Will you receive an Obamacare premium subsidy?

How the Affordable Care Act's subsidies are calculated, and who is eligible to receive them

ACA subsidy eligibility is based on income: you have to earn at least 100 percent – but not more than 400 percent – of the federal poverty level. But there are other factors that determine eligibility as well. | Image: H_Ko / stock.adobe.com

More than a decade after the Affordable Care Act was signed into law, it remains almost fully intact (the individual mandate penalty was eliminated as of 2019, and some of the law’s taxes have also been repealed, including the Cadillac tax). The structure of the ACA (aka Obamacare) premium subsidies — also known as premium tax credits — is unchanged, and subsidies continue to adjust each year to keep pace with premiums. (Here’s how that works.)

Average premiums changed very little for 2020, but average benchmark premiums (on which subsidy calculations are based) dropped by an average of 4 percent in the 38 states that use HealthCare.gov. In many cases, lower benchmark premiums are a result of new insurers entering the market with lower-priced plans; this can result in subsidy fluctuations and big swings in after-subsidy premiums, even when the full-price cost of a person’s existing plan changes very little. It’s always important to shop carefully during open enrollment, as opposed to auto-renewing an existing plan.

Because of the small reduction in average benchmark premiums, subsidy amounts in 2020 tend to be slightly smaller than they were in 2019. But subsidy amounts continue to be considerably larger than they were prior to 2018. This has been the case since the Trump administration stopped funding cost-sharing reductions (CSR — a different type of ACA subsidy) in the fall of 2017. To cover the cost, insurers in most states now add the cost of CSR to Silver plan premiums. That makes the Silver plans disproportionately expensive, and since premium subsidies are based on the cost of the benchmark Silver plan, it also makes the premium subsidies disproportionately large.

Premium subsidies can be used to offset the premiums for any metal-level plan in the exchange. Because the subsidies are so large, some enrollees can get free Bronze plans, or Gold plans that are less expensive than Silver plans. According to an analysis by the Kaiser Family Foundation, 4.7 million uninsured Americans were eligible for free Bronze plans for 2020 — even more than the estimated 4.2 million uninsured people who could have obtained free bronze plans for 2019.

During the open enrollment period for 2020 coverage, 11.4 million people enrolled in plans through the exchanges nationwide. Of those, 9.6 million – or 84 percent – receive premium subsidies. For those enrollees, premium subsidies cover the bulk of their premiums: The average full-price plan across the 38 states that use HealthCare.gov is $595/month, but the average after-subsidy premium is just $145/month.

In short, the subsidies are a significant part of the “affordable” in Affordable Care Act. With each successive open enrollment period, awareness of the law’s premium tax credits (subsidies) has continued to grow. But many Americans may still be wondering, “Am I eligible to receive a premium subsidy – and if so, what should I expect?”

Who is eligible for a subsidy?

So who are the 9.6 million people who are receiving premium subsidies in 2020? Subsidy eligibility is based on income (ACA-specific MAGI): You have to earn at least 100 percent of the federal poverty level (139 percent of the federal poverty level in states that have expanded Medicaid), but not more than 400 percent of the poverty level. (This is all discussed in more detail below.) But there are other factors that determine eligibility.

Let’s take a look at what they are:

Access to affordable employer-sponsored coverage

If your employer offers coverage that’s considered affordable and provides minimum value, you’re not eligible to receive a subsidy in the exchange. Note that the affordability test only applies to coverage for the employee; the cost to add dependents to the plan is not taken into consideration. But if the employee’s coverage is considered affordable, the dependents are not eligible for premium subsidies in the exchange — and this situation is known as the family glitch.

If your employer offers affordable coverage that provides minimum value, you already are receiving a subsidy from your employer in the form of pre-tax health insurance benefits and an employer contribution to your premiums. The exchanges offer subsidized health insurance benefits to the self-employed, the unemployed, and employees who work for a company that does not offer affordable health benefits.

Note that some employers offer coverage that is either not affordable or does not provide minimum value (by doing this, they can avoid the potentially larger penalty they would pay if they didn’t offer coverage at all). These plans, while technically considered minimum essential coverage, can be quite skimpy — and to clarify, employers are subject to a penalty if they offer these plans and their employers opt for a subsidized plan in the exchange instead. If your employer offers a plan that doesn’t meet the affordability rules and/or the minimum value rules, you do have access to premium subsidies in the exchange if you’re otherwise eligible based on your income, immigration status, etc.

Access to Medicaid or CHIP

In addition, premium subsidies aren’t available to people who qualify for Medicaid or CHIP, since Medicaid and CHIP (the Children’s Health Insurance Program) generally provide even more financial assistance than premium subsidies.

It’s important to understand that CHIP eligibility extends to much higher incomes than Medicaid eligibility. Kids in households with MAGI at 200 percent of the federal poverty level (FPL) are eligible for CHIP in nearly every state, and there are several states where CHIP eligibility extends to above 300 percent of the poverty level.

If your kids are eligible for CHIP, they aren’t eligible for premium subsidies. That means the subsidy amount you’ll see when you enroll is just for the adults in your household, as the kids will be on CHIP instead.

Age: Nothing but a number

There’s no upper age limit for subsidy eligibility. Most people become eligible for premium-free Medicare Part A when they turn 65. In that case, they lose their eligibility for premium subsidies.

But if you’re not eligible for premium-free Medicare Part A because you don’t have enough work history in the U.S., you can continue to buy coverage in the exchange, and you’ll continue to receive premium subsidies if your income makes you eligible. (See question A6 in this guide from CMS.)

