reductions help lower the amount you pay out-of-pocket when using medical services or receiving health care. Common out-of-pocket costs include deductibles, coinsurance, and copayment fees.
Like the Premium Tax Credit, which lowers the costs of your monthly insurance rate, Cost-Sharing Reductions are an additional type of subsidy, or "discount,” paid for by the government. Those who qualify for both subsidies find that they can substantially save on their total cost of health care.
To qualify for Cost-Sharing Reductions, you must choose a Silver plan, and your income must be at or belox 2.5x the Federal Poverty Line. You may qualify if your income falls within the following ranges:
Within these ranges, the lower your income, the more you can save on your out-of-pocket costs. That is because those with lower incomes qualify for greater Cost-Sharing Reductions. If your income falls below these levels, you may be eligible for Medicaid depending on the state you live in. Check with the Federal Health Insurance Marketplace or your state’s exchange to learn more.
See if You Qualify for Savings in Your State
Use this tool to research how much saving you qualify for based on the amount of people in your household and your collective household income. This tool can also tell you your eligibility for Medicaid if it is currently aviable in your state.