Q: How do I tell whether I’m eligible for expanded Medicaid or coverage through my state’s exchange?
A: When you enroll in the exchange, you’ll automatically be directed to the appropriate option, based on your income. If you’re eligible for Medicaid, you’ll be able to enroll in Medicaid through the exchange. And if you’re not eligible for Medicaid, you’ll be directed to the private plan options, where you may qualify for a premium subsidy based on your income.
About 11 million people – many of whom were uninsured prior to 2014 – have gained coverage under Medicaid thanks to the ACA’s expansion of the program. But in 2012, the Supreme Court ruled that states can opt of Medicaid expansion without penalty, and there are still 19 states that have not expanded Medicaid (technically 20, but Louisiana‘s Medicaid expansion will take effect in July 2016, leaving 19 states without expanded Medicaid at that point).
In Medicaid expansion states, Medicaid coverage is available for adults with household income up to 138 percent of the poverty level. For a family of three in the 48 contiguous states and DC, that’s $27,820 in annual income in 2016. Since the federal poverty level is adjusted for inflation each year, the upper income threshold for Medicaid eligibility also rises slightly each year.
In states that have not expanded Medicaid, there are unfortunately almost three million people who are in the coverage gap – they don’t have access to Medicaid OR to subsidies in the exchange, and thus have no realistic access to health insurance. If you’re in this situation, you’ll be eligible to purchase a private plan through the exchange, but without premium subsidies (which makes those plans unaffordable for many people in the coverage gap, since their incomes are below the poverty level).
Subsidies in the exchanges
In states that have expanded Medicaid, applicants with incomes above the 138 percent threshold have access to coverage within the health insurance exchanges and are eligible for a premium subsidy if their income is at or below 400 percent of the poverty level. The amount of the subsidy depends on the price of the second-lowest cost silver plan in each area, and also how the applicant’s household income compares with the poverty level.
For a family of four to be eligible for a premium subsidy in 2017, their income must not exceed $97,200.
In states that have not expanded Medicaid, the lower threshold for subsidy eligibility in the exchange is 100 percent of the poverty level (as opposed to 138 percent in states that have expanded Medicaid). The upper income limit for subsidies in the same 400 percent of the poverty level in every state.
These charts from Families USA provide at-a-glance details on how different family sizes and income levels stack up against the poverty level. Note that for Medicaid eligibility, the current year’s guidelines are used. But for premium subsidy eligibility, the previous year’s guidelines are used until open enrollment begins in the fall (so the 2016 poverty level guidelines won’t be used for subsidy eligibility determination until open enrollment begins on November 1, 2016).
Going uninsured instead? You might owe a penalty
Since 2014, there’s been a penalty system in place for people who choose to go without health insurance. The penalty is calculated on your tax return, and it’s gotten steadily larger from 2014 to 2016. As of 2016, it’s ramped up to the highest level, although it will increase with inflation in future years. There’s a long list of exemptions from the penalty, but if you don’t qualify for one of them are are uninsured for more than two months in the year, you’ll owe a penalty when you file your tax return the following spring.