The Medicaid coverage gap

Premium subsidies aren’t available to people with income below the poverty level (with the exception of recent immigrants, as described below), because when the ACA was written, it was expected that everyone living in poverty would be eligible for Medicaid. But two years after the law was enacted, the Supreme Court ruled that states couldn’t be forced to expand Medicaid, and some states still haven’t expanded coverage.

This results in a coverage gap for people with income below the poverty level in those states. In most cases, they’re not eligible for Medicaid because they’re in states with strict Medicaid eligibility guidelines. But they’re also not eligible for premium subsidies.

Immigration status

Premium subsidies aren’t available to people who aren’t in the U.S. legally, although they are available to immigrants living legally in the U.S. In other words, you don’t have to be a U.S. citizen to get premium subsidies. In fact, premium subsidies are available for recent immigrants with income below the poverty level, even though they’re not available to the general population with income below the poverty level.

That’s because Medicaid is not available to recent immigrants until they’ve been in the U.S. for at least five years. When the ACA was written, the expectation was that Medicaid would be expanded in every state to cover people living in poverty.

But lawmakers knew that recent immigrants wouldn’t be eligible for Medicaid, even with the expanded eligibility guidelines. So they were careful to clarify that these individuals would be able to receive premium subsidies in the exchange. (Their goal was to make it so that all lawfully present U.S. residents would have access to affordable coverage, one way or the other.)

The income cap for subsidy eligibility

Premium subsidies also aren’t available to people with income (ACA-specific MAGI) above 400 percent of FPL. When the law was written, the expectation was that coverage would be affordable without subsidies at that income level. (For 2020 coverage, that upper income cap is $49,960 for a single person and $103,000 for a family of four.) But as premiums have grown, there are some areas of the country where coverage can easily exceed 25 percent of household income for a family just a little above 400 percent of the poverty level.

It’s important to understand that contributions to a health savings account (HSA) and/or pre-tax retirement plans will reduce your income for subsidy-eligibility purposes, but it’s also important to understand the subsidy cliff, and the effect it has on the affordability of coverage. The number of people with off-exchange coverage—and unsubsidized coverage in general, including people who buy full-price plans in the exchange — has declined precipitously in recent years in many areas. This is not surprising given the sharp premium increases in 2017 and 2018, which caused coverage to become unaffordable for some people who earn a little too much to qualify for subsidies (although rates have stabilized in 2019 and 2020, they’re still too high to be affordable in many areas when a household’s income is just a little above the subsidy eligibility cap).

Ideally, the income cap for subsidy eligibility would be removed, and we’d switch to a system that just compares the cost of the benchmark plan to the applicant’s income, adding premium subsidies if it exceeds a certain percentage. For 2020 coverage, it’s 9.78 percent of income for people with income between 300 and 400 percent of the poverty level; that could just be extended to apply to people with income above 400 percent of the poverty level too.

Obviously, there would still be no subsidies for people earning millions of dollars, as health insurance premiums wouldn’t even come close to eating up 9.78 percent of their income. But people with income in the 400 to 600 percent of FPL range would start to qualify for subsidies in some areas, and the subsidy cliff would be eliminated. California has created its own state-funded subsidies for people earning up to 600 percent of the poverty level, and other states might follow suit (at the federal level, there would likely need to be a Democratic majority in both chambers to Congress to make it happen).

Subsidies are based on the cost of Silver plans

Now that we know who is eligible, let’s take a look at how the subsidies actually work. The subsidies are tax credits that are available to help middle-income and low-income people afford health insurance when they don’t have access to affordable employer-sponsored coverage or government-sponsored coverage (Medicaid or Medicare). Most eligible enrollees take those tax credits in advance, paid directly to their health insurance carrier each month to offset the amount that has to be paid in premiums.

But you can also pay full-price throughout the year for a plan through the exchange, and then claim your subsidy as a lump sum when you file your taxes. Subsidy reconciliation is completed when you file taxes, using form 8962. If the subsidy you receive during the year is too high, you’ll pay back some or all of it when you file taxes. If it was too low—or if you didn’t receive an advance subsidy at all during the year—you’ll get the balance of the tax credit when your return is processed.

As discussed above, premium subsidies are available to exchange enrollees if their MAGI is between 100 percent and 400 percent of FPL. (Off-exchange enrollments are not eligible for subsidies, regardless of income.) In states that have expanded Medicaid under the ACA, Medicaid is available to enrollees with incomes up to 138 percent of the poverty level, and subsidies are not available below that threshold.

In all states, the upper limit for ACA subsidy eligibility is 400 percent of FPL (as noted above, California has its own subsidies, starting in 2020, for people with income up to 600 percent of the poverty level). For 2020 plans in the continental US, that upper subsidy threshold is $103,000 for a family of four; subsidy availability extends well into the middle class. Alaska and Hawaii have higher poverty levels, so the income cutoff of subsidies is higher in those states as well, since it’s still 400 percent of their state-specific poverty levels: In 2020, a family of four in Alaska can qualify for a premium subsidy with an income as high as $128,760, and a family of four in Hawaii can qualify for a premium subsidy with an income as high as $118,480.

[Note that some people with MAGI under 400 percent of the poverty level don’t receive subsidies simply because the unsubsidized cost of coverage in their area is under the threshold established by the ACA.]

Subsidies are tied to the cost of the second-least expensive Silver plan in your area (ie, the benchmark plan). The architects of the Affordable Care Act (ACA) wanted to make sure that people who must buy their own insurance can afford that benchmark Silver plan, even in regions where health care is extremely expensive. So knowing the price of the benchmark plan in your region is key to calculating the size of your subsidy.

