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How does the government calculate the ACA’s premium subsidies?

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  • December 17, 2012

Obamacare health insurance premium subsidyQ: How does the government calculate the ACA’s premium subsidies?

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A: Your subsidy is tied to your income. Under the Affordable Care Act, the percent of your income that you are expected to lay out for healthcare varies depending on how much you earn. For example, if an individual earns 250 percent of the federal poverty level (FPL) (currently $27,925 for a single person, $57,625 for a family) he would be expected to spend 8.6 percent of his income on a premium. His subsidy would make up the rest. By contrast, if he earned only 133 percent of the FPL ($14,856 for an individual, $30,657 for a family of four) he would be expected to lay out only 2 percent of his income for coverage; his subsidy would cover the remainder of his premium.

Read more FAQs about premium subsidies.