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 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 US, 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.