The benchmark can be a different plan from one year to the next, as insurers adjust their prices—but it’s always the second-lowest-cost Silver plan in a given area. And as the cost of the benchmark plan changes, the size of the premium subsidy changes too, to keep pace with the benchmark plan cost. If the benchmark rate goes up, subsidies increase. But if the benchmark rate goes down, premium subsidies will decline. This has happened quite often recently, especially in areas where new insurers join the exchange.

The enrollment software will automatically calculate your subsidy, but many enrollees are curious about how the subsidy amount is determined, so here are the details:

What exactly is a Silver plan?

In the exchanges, insurers offer Bronze, Silver, Gold and–in a few areas–Platinum plans. (Catastrophic plans are also available to young adults and people with hardship exemptions, although subsidies are not available on catastrophic plans). All must cover the ACA’s essential health benefits, and cannot refuse to cover you or charge you more because you suffer from a pre-existing condition.

The difference between the four tiers is their actuarial value. Bronze and Silver plans tend to have lower premiums, with higher co-pays and deductibles–up to a maximum of $8,150 in out-of-pocket costs in 2020 (many plans have out-of-pocket caps that are below this level.) After an enrollee hits the out-of-pocket limit, the insurer pays for all essential benefits, as long as the patient stays in-network.

Gold and Platinum plans’ premiums are higher, but deductibles, copays, and total out-of-pocket exposure on those plans are often lower. Silver plans pay roughly 70 percent of enrollees’ expected healthcare costs, and generally have premiums that are higher than Bronze plans, but lower than Gold plans. (Note that “expected healthcare costs” is in relation to the average costs for the entire population covered by the plan, including those with very high health care costs; it does not apply to each individual insured.)

It’s important to understand, however, that because the cost of cost-sharing reductions has been added to Silver plan rates in many states, you may find that there are Gold plans in your area that are less expensive than silver plans. Shop carefully!

How to calculate your subsidy in four easy steps

The size of your subsidy is based on how your household’s income (ACA-specific MAGI) compares with the prior year’s poverty level, and the price of the benchmark Silver plan in your region.

To calculate the size of your subsidy:

1) Use this table to find out whether your income and household size will make you eligible for a subsidy in 2020. [These numbers are based on the 2019 federal poverty guidelines in the continental US. Since open enrollment for 2020 took plans in 2019, these numbers will be used for all plans with 2020 effective dates.] As noted above, the numbers are higher in Alaska and Hawaii, and California has its own supplemental premium subsidies that extend to incomes above these levels as well.

For instance, as the table indicates, a family of three with household income up to $85,320, and a family of five with income up to $120,680, are eligible to receive a premium tax credit for 2020, depending on the cost of a Silver plan in their area.

Percent of Federal Poverty Level (FPL)
Household Size 100% 138% 150% 200% 300% 400%
1 $12,490 $17,236 $18,735 $24,980 $37,470 $49,960
2 $16,910 $23,336 $25,365 $33,820 $50,730 $67,640
3 $21,330 $29,435 $31,995 $42,660 $63,990 $85,320
4 $25,750 $35,535 $38,625 $51,500 $77,250 $103,000
5 $30,170 $41,635 $45,255 $60,340 $90,510 $120,680
6 $34,590 $47,734 $51,885 $69,180 $103,770 $138,360
For each additional person, add $4,420 $6,100 $6,630 $8,840 $13,260 $17,680

2) Find out how much the Affordable Care Act expects you to contribute to the cost of your insurance by consulting Table 2. The expected contribution is adjusted slightly each year. The percentages listed below are for 2020.

If you earn Your expected contribution is
Up to 133% of FPL            2.06% of your income
133%-150% of FPL            3.09%-4.12% of your income
150%-200% of FPL            4.12%-6.49% of your income
200%-250% of FPL            6.49%-8.29% of your income
250%-300% of FPL            8.29%-9.78% of your income
300%-400% of FPL            9.78% of your income

The subsidy will make up the difference between the amount an individual is expected to contribute (based on income) and the actual cost of the area’s second-lowest-cost Silver plan.

3) Determine out how much a benchmark Silver plan costs in the area where you live. You can scroll through the available quotes in your state’s exchange and see what the second-lowest-cost Silver plan’s premium would be for you and your family, or you can call the exchange.

It’s important to note that the benchmark plan changes from one year to another: Carrier A might have the second-lowest-cost Silver plan one year, but due to premium fluctuations, Carrier B might take over that spot the following year.

4) See Table 2. Subtract the amount that you are expected to contribute (based on your income) from the cost of your benchmark Silver plan. For instance, let’s say your Silver plan costs $3,000 a year, and you are expected to contribute $1,000. You will receive a subsidy of $2,000.

Sample calculations for 2020

*****This example is based on 2020 numbers, including the required contribution percentages for 2020*****

Rick is 27 and lives in Alabama. In Alabama for 2020, the average benchmark Silver plan costs $453 a month for a 27-year-old or $5,436 annually. (The exact amount for Rick would depend on his zip code, but for the sake of this example, we’re just using the state-wide average; note that in Alabama, the average benchmark premium for 2020 is slightly higher than it was for 2019.)

If Rick earns $24,980 (that’s 200 percent of FPL, based on the 2019 FPL numbers) he would be expected to kick in 6.49 percent of his income, or $1,621 toward his insurance. (0.0649 x $24,980 = $1,621.)

To calculate his subsidy, he just needs to subtract $1,621 (the amount he kicks in) from $5,436 (the cost of the benchmark plan). His subsidy will be $3,815 for the year. That means the exchange will send $318/month to his insurer, and Rick will have to pay the other $135/month. Of course, that’s assuming he picks the benchmark plan; if he buys a less-expensive plan, he’ll pay less, and if he buys a more expensive plan, he’ll pay more. The $318/month subsidy will stay the same regardless of what plan he buys — unless he finds a plan that costs less than $318/month. In that case, the subsidy will cover the full price, but he won’t be able to claim the excess subsidy.

