A. Subsidy eligibility is determined when you apply for coverage. This subsidy is shown as a reduction in your monthly premium. The balance of the premium is what you pay to your insurer every month. Any differences as the result of an increase or decrease in income will be reconciled on your tax return the following year.
Many people in the US could, and will qualify for subsidies to make coverage more affordable. These subsidies, which are tax credits to help pay your premiums – will be available to people with incomes up to 400 percent of the federal poverty level. That’s about $46,000 for one person or $94,000 for a family of four. And there are cost-sharing subsidies to reduce deductibles and copayments, depending on your income.
Your income, not your assets such as your house, stocks or retirement accounts will count toward determining whether you can get tax credits. When you buy your plan, you estimate your income for next year, and your tax credit is based on that estimate. The next year, your tax returns will be checked by the IRS and compared against your estimate.
If you live in one of the 25 states and the District of Columbia that expanded Medicaid, the government is offering to fully cover insurance costs for anyone making less than about $16,000 for an individual and $32,500 for a family of four. If you make too much money for Medicaid, you still qualify for a subsidy through the insurance marketplaces. Those are available, for example, to people making $11,490-$45,960 per year.
The new health care law will provide around $1 trillion in subsidies to low- and middle-income Americans over the next decade to help them pay for health insurance.
Johanna Humbert of Galien, Mich., was pleasantly surprised to discover that she qualifies for an insurance subsidy, since her current plan is being canceled. Humbert makes about $30,000 a year, so she’ll get a subsidy of about $300 a month. The new plan is similar to her current one, but it will cost $250 — about half of what she pays now.
Obamacare health insurance subsidies