One of the main reasons for the passage of the Affordable Care Act (ACA) was to make having health insurance mandatory for all Americans, with just a few exemptions allowed. Whether you receive health insurance from your employer or through a government-run program such as Medicaid or Medicare, you meet the requirement to be covered by health insurance.
What about if you have to buy your own health insurance and you need help financially to afford it? You still have to purchase a policy or else pay a penalty. The answer to the question is best answered by asking another question.
Do I qualify for subsidized health insurance?
What is a Subsidy?
A subsidy represents financial assistance to help you pay for a product or service. Because it is not considered a loan, you do not have to pay back the money that subsidizes a purchase.
The United States government offers two types of subsidies to help Americans purchase individual health insurance policies.
- Advanced Premium Tax Credit
- Cost Sharing Reduction
The Advanced Premium Tax Credit reduces the monthly premium that you pay to have a health insurance policy. Cost Sharing Reduction decreases the out-of-pocket costs that you pay during the term of a policy, which typically runs for one year.
Who Qualifies for an ACA Subsidy?
Eligibility for health insurance subsidies depends on income. However, because of the negative economic impact produced by the COVID-19 pandemic, you might qualify for a health insurance subsidy is you received unemployment benefits in 2021.
Income-based eligibility for a health insurance subsidy requires a household to earn an income that is no more than 100 percent of the federal poverty level. For states that have expanded Medicaid coverage, the income qualification for a health insurance subsidy is 136 percent of the federal poverty level.
How Do I Get Access to Affordable Employer-Based Health Insurance?
If your employer offers affordable health insurance that meets the minimum standards for value, you do not qualify for a subsidy to defray some of the costs of paying for employer-sponsored health insurance. The affordability test applies only to an employee, not the costs incurred by adding dependents to a policy.
The bottom line is if your employer meets the minimum standards for affordability that provide appropriate value, you are already receiving a subsidy in the form of your employer paying some of the cost of your monthly premiums.
How Do I Get Access to Medicaid or the Children’s Health Insurance Program?
Getting access to affordable Medicaid coverage or coverage provided by the Children’s Health Insurance Program (CHIP) requires going through the standard application process. Because both government-managed programs offer more financial assistance than the subsidies granted for health insurance premiums, there is not a discount provided to participate in either program.
CHIP allows households with higher incomes to receive financial assistance to pay for the health insurance needed by children. Medicaid requires much lower income standards, which might disqualify a household that would otherwise qualify for the financial assistance provided by CHIP.
Am I Eligible for a Subsidy If I Have a Medicaid Coverage Gap?
The short answer is no, although the United States Congress is trying to change federal law to eliminate the Medicaid coverage gap.
When the ACA became law, the pundits in Washington D.C. expected everyone not eligible for health insurance subsidies to qualify for Medicaid. However, that has not been the case, and many families continue to struggle because of the strict standards implemented by some states when it comes to eligibility. If you received unemployment benefits for at least one week during 2021, you might qualify for a health insurance subsidy.
Does the American Rescue Plan Offer Health Insurance Subsidies?
In response to the economic carnage triggered by the pandemic, the United States Congress, with the avid support of the Biden administration, enacted the American Rescue Plan. The monumental legislation increases the number of available premium tax credits (PTCs) for millions of lower and middle-income Americans. Households that have incomes above 400 percent of the federal poverty level might qualify for PTCs.
The second way the American Rescue Plan boosts subsidy support for health insurance is Americans who qualify for PTC assistance will receive higher amounts of money to pay for health insurance policies. Finally, the American Rescue Plan allows individuals that receive or are approved to receive unemployment benefits at any time during 2021 to qualify for the maximum amount of health insurance subsidies as written into the ACA.
If the American economy continues to grow, the health insurance subsidies granted by the American Rescue Plan might eventually disappear. This means you should act with a sense of urgency to receive the financial help that you deserve to purchase a health insurance policy.
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