[Note that you can also calculate your expected contribution percentage if your income is somewhere in the middle of one of the ranges shown in Table 2. Here’s how it works.]

Rick’s 27-year-old cousin Alice, earns the same amount as Rick, but lives in Arkansas, where the pre-subsidy cost of the benchmark plan is quite a bit lower. After her subsidy, she’ll pay the same amount as Rick for the benchmark plan (because they earn the same income), but her subsidy won’t need to be as large. In Arkansas, the average benchmark premium for a 27-year-old is only $300/month for 2020, or $3,600 for the year (note that this is a little lower than it was in 2019; average benchmark premiums declined slightly in Arkansas for 2020).

If Alice also earned $24,980 (200 percent of the FPL) the government would expect her to spend 6.49 percent of her income on the benchmark plan, just like her cousin in Alabama. (Remember, the expected contribution is tied to income (MAGI), not the underlying cost of the plan.) So she, too, would have to pay $1,621 of her own money to buy an average benchmark plan in Arkansas. But because the average benchmark plan in Arkansas costs $3,600, her subsidy would be just $1,979, or $165/month. ($3,600-$1,621 = $1,979).

Since Rick and Alice earn the same amount, they pay the same in after-subsidy costs for the benchmark plan: $1,621 for the year. This is based on their MAGI — not their age, health status, or location. But Rick’s subsidy has to be larger than Alice’s, because the unsubsidized cost of his plan is so much more, due to his location.

If Rick and Alice were younger, the Silver plan would be less expensive and their subsidies would be smaller. If they were older, the Silver plan would be more expensive, and their subsidies would be higher.

The idea behind the subsidies is to level the playing field and bring average premiums to a middle ground for everyone who has the same general level of income (MAGI). So at the same income level, an older person will receive a higher subsidy than a younger person, but they’ll both ultimately pay the same price for the benchmark plan.

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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PHOTO CAPTION: President Barack Obama receives an update on the Affordable Care Act in the Oval Office, April 1, 2014. With the President, from left, are: Phil Schiliro, Assistant to the President and Special Advisor; Tara McGuinness, Senior Communications Advisor; Marlon Marshall, Principal Deputy Director of Public Engagement; Jeanne Lambrew, Deputy Assistant to the President for Health Policy; Kristie Canegallo, Advisor to Chief of Staff; and Senior Advisor Valerie Jarrett. (Official White House Photo by Pete Souza)


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the examples use a single person, if a married couple income was 60,000 then 9.78% of income is about $6,100/year. is that to cover both or just one person?

It’s to cover both people together, as long as they’re both enrolling in a plan through the exchange. The numbers above that detail the percentage of income that a household has to pay for the benchmark premium are for the combined total premium for all members of the household that are enrolling through the exchange. But if one family member is on Medicare or covered through an employer’s plan, for example, that person’s insurance expenses aren’t counted towards the roughly $6,100 (in your example) that the household is expected to pay for their coverage. That’s why a family might find… Read more »


Thanks, Louise. Just my wife and myself. Assume $75K income, both of us in our 50s without employer offered coverage. The online calculators will spit out approx $7300 for premium max (9.78%). This $7300 would cover premiums for BOTH of us, correct? Can you give me an idea of total out of pocket maximum expenses we should each plan for each year (over and above the $7300)? Thanks!

Jo Ann

Although this is an old post, I see that you have not received a reply. It is my understanding that if your income is above the 400% FPL ($67,640 for a family of two in 2020), then there is no subsidy available. This loophole is one is one of the most criticized issues in the ACA. For families and for those middle aged or older, crossing over that threshold can mean a difference of thousands of dollars a year in premiums. If there were a political climate to do so, a fix would not be difficult, by just passing a… Read more »

Yes, the “subsidy cliff” is particularly challenging for older people and people who live in areas where health insurance is more expensive than average. Here’s more about that: https://www.healthinsurance.org/obamacare/beware-obamacares-subsidy-cliff/
The Biden/Harris health plan includes a solution to the subsidy cliff problem, but Congress would have to agree to the fix in order to make it happen.

Sorry for the delayed reply, Mike. At an income of $75k for two people, you won’t be eligible for premium tax credits — assuming you can’t reduce your income further by contributing to a health savings account or retirement accounts? Here’s more about that: https://www.healthinsurance.org/faqs/with-my-income-im-barely-over-the-eligibility-limit-for-a-premium-subsidy-is-there-anything-i-can-do-to-lower-my-income-so-i-become-eligible/ But assuming you’re not eligible for a premium tax credit, there’s no cap on how high your premiums can be. They’re whatever the approved rates in your area are, for the plan you select. The 9.78% cap was for 2020, but it only applied to people who earn up to 400% of the poverty level.… Read more »

Mo Albadri

What if the new immigrants has no income and they live in their son’s house, do they still qualify to get health plan through exchange?

Premium subsidies are a tax credit, so they have to be reconciled on the person’s tax return. If they’re actually counted as their son’s tax dependent, the son’s income would also be considered and the subsidy would be reconciled on the son’s tax return. But if they’re not considered a tax dependent on their son’s return, they’d qualify for subsidies based on their own income and would then file a tax return (including Form 8962) to reconcile the tax credit after the end of the year. They would have to file a return in that case, even with zero income.


Based on the article, an individual has to earn at least 100 percent of the federal poverty level (139 percent of the poverty level in states that have expanded Medicaid), but not more than 400 percent of the poverty level.

