Who ISN’T eligible for Obamacare’s premium subsidies?

Q. Obamacare advocates frequently talk about how most exchange enrollees qualify for government subsidies. But who is left out? Aren’t there some people who really want and need the tax credits who aren’t eligible?

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A. You aren’t eligible for government subsidies to help cover health insurance premiums if:

  • Your employer offers comprehensive, “affordable” coverage – which means that it pays for 60 percent of a standard population’s average healthcare costs (including coverage for inpatient and physician services), and your portion of the premiums is no more than 9.86 percent of your household income in 2019.
  • You have access to coverage under a family member’s employer-sponsored health plan, and the cost for just the employee’s coverage isn’t more than 9.86 percent of your household income. This is true regardless of how much it costs to add a spouse or dependents to the plan. This dilemma is known as the family glitch.
  • You are eligible for Medicare, Medicaid or another government program.
  • You earn less than 100 percent of the federal poverty level (FPL). This was not supposed to be a problem, as the Affordable Care Act called for everyone with income below the poverty level to be covered by Medicaid. But the Supreme Court ruled that Medicaid expansion would be optional for the states, and there are still 16 states where there’s a coverage gap as a result (there are 17 states that haven’t expanded Medicaid, but Wisconsin does cover people up to the poverty level under Medicaid; three of those 17 states – Idaho, Nebraska, and Utah – are working on Medicaid expansion proposals that could take effect in 2020 but with various restrictions). If you’re an immigrant who has been in the US for less than five years and are thus not eligible for Medicaid, the ACA does allow you to receive subsidies in the exchange even with an income below the poverty level.
  • You earn more than 400 percent of the federal poverty level. For coverage in 2019 coverage (based on 2018 poverty level numbers), the upper income limit is: $48,560 for an individual, $83,120, for a family of three, $117,680 for a family of five.
  • Your premium for the second-lowest-cost plan in your area is already considered affordable (based on a percentage of your income) without a subsidy. This can happen even if your income is less than 400 percent of the poverty level, particularly for younger enrollees in areas where health insurance is less expensive.
  • You’re not legally present in the U.S., or you’re incarcerated.

Understandably, people who earn a little more than 400 percent of the FPL are often very disappointed when they don’t qualify for a premium subsidy. And for some of them – particularly older applicants in areas where coverage is very expensive – coverage remains unaffordable. If your income is just a little over the subsidy-eligibility threshold, you can talk with a tax advisor about strategies for lowering your modified adjusted gross income to make it subsidy-eligible.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

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Lakshman Nandwani

I am retired and live with wife. I make less than 50k after taxes and more than 50 K before taxes.i have Medicare A&B
Will I qualify Obama or trump care act.

Can you clarify what things you’re wondering about qualifying for? TrumpCare is just a term that people use to refer to various health care reform proposals that Trump has put forth, as well as things like the administration’s expansion of short-term health plans. ObamaCare refers to the Affordable Care Act (which Obama signed into law in 2010), but it didn’t make very many changes to Medicare.

Peter S Savas

I don’t think so because you have medical, you should only be paying the govt mandated charge that comes out of your as benefits, usually a couple hundred dollars, which everyone must pay, and the you opt for a supplement like United health care that should cost you appx 150.00 per month, maybe less so for health care benefits after 65, your cost should be total of 300.00 and you may have to pay a deductible on doctors visits and prescriptions, I have Humana and they are great

The costs for Medigap plans (Medicare Supplement) vary based on the state, the plan the person selects, and the insurer that offers it. Here’s more on how those plans work: https://www.medicareresources.org/medicare-benefits/medigap/

Jeanette potter

My husband & I live in NY State I am on medicare and he still works. If he is under the 400 mark can he get on the on Obama plan with me even thou I am on medicare

You cannot enroll in an individual market plan, since you’re on Medicare. But your husband can enroll in a plan through NY State of Health (if he’s uninsured, there’s currently an enrollment window due to the COVID-19 pandemic; otherwise he’ll need a qualifying event or would have to wait until open enrollment in the fall). His eligibility for premium subsidies will depend on your total household income, and how it compares with the full-price cost of the benchmark plan for him. Here’s an FAQ that might help to clarify how this works: https://www.healthinsurance.org/faqs/i-am-on-medicare-and-social-security-my-wife-is-self-employed-and-needs-insurance-from-the-state-exchange-how-do-we-figure-our-household-income/

Nathalie C.

