Posted 10/31/2013 By

Obamacare 101: How Do The Health Insurance Subsidies Work?

Many individuals and families looking for health insurance in 2014 will qualify for financial assistance with their premiums under the Affordable Care Act. Let's have a look at how these subsidies work, and who will qualify.

This page:

Explains how the health insurance subsidies work.

Presents a simple infographic that shows who qualifies for subsidies.

Links to to a calculator that approximates your monthly premium and possible subsidy.

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The Health Insurance Premium Subsidies Are Based On Income And Family Size

All of the benefits of the Affordable Care Act apply to everyone covered under individual and small business group plans, however, not everyone will qualify for financial assistance.

This is important to note: everyone will benefit from Obamacare, it's just not everyone will qualify for a subsidy.

During the current open enrollment period (which ends March 31st 2014 as of this writing), individuals and families (that's you) can apply for health insurance through the federal or state exchanges, and receive a subsidy, provided that they (and you) meet certain income guidelines.

For individual applicants, if your income is up to 400% of the federal poverty line (currently that tops out at around $46,000/year), you are eligible for some amount of financial assistance with your monthly premiums.

Click here for a look at various income limits according to family size.

For all applicants, regardless of family size, the subsidy is calculated based on the cost of the second-lowest tiered plan, called the Silver Plan.

Because the prices vary from state to state, it is impossible for us to tell you exactly how much subsidy you can expect, or what your premium will be. However, the following charts show you the maximum percentage of your income that will go towards your premium, based on your income in 2013. This percentage is the same for everyone in all states.

The following chart shows the subsidy level and maximum monthly premium for a 40-year-old individual:

2013 Individual Subsidy Levels

This chart shows the same figures, but for an average family of four:

2013 Individual Subsidy Levels

*In many states, if your household income is below 133% of the Federal Poverty Line, you may actually qualify for Medicaid, which would lower your premium to $0.

And here's a nice lady explaining the whole thing like you're a fourth-grade student and she's the teacher. She does a good job:

Currently, it is very difficult to obtain accurate premium and subsidy information online, due to the problems with the federal exchange. However, you can use Ehealth's simple calculator to estimate how much assistance you can expect based on your income level, and what your monthly premium might be in 2014. Give it a try.


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