Is it correct to conclude, that an individual not eligible for Medicaid or Medicare, earning less than federal poverty level would not be eligible for a subsidy? If so, can you explain the logic? I understand a maximum income threshold, but why a minimum? Wouldn’t that person be in more need of financial support?

Yes, people with income below the poverty level are more in need of financial support, which is why the ACA called for covering them with Medicaid instead (total out-of-pocket costs are much lower than they would be with a subsidized private plan). But states are responsible for covering 10% of the cost of expanding Medicaid, and the Supreme Court ruled in 2012 that states couldn’t be forced to expand Medicaid in order to keep their existing federal Medicaid funding. There are still 15 states (mostly in the south) that haven’t accepted the extra federal funding to expand Medicaid (Nebraska will… Read more »

Dan Duley

If I am laid off can I get a subsidy to pay for COBRA coverage?
If I am laid off and my income for 3 months is very low and I qualify for a subsidy based on the low income, but I then get a new job that pays well and I go on the employer’s plan will I have to pay back the subsidy at the end of the year if my total yearly income pushes me out of the income range to receive a subsidy?

Unfortunately, Dan, there are not subsidies for COBRA coverage: Here’s an article about that. https://www.healthinsurance.org/obamacare/do-you-still-need-cobra-health-coverage/


If a person has employer offered insurance, the open enrollment period is over, and the employer lowers how much of the cost of insurance they are going to pay which puts the premiums into the unaffordable range, can this person seek insurance elsewhere if they have the opportunity to cancel their coverage because of the change in premiums? And would their only subsidy be the amount over the 9.78% of their income?

Yes. If a change in income, work hours, or coverage details results in the employer’s plan becoming unaffordable (ie, the employee’s portion of the cost of employee-only coverage under the lowest-cost plan the employer offers is more than 9.78% of the employee’s household income), that would trigger a special enrollment period for individual market coverage: https://www.healthinsurance.org/special-enrollment-guide/an-sep-if-your-employer-plan-doesnt-measure-up/ During the special enrollment period, the employee can switch to a plan in the exchange, and can qualify for premium subsidies as long as they’re otherwise eligible.


I lost my full-time job in 2018 and went on COBRA. My COBRA ends at the end of March and I’m not yet eligible for Medicare, so I’ll need insurance. I am married right now, but my husband left and we’re anticipating the divorce will be final at the beginning of March. Although I don’t have a ‘real job’, I do get side jobs. In 2019 I made about $23,000. My husband and I will file jointly for our 2019 taxes, since he made $70,000 as a couple we’ll be over the threshold. Will that affect my ability to get… Read more »

They will be looking at your 2020 income when determining whether you’re eligible for a subsidy for 2020, so it will only be based on your own income if you’re going to be single and filing your own tax return for 2020 (the premium subsidy is a tax credit that has to be reconciled when you file your 2020 tax return). The exchange will ask you to project your income for the year, and to provide whatever documentation you have in order to back up the projection you give them. If your income changes later in the year, you can… Read more »


Thank you!~

Charles Schulz

I will turn 65 in June and lose my current healthcare coverage. As I will go on Medicare that’s not an issue, but I will have to buy insurance for my wife and teenage son. While only the two of them will be covered, is the income level based on the “family of 3” since there are three of us in the family? Most of our income is from my pension and social security.

Josh Schultz

It sounds like you’ll be looking for ACA coverage for your wife and son. Your income level for calculating your subsidy will be based on the tax household, and isn’t impacted by the fact that you yourself are going on Medicare.

M Pinder

Assuming the same facts but that he had also qualified for $2000 in monthly premium credits. What happens to all of those credits once the husband goes on Medicare? As an example, assume June 1st he gets Medicare coverage. So obviously through May 31st, they still get the $2000 in premium credits. What happens after June 1st? Do they lose all of $2,000 of the monthly credits. Or just 1/3 since the wife and son are still on Obamacare? (this also assumes they will meet the income level). this question is all about the credits for June- December.

The family’s household income relative to the poverty level will still be based on a household of three, since that’s the tax household. (ie, in 2020, premium subsidies would be available for this household with an ACA-specific MAGI of up to $85,320, since that’s 400% of the 2019 poverty level for a household of three). The premiums the family pays for Medicare will not be taken into consideration when subsidies are calculated for the wife and son. Only the cost of the second-lowest-cost silver plan for the two of them will be used, and it will be compared with the… Read more »

Charlie Siedle

yes! It will include all 3 of your income, but only 2 of you need to be insured


I am a married teacher in Florida. They offer us an option to continue our insurance after I retire. It would cost 13000 a year for both of us or 6000 a year for just me. I would make 40000 a year in retirement benefits. Would I or my wife qualify for obamacare?

If your total household income, including any income your wife has, is $40,000, you and your wife are likely both eligible for premium subsidies in the exchange once you retire. If your former employer offers retiree health benefits, you can decline that coverage and select a plan in the exchange instead, and qualify for subsidies based on your income (so retiree benefits are different from benefits offered to active employees, in that they only prevent you from getting subsidies if you’re enrolled, not just if you’re eligible). Here’s more about how this works: https://www.healthinsurance.org/faqs/im-60-and-retired-with-no-income-i-can-get-insurance-from-my-former-employer-but-its-very-expensive-do-i-qualify-for-insurance-under-the-exchanges/

Suzanne M

My husband retired at the end of 2018, and we were on COBRA through the 4th quarter of 2019. If our household income (2 of us) is $42,000 and we paid for ACA insurance for the 4th quarter. (Total paid was about $6,000). It looks like my expected contribution is about $3,500 (8.29% of income) but the silver plan monthly is $460/month. Do I determine a pro-rated amount to what my credit will be on my return?

