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?
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% 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 9.83% of your household income in 2021 (note that the IRS might change this to 8.5%, to align with the American Rescue Plan).
- 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 9.83% 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% 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 13 states where there’s a coverage gap as a result (there are 14 states that haven’t expanded Medicaid, but Wisconsin does cover people up to the poverty level under Medicaid; tow of the other states — Missouri and Oklahoma — are scheduled to expand Medicaid as of July 2021, but the process is still uncertain in Missouri as of April 2021). However, 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 enough that the premium for the benchmark plan (second-lowest-cost silver plan in your area) is already considered affordable without a subsidy. Under the ACA, subsidies end abruptly when a household’s income goes above 400% of the poverty level. But for 2021 and 2022, the American Rescue Plan has eliminated that income cap. Instead, a household with income above 400% of the poverty level can qualify for a subsidy in 2021 and 2022 if the benchmark plan would otherwise cost more than 8.5% of the household’s income. For households that earn less than 400% of the poverty level, the percentage of income they’re expected to pay for the benchmark plan is lower than 8.5%, going all the way to 0% for those on the lower end of the income scale.
- You’re not legally present in the U.S., or you’re incarcerated.
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.