Individual Subsidies • September, 2014

Federal help with insurance premiums – Starting in 2014, people who purchased individual medical coverage through their state’s Exchange may have been eligible for help paying the premiums. Unlike other tax incentives, you receive the subsidies monthly – no waiting until you file your taxes.

Who qualifies? If your family household income is between 138% and 400% of the Federal Poverty level, you’ll be eligible for this government subsidy. But of course, there are always restrictions, so read on to be sure you know the rules.

Federal Poverty Level (FPL)
The first hurdle in qualifying for a subsidy is having household income between 138% and 400% of the FPL.

This will be based on your household income. Below is a chart showing the FPL ranges that would qualify for a subsidy, based on 2014 figures. These will increase slightly for 2015.

fpl

If your household income is below 138% of the FPL, you would qualify for Medicaid, rather than a Federal subsidy, in most states. Both Washington and Oregon will use this level for Medicaid qualification.

Individual Coverage
The second hurdle – you’ll need to purchase individual coverage through your state’s Health Insurance Exchange.

You are not allowed to receive a subsidy if you purchase coverage directly through an insurance company. You must purchase the plan through your State’s Exchange.

Does Your Employer Offer Coverage?
The third hurdle is a tricky one – you must not have access to an employer-sponsored medical plan that provides “minimum coverage” and is “affordable”. If you don’t have an employer-sponsored plan available to you, then you pass this hurdle. If you do have coverage available through your employer, you’ll have to determine if your employer–provided plan provides “minimum coverage” and is “affordable”. These are defined below:

  • “Minimum” coverage means the plan would have to
    pay for at least 60% of all care you receive (also called
    a Bronze level plan). Most plans meet this minimum.
  • “Affordable” coverage means the plan costs you less
    than 9.5% of your household income for just your
    single employee premium.

Two Common Questions
Q1: If I do not qualify for the subsidy, can my spouse and children still qualify?
A1: Unfortunately, no. This is an IRS rule. Even if your employer plan is not affordable for your family members, they will still not be eligible for a Federal subsidy.

Q2: What if I get a subsidy and it turns out when I do my taxes that I should not have received it?
A2: The subsidy is treated like an advance. When you file your tax return, you will have to calculate whether or not you were eligible for the subsidy. If you received too much, you will have to pay it back when you file your return. If you received too little, you will receive an additional credit when you file your return.

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