With specific tax questions like this, we always recommend that you speak with a tax professional. But in terms of general background info, yes, you’ll be able to prorate your subsidy amount for the months you had coverage. Form 8962 is the tax form that you’ll use to reconcile your subsidy: https://www.irs.gov/pub/irs-pdf/f8962.pdf In Part II of that form, you’ll see where there’s an option to use annual totals (for people who had exchange coverage all year) or monthly totals, for people who had partial year coverage. If you’re using the monthly section, it will have you divide your annual expected… Read more »


My husband will be signing up for Medicare (turns 65 in September) and when he does that, I will lose the employer healthcare plan that I have had for years here in VA, and I am only 60, so will need to find insurance for a little over 4 years. When I am checking the charts, do I use my income of $23,000, or the total of mine and my husband’s income, which is $78,160 for the two of us? I just a little confused, and when I called the exchange, they said it was too soon to provide me… Read more »

Alice Shook

Do you have report a change of income if you receive a corona virus stimulus check?

No. It’s not considered income, so it won’t change anything about your subsidy eligibility. The new $600/week federal unemployment benefit is counted for premium subsidy eligibility, but not for Medicaid eligibility. But the stimulus checks that are being sent out (based on 2018 or 2019 income) are not counted for either one.

At what point in time are earnings considered for subsidy eligibility? Is it based on prior year AGI. Or if someone worked from January – March, then was laid off, is it based on 2020 earnings to date, or earnings as of the layoff? Obviously much lower after lay off.

Premium subsidies are a tax credit, so they’re based on your income for the year during which you’re getting the subsidy. But unlike other tax credits, they can be taken in advance — paid directly to your insurance company — instead of having to wait until you file your tax return next spring (that’s also an option, but most people take them in advance, throughout the year). So when you’re enrolling in a plan through the marketplace, you want to project the annual income you expect to have, to the extent that you’re able to do so — admittedly tricky… Read more »


Can a person drawing social security who is under age 65 receive subsidies?

Eligibility for premium subsidies is based on an ACA-specific calculation of modified adjusted gross income, which is described in more detail here: https://www.healthinsurance.org/glossary/modified-adjusted-gross-income-magi/
SSDI is counted as income under this formula, but SSI is not. A person who is receiving SSDI could still get premium subsidies if their total household income is in the subsidy-eligible range.


Can an employer buy the Obamacare? What impact for profit or loss on their S-Corp?

Celina, here’s an article about how businesses can offer small-group ACA-compliant coverage to their employees. https://www.healthinsurance.org/small-group-health-insurance/


I quit my job to take care of my elderly parent full time. Can I say I am self employed and use room and board equivalent to qualify my income at the poverty level? My state doesn’t have expanded Medicaid.

Unfortunately, that is well beyond the scope of our expertise. We’d recommend you consult with a tax adviser or attorney, especially since that could affect your parent’s income tax return too. But this thread might be useful: https://www.agingcare.com/questions/room-board-for-a-live-in-calculated-179051.htm

Shishir Valunjkar

Me and my wife want to go for Medicare
We are 63 and 59 age
We have filed our tax for 2019 (1040)
Our adjusted gross income annually is less than USD 4000
Are we eligible for Obamacare and subsidy?
We both are having PR status
Please guide how to proceed

Shishir, Your income puts you under the poverty level, but the ACA (Obamacare) has a special provision allowing recent immigrants to get premium subsidies even if their income is under the poverty level. That’s because Medicaid — which is available in most states to people with income below the poverty level — is not available to recent immigrants who have been in the US for less than five years. So if you’ve been in the US for under five years, you should be able to qualify for a substantial premium subsidy in the exchange, as explained here: https://www.healthinsurance.org/obamacare/how-immigrants-are-getting-health-coverage/#recentimmigrant Keep in… Read more »


I currently have employer-sponsored health insurance, but in August, I plan to go down to part-time work while I take courses toward a career change. This will make me ineligible for my employer’s plan. Will this decrease in income from the switch to part-time work count as a qualifying event? And will I be able to use my new, part-time salary to qualify for a tax subsidy? If so, there will be a lag in obtaining pay stubs to document the decrease in income, so I may have a coverage gap…I assume that the very expensive option to COBRA during… Read more »

Losing your employer-sponsored coverage is a qualifying event that will trigger a special enrollment period for a plan in the exchange: https://www.healthinsurance.org/special-enrollment-guide/involuntary-loss-of-coverage-is-a-qualifying-event/ If you know the date your employer-sponsored coverage will end, you’ll have 60 days before that date when you can enroll in a health plan through the exchange. Assuming your employer-sponsored plan will end on the last day of the month, you’ll be able to have seamless coverage that way (if you wait and enroll after your employer-sponsored plan ends, you’ll have a gap in coverage, since the exchange plan won’t provide retroactive coverage). Your eligibility for a… Read more »


Thank you, Louise! This is extremely helpful and makes me feel better prepared to navigate my transition.


We just learned from our tax preparer that we have to pay back 17,000 more to Obamacare. My wife is the only person with a policy. I am on Medicare. She payed $226 a month premium thru the year. We made a little over $69,000 gross income for the year. That puts her premium for the year at 19,712. That is 29% of our income for one person.Thanks for the screwing Obama. Can this be right?

