(By Louis Toffoli)
In March of 2010, President Barack Obama signed the Affordable Care Act (ACA). In this bill, there are healthcare reform subsidies that help eligible individuals pay lower premiums and out-of-pocket costs.
These financial assistance measures helped Americans afford quality medical care. However, it’s crucial that you know who is eligible before helping employees with the application process for these subsidies.
If you have questions about the basics of healthcare reform subsidies, this article will answer 10 of the them.
What Are Healthcare Reform Subsidies?
In its basic definition, a federal subsidy is financial assistance provided by the government. For a healthcare reform subsidy, the government will assist in helping you pay for your health insurance costs.
The assistance provided will depend on various factors, such as your:
- Employer’s Offered Healthcare Plan
- The Health Insurance Plan’s Cost
What Are The Types of Healthcare Subsidies?
There are two types of subsidies available to eligible Americans. The first option is cost-sharing subsidies which reduce your out-of-pocket costs. The second option is premium tax credits, reducing the cost of monthly health insurance payments.
Both of these subsidies can be used by eligible individuals to reduce the costs of health insurance significantly. The cost-sharing subsidy will be more strict on requirements, determined by the individual level on the Federal Poverty Guidelines (FPL).
Do You Need to Pay Back Subsidies?
Unlike loans, you do not need to pay back healthcare subsidies or HRAs. The government or your employer provides these subsidies based on your income. However, if you file your income less than you make, you may need to pay back the subsidy.
On the contrary, if your household income is close to $0, you should apply for Medicaid as soon as possible. Medicaid is a valuable program that will remove the requirements of paying for health insurance.
How Do You Qualify For Healthcare Reform Subsidies?
Qualifying for a healthcare reimbursement is almost entirely up to your income level based on the Federal Poverty Level. To qualify for premium tax credits, there must be a household income ranging from 100% to 400% FPL.
If you have a two-person household, 100% FPL would be $17,420 per year in 2021. To qualify for cost-sharing subsidies, you must qualify for premium tax credits and have a household income of 100% to 250% of FPL.
What Are The Income Limits for Healthcare Subsidies?
As the top of the Federal Poverty Line, 400% of the FDL is where most benefits end for subsidies. Once you surpass this income level, you will be ineligible for premium tax credits and cost-sharing subsidies.
In 2021, 400% of the FDL is:
- 1-Person Household: $51,520
- 2-Person Household: $69,680
- 3-Person Household: $87,840
- 4-Person Household: $106,000
- 5-Person Household: $124,160
- 6-Person Household: $142,320
- 7-Person Household: $160,480
- 8-Person Household: $178,640
Do Healthcare Subsidies Affect My Taxes?
If you receive a healthcare subsidy part of the Affordable Care Act, you will not have to report it as income. However, if you receive premium tax credits, you will still need to report them on your taxes.
The exchange will keep track of how much assistance you receive in a tax year and send you a form 1095-A. When you receive cost-sharing subsidies, there is no additional reporting you need to do on your taxes.
Can Non-Citizens Qualify for Healthcare Subsidies?
In the United States, naturalized citizens and green card holders can apply for healthcare subsidies. However, non-citizens or undocumented immigrants can not qualify for healthcare subsidies unless they meet immigrant requirements.
Non-citizens can receive healthcare subsidies based on humanitarian grounds, such as immigrants seeking asylum in the United States. Undocumented immigrants over the age of 65 may also be eligible in some cases.
How Do You Calculate Healthcare Subsidies?
There are numerous calculators that you can use online that will deliver an accurate estimate for you. Some of the most common calculations are your income, number of people in your family, and spouse’s coverage if you are married.
One of the most accurate calculators can be found on KFF, which will provide an estimated amount of financial help you will receive. You will also receive insights into what a plan would cost without financial help.
How Long Do Healthcare Subsidies Last?
Each year, you will need to report your income and determine if you are still eligible for financial assistance. In 2021, President Biden has made the Affordable Care Act more generous until 2022 for people of higher incomes. As long as you remain eligible for subsidies, you can continue to use them every year.
Can Married Couples Receive Subsidies?
Due to subsidies being based on household income, you must file a joint tax return to receive financial assistance. Separate tax returns may cause rejection from inaccurate filing from you and your spouse. If a spouse has suitable group coverage from their employer, you may also be ineligible for subsidies.
… and as usual, if you need help with any of the information in this article, we can be reached at email@example.com.