My divorce will be final very shortly. I was a housewife before the divorce and will now be receiving alimony which will be non-taxable for me due to the new law regarding alimony granted after 1/1/19, so won’t count for my MAGI. I’m 52 and live in Florida. My kids are grown and not dependents. So I don’t qualify for Medicaid. If I don’t have an income of at least $13K between now and Dec 31st (outside of alimony), I won’t qualify for ANY subsidies for the ACA, as far as I can tell, so I’ll have to pay the… Read more »

Nathalie, I’m sorry you’re having to deal with this. The way the ACA was written, people with income below the poverty level (actually, up to 138% of the poverty level) were supposed to get Medicaid. It was intended to be a seamless system, with Medicaid for those with the lowest incomes and premium subsidies for those with higher incomes. That’s how it works in the majority of the country, but Florida is one of the states that has thus far refused to accept federal funding to expand Medicaid, which means there’s a coverage gap in the state. Florida could choose… Read more »

G Vick

We are a retired couple filing Married, filing jointly, and are under age 65, live in FL. If we can live entirely off the savings in our checking account for a Jan-Dec calendar year (not retirement accounts) and therefore have an income of $0, that would mean we would not qualify for a subsidy for Obamacare, right? If we want to qualify for a subsidy we need to show some kind of income that equals at least about $18,000, right? And then we’d need to be sure that the MAGI is also over 18,000. — Also, is there a required… Read more »

Yes, you’d need to show an income of at least about $17,000 in order to qualify for a premium subsidy in Florida (this amount increases each year as the poverty level increases). For reference, here’s how ACA-specific MAGI is calculated: https://www.healthinsurance.org/glossary/modified-adjusted-gross-income-magi/ You just need to have a home address in the US in order to enroll. You can keep that coverage even if you travel outside the country, and your premium subsidy just requires you to file an income tax return in the US. But keep in mind that your marketplace plan would likely provide minimal (if any) coverage while… Read more »

Gwenlyn Snyder

My son is 57 and has an income of 21,000 per year. Within that income is interest from CD’s. Does he still qualify for the Marketplace insurance or medicaid?

Here’s an overview of how income is calculated in terms of eligibility for premium tax credits and Medicaid: https://www.healthinsurance.org/glossary/modified-adjusted-gross-income-magi/
He’ll want to consult with a tax professional if he has questions about his specific situation. But in general, it will be his AGI from his tax return, plus (if applicable) non-taxable Social Security benefits, tax-exempt interest, and foreign-earned income. If he doesn’t have any of those three sources of income, it will just be his AGI from his tax return.

I have a son who is 21 and a son who is 19. I do not claim them on my tax return.
Can they get a subsidie from the oca. they are both student with little income

Since they each file their own tax returns, they can apply for coverage in the marketplace (exchange) in their states, using only their own income to determine eligibility for financial assistance (assuming they’re not married; if they are, their partner’s income would be considered as well). If they’re in a state that has expanded Medicaid under the ACA, they will qualify for Medicaid if they earn no more than 138% of the poverty level (that currently amounts to $1,467 per month). If they’re in a state that has not expanded Medicaid, they likely will not qualify for Medicaid, and will… Read more »

Daryl Spaulding

I am retired and my employer retired health care cost 1300 a month for my spouse and I. I draw 24000 a year from social security and withdrew 24000 from my IRA this year to get by for a total income of 48,000 gross for 2020. Do I qualify for assistance and would like to have an annual gross of 24000 next year and leave my IRA for the future.

Daryl, are you also covered by Medicare, or are you not yet 65? If you’re not yet 65 and relying entirely on the retiree health plan, you can choose to decline that coverage and switch to a marketplace plan instead. See question 17 in this set of FAQs from the IRS: https://www.irs.gov/affordable-care-act/individuals-and-families/questions-and-answers-on-the-premium-tax-credit (in other words, the fact that you have access to a retiree health plan isn’t taken into consideration when determining your eligibility for a premium tax credit in the marketplace). With a household of two, you would qualify for premium tax credits in the marketplace with an income… Read more »

Michael Simpson

I am a head of household who obtained a Covered California Blue Shield PPO for my dependent disabled adult friend. My friend had previously obtained In Home Supportive Services but had to sign up with Medi-Cal in order to get this service. She doesn’t use the Medi-onCal for medical services because it is inadequate to meet her complex medical needs. Is there any way she can continue to receive IHSS and still be able to keep her superior Covered California medical insurance?

You’ll need to reach out to Medi-Cal for a definitive answer on this. It’s possible to have private insurance in addition to Medicaid. But in that case, Medicaid is always the secondary payer, with the private insurance paying first. So Medi-Cal would have to confirm whether they can continue to provide IHSS if she also has private medical coverage.