Walt, Unfortunately, an ACA-specific MAGI above $65,840 in 2019 would put your household above 400% of the poverty level, which reduces premium subsidies to zero. And there’s no cap on repayment of excess subsidies to the IRS if your household income makes you entirely ineligible for subsidies, so your tax preparer is right in saying that you have to pay it all back. I assume you’ve already looked into this, since you’re working with a tax adviser, but did your wife contribute the maximum allowable amount to a traditional IRA for 2019, assuming she had earned income for the year?… Read more »


Before Obama care my wife and I bought our health insurance from Blue Cross/Blue Shield as employees of our small construction company. Premiums for the two of us were approximately $700 per month for a plan that was better than she has now. We were forced off our insurance and into the Obama care marketplace like many others we know. Remember “you can keep your insurance” This was a lie. Now premiums for one person are almost $2000 a month. How is this helping the working family? We are now retired and living on Social Security and savings. My wife… Read more »

Daniel Vollmer

I went part time as of Jan 1st 2020. I could not get insurance thru my company b/c I would be working less than 32 hrs. because of this I applied for the AFCA insurance. I had already paid for the first month for this insurance the last week of December. Now, before the end of the year I got hurt and this applied as a workmans comp injury. Not knowing when i returned to work after the Christmas Holidays, workmans comp said I would need to get paid at the rate when i got injured, which at that time… Read more »

Daniel, We recommend that you talk with a tax advisor or an attorney who specializes in workers’ comp, to see if there’s anything that can be done to address the situation you’re describing. But as a general background, the rules are pretty cut and dried when it comes to ACA premium tax credits. They’re reconciled on your tax return, based on the income you actually earned during the year (as opposed to the income you projected when you enrolled prior to the start of the year), and the guidelines for calculating ACA-specific MAGI re fairly straightforward: https://www.healthinsurance.org/glossary/modified-adjusted-gross-income-magi/ That said, keep… Read more »

Daniel Vollmer

I may need to get an operation from a work injury. I am on Affordable care insurance. Does disability pay get applied to income?

It depends. We recommend that you touch base with a tax advisor to clarify the specifics for your situation, but here’s some general background: Social Security Disability Income does count as income when your ACA-specific modified adjusted gross income is determined (it’s one of the things that has to be added back to your AGI to calculate your ACA-specific MAGI: https://www.healthinsurance.org/glossary/modified-adjusted-gross-income-magi/ ) If you have private disability insurance, the benefits will generally be counted as taxable income (and thus included in your ACA-specific MAGI) if your premiums were paid with pre-tax dollars, but not counted as taxable income if your… Read more »

Bob Jones

I am thinking about retiring in the middle of next year at the age of 57. I work for a city. I would need coverage for me and my wife who no longer works. If I retire I estimate that our combined income for the year would be only a little over the federal poverty level. Would this qualify us for a full subsidy in the exchange.

Bob, it depends on what you mean by “only a little over the federal poverty level,” and on where you live. If you’re in a state that has expanded Medicaid, you and your wife would qualify for Medicaid if your ACA-specific MAGI is up to 138% of the poverty level (above that, you’d qualify for a premium subsidy in the exchange). If you’re in a state that has not expanded Medicaid, you’d qualify for a subsidy if your income is at least 100% of the poverty level. Here’s how MAGI is calculated: https://www.healthinsurance.org/glossary/modified-adjusted-gross-income-magi/ And here’s a summary of which states… Read more »


What happens if a person is receiving a subsidy during the year they turn 65. Once 65, can their reportable income increase since they are no longer receiving the subsidy, or do they have to maintain the lower income for the full year?

They would need to maintain a subsidy-eligible income (ie, no more than 400% of the prior year’s poverty level) for the entire year. Premium subsidies are reconciled on tax returns, using Form 8962 (here’s more about how that works: https://www.healthinsurance.org/faqs/what-happens-if-my-income-changes-and-my-premium-subsidy-is-too-big-will-i-have-to-repay-it/ ). If a person’s total annual income goes above 400% of the poverty level, they’ll need to pay back the entire subsidy that was paid on their behalf. That’s true even if they only had a subsidy for a few months, and even if their income during that time was lower.


I haven’t seen anyone talking about how the add’l $600/week unemployment from the CARE Act could impact our ACA subsidies for 2020. If this is considered income, I will likely lose my subsidy and owe ACA over $6,000 when this is all over. Not sure why no one is warning the public, but I’d like to find guidelines on this topic and is there a way to minimize the damage (i.e. will investing in an IRA reduce my ACA income?). Thanks if you can help.


I am a divorced father who splits custody of my son 50/50. One year I am able to claim his as a dependent and get head of household status, the next year I don’t and his mom does. His health insurance coverage is under his mom, but I pay the premiums. For the year he is my dependent, does my income limit for the subsidy move up to the $67640 level for that year, even if I don’t get ACA coverage for him – it would just be for me? Or is the income limit only applicable to who will… Read more »

The income limit for subsidy eligibility is based on the size of your tax household. So yes, in years that you claim your son as a tax dependent, you’re considered a household of two and you’d be eligible for a premium subsidy with an income of up to 400% of the poverty level for a household of two (for 2021 coverage, that will be $68,960). But your eligibility for a subsidy also depends on how the total premium (in your case, just for yourself) for the second-lowest-cost silver plan in the exchange compares with your household income. If it’s already… Read more »


I receive an ACA subsidy for myself and three dependents. We are all on a Marketplace Health Insurance Plan. Two of the dependents are in their young twenties and working. When estimating my annual income for subsidy prediction, I included the presumed income of one child whom I suspected would earn more than $12,400 (standard deduction). If she earns $13,400, and she files her own taxes (and I file mine with her as a dependent) do I add $13,400 to my household income for subsidy calculations? Or $1,000 (the amount over the standard deduction)? The second daughter, due to unemployment… Read more »

Kathryn, You’re definitely going to need to talk with a certified tax advisor for the specifics of your situation. But here’s some general background info: Your children who are in their early twenties and working are almost certainly going to have to file their own tax returns, and cannot be counted as a dependent on your tax return. That’s basic IRS rules, independent of health insurance: https://www.irs.gov/faqs/filing-requirements-status-dependents/dependents/dependents-2 The rule that allows you to include your young adult kids on your health insurance plan is applicable even if they’re no longer your tax dependents (as is likely the case for your… Read more »


Thank you for this reply. I appreciate it and I will read the linked articles. In years’ past, all children have filed their own tax returns – as they each had earned income – and I claimed them as my dependents. They filed their taxes based on their earnings, but indicated that they were being claimed on someone else’s tax return as a dependent – which they are – both in college (the youngest is in high school). Can they not file their own returns (all three of them) while still being claimed as dependents on mine?

Alicia Briceno

i am very confused about all insurance. I am unemployed due COVID and My husband’s job still close so we may run out of medical insurance on September, he found a job meanwhile, (they do not ofder insurance)we have a daughter and we have a son with autism and we were thinking to buy an insurance just for him,so he could still recieve ABA therapy. I don’t know how to do it or the cost of a family insurance . So many plans, restrictions, i don’t know were to start. Any where i can call?


I am in a family of 2 our income has exceeded our cap.We because of the covid unemployment and stimulus have gotten by the end of the year to 87,000


What will we have to pay back.We we’re paying 70 a month

The amount you’ll have to pay back will depend on whether your MAGI (as described in the comment above) goes over 400% of the 2019 poverty level for your household size. If it does, you’ll have to pay back all of the subsidy that was paid on your behalf. If not, there are caps on how much you’d have to repay, with the highest repayment amount capped at $2,650 for last year’s taxes: https://www.irs.gov/instructions/i8962#idm140224345750000 (could be a little higher for 2020 taxes). But again, that cap only applies if your MAGI doesn’t go over 400% of the poverty level. If… Read more »

The one-time stimulus checks that were sent out last fall are not included in taxable income. But the extra $600/week in unemployment benefits provided by the federal government does count as income in terms of calculating premium subsidy eligibility. Here’s a general overview of how MAGI is calculated for determining subsidy eligibility: https://www.healthinsurance.org/glossary/modified-adjusted-gross-income-magi/ If you’re able to contribute to a pre-tax retirement account, that will lower your MAGI. And if you have an HSA-qualified health plan, contributions to an HSA will also lower your MAGI. But if your MAGI for 2020 ends up being above 400% of the 2019 poverty… Read more »


Please advise. I will lose my job Oct 30 and can get COBRA for one month paid by my employer. Once that is up, I’m not sure what route to take. My spouse and I also own a small business and we have one other employee but currently offer no healthcare benefits. We are a family of 5. I should get unemployment after I am let go from my job- but have no idea if they will pass another stimulus unemployment bonus which adds extra 400-600 a week. Our business income is 55,000. Do I buy insurance in the marketplace… Read more »

You’ve got a lot of really good questions, not all of which have clear answers! Yes, another stimulus bill that adds extra unemployment benefits would have an effect on subsidy eligibility and repayment of subsidies on 2020 tax returns (unless lawmakers opt to build in a clause to make that income not counted for subsidy eligibility, the way they did the first time for Medicaid eligibility). Here’s more about that: https://www.healthinsurance.org/faqs/how-could-covid-19-financial-relief-affect-my-income-taxes-for-2020/ But with a current income of $55,000, you would likely qualify for premium subsidies as a family of five even if you end up getting additional unemployment benefits later… Read more »

Diana Gundry

My daughter made approximately $2,000 above the 400% limit in 2019. Now she is told she has to return the entire subsidy. She did not qualify for 2020 so now for silver she pays over $700 a month with a $8,000 plus out of pocket. She had to go to the ER and now has over $2,500 in expenses.
How is this considered affordable? With all these medical expenses she is going through some very hard economic times.

I’m really sorry your daughter is struggling. The “subsidy cliff” at 400% of the poverty level is a very real problem, and one that Democratic lawmakers are trying to address. Eliminating it is part of the Democratic Party platform and the Biden/Harris health care reform proposal: https://joebiden.com/healthcare/# For this year, if your daughter is enrolled in a plan through the exchange, has she checked to see if it’s possible to get her income into the subsidy-eligible range by making contributions to a pre-tax retirement plan (or an HSA, if the Silver plan she has is HSA-qualified)? https://www.healthinsurance.org/faqs/with-my-income-im-barely-over-the-eligibility-limit-for-a-premium-subsidy-is-there-anything-i-can-do-to-lower-my-income-so-i-become-eligible/ Since her income… Read more »

Charlie Siedle

if we make 66,000 total for 2021, and live in illinois, and choose the lowest bronze plan, what will our cost be?

Jo Ann

Options will vary from county to county. The best way to get an answer to this question is to go on healthcare.gov and start an application. After you submit information about your location, family size and income, you will be able to see how much of a subsidy you would be eligible for, the plans available to you, the original cost and the cost with the subsidy for which you qualify.


In the state of New Hampshire, Married person with 3 dependants when enrolling why are my 3 kids placed in a CHIP program when My income is just below the $119,000 per year?


You can use this calculator to see your eligibility for a subsidy: https://www.healthinsurance.org/obamacare/subsidy-calculator/

Tim, I’m not sure what might be going on there. The cutoff for Medicaid/CHIP for kids in New Hampshire is 318% of the poverty level: https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/medicaid-childrens-health-insurance-program-basic-health-program-eligibility-levels/index.html The poverty level for a household of five is currently $30,680, so 318% of that is $97,562 in annual income. You’re well above that level, so I’m not sure why it’s showing that your kids would be in Medicