The Affordable Care Act (ACA) provides subsidies to help low and moderate-income people pay for health insurance.
These subsidies are available to people who meet certain income and family size criteria. In 2022, the ACA subsidy amounts will be based on the second-lowest-cost silver plan available in each state. The subsidy will cover a certain percentage of the premium for this plan, depending on the person’s ncome.
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This article goes over how to save money when using an Obamacare health plan by getting a subsidy, as well as how to get discounts. Obamacare is designed to be affordable and this article provides information on how you can save on your Obamacare premium.
What is an ACA Subsidy?
The Affordable Care Act (ACA) provides subsidies to help low- and middle-income people pay for health insurance. To qualify for a subsidy, you must meet certain income and family size requirements.
In 2022, the ACA subsidy will be available to people who earn between 138% and 400% of the federal poverty level. For a family of four, that means an annual income of between $17,609 and $51,040.
The amount of the subsidy is based on your income and the cost of health insurance in your area. The subsidy can be used to reduce the monthly cost of a health insurance plan purchased through the ACA marketplace.
If you qualify for a subsidy, you will need to enroll in a health insurance plan through the ACA marketplace. You can compare plans and prices before you enroll.
Enrolling in a health insurance plan through the ACA marketplace is the only way to get a subsidy. If you enroll in a plan outside of the marketplace, you will not receive a subsidy. If you have questions about whether you qualify for an ACA subsidy, contact your state’s marketplace or an enrollment assistant.
What is the Income Limit for Obamacare Subsidies in 2022?
The income limit for Obamacare subsidies is 400% of the federal poverty level (FPL). For a family of four, that means an annual income of $104,800. If your income is below this threshold, you’ll be eligible for subsidies.
The subsidies are available to help you pay for your health insurance premiums. They’re based on your income, so the lower your income, the higher the subsidy will be. The subsidies are available to people who purchase their own health insurance through the Obamacare marketplace.
If you have a job that offers health insurance, you’re not eligible for subsidies. However, if your job doesn’t provide health insurance or if the coverage is too expensive, you may be eligible for subsidies.
If you’re not sure whether you qualify for subsidies, you can use the Obamacare subsidy calculator to find out.
How ACA Subsidies (Obamacare) Work
The Affordable Care Act (ACA) provides subsidies to help low- and moderate-income individuals and families pay for health insurance. ACA subsidies are available to people who enroll in health insurance through the ACA Marketplace.
There are two types of ACA subsidies: premium tax credits and cost-sharing reductions. Premium tax credits help eligible individuals and families pay for their monthly health insurance premiums. Cost-sharing reductions help eligible individuals and families pay for out-of-pocket costs, such as deductibles, coinsurance, and copayments.
To be eligible for ACA subsidies, you must meet certain income requirements. For 2021, the income limits are $51,040 for an individual and $104,800 for a family of four. If you qualify for a subsidy, you will receive it in the form of a tax credit that you can use to lower your monthly health insurance premiums.
How to Apply for ACA Subsidies
There are two ways to apply for Obamacare subsidies: through the Health Insurance Marketplace or through your state’s Medicaid office.
If you want to apply for subsidies through the Health Insurance Marketplace, you can do so online, by phone, or in person. You’ll need to provide some information about your household income and size. Based on this information, you’ll be able to see if you qualify for any subsidies.
If you want to apply for subsidies through your state’s Medicaid office, you can do so by visiting their website or by calling their office. You’ll need to provide some information about your household income and size. Based on this information, the Medicaid office will be able to tell you if you qualify for any subsidies.
Overall, there are two ways to apply for Obamacare subsidies: through the Health Insurance Marketplace or through your state’s Medicaid office.
How Much Will My Obamacare Subsidy Be?
The American Rescue Plan, also known as the ARP, advanced by the President, offers temporary enhancements to the ACA. Additionally, the Build Back Better Act which included language to extend the ARP enhancements was passed by the house in November 2021but has not been put up for a vote in the Senate.
The ARP makes health insurance and healthcare more accessible and cheaper because of the multiple provisions contained in the bill. For 2021 and 2022, the size of premium tax credits will be increased, and the upper-income limit for subsidy eligibility will be eliminated.
Although the premium subsidies typically adjust every year to keep pace with rising premiums, the subsidies for 2021 and 2022 are higher than they have been for prior years. Moreover, the subsidy threshold is not in effect during this two-year period. This means that anyone who is purchasing coverage through the ACA Marketplace will not have to contribute more than 8.5% toward the cost of the benchmark health plan.
And, applicants with lower incomes will likely pay a much small percentage of their household income for the benchmark plan.
According to CMS.gov, The American Rescue Plan lowered health care costs for most Marketplace consumers and increased enrollment to these records levels: HealthCare.gov consumers saw their average monthly premium fall by 23%, compared to the 2021 enrollment period that ended before the American Rescue Plan passed. The enrollment numbers are a testament to the Biden-Harris Administration’s commitment to lowering costs for working families and reaching people where they are through concerted outreach.
|
Household Income |
Expected Contribution |
| Up to 150% of the federal poverty level | 0% |
| 150% to 200% of the federal poverty level | 0% to 2% of your income |
| 200% to 250% of the federal poverty level |
2% to 4% of your income |
| 250% to 300% of the federal poverty level | 4% to 6% of your income |
| 300% to 400% of the federal poverty level | 6% to 8.5% of your income |
Now that you’ve determined what your contribution requirement will be, find out the cost of the benchmark health plan where you live. To find out what your benchmark will cost, check with the federal marketplace or the health insurance exchange in your state and determine the second lowest cost Silver health plan where you live.
Next, subtract your contribution amount from the cost of the benchmark plan to get the amount of your ACA subsidy.
The good news is, that you can use your subsidy amount (benchmark plan cost minus contribution) towards a less expensive health plan or a more expensive health plan. Your subsidy will apply to whatever plan you select.
For example, if an applicant with a family of four has a Modified Adjusted Gross Income of less than $200,000, the applicant will still qualify for a subsidy in 2022 due to the income limit increase in 2022.
What About Cost Sharing Reductions?
Cost-sharing reductions help you reduce your out-of-pocket costs for deductibles, coinsurance, and copayments that will be a part of your ACA health plan.
Although subsidies can be applied toward any ACA health plan, the cost-sharing reduction can only be applied to a Silver ACA plan. If your household income is within 100% and 250% of the federal poverty level, you’ll likely qualify for cost-sharing reductions.
The less household income you make, the more subsidies or cost reductions you’ll qualify for.
Frequently Asked Questions
What is the minimum income to qualify for ACA subsidies?
An eligible single person can earn from $12,880 to $51,520 and qualify for the tax credit. Simply put, the more your household earns, the lower subsidy you’ll qualify for.
Is my ACA subsidy taxable?
No, it is not taxable. The subsidies (both premium assistance tax credits and cost-sharing) are not considered income and are not taxed.
Will insurance premiums go up in 2023?
Regretfully your insurance rates will likely continue increasing in 2023 due to inflation and increased insurance claims.
What are the income limits for Obamacare subsidies in 2022?
To get assistance under the Affordable Care Act you must earn between 100% – 400% of the poverty level. For 2023, that is $13,590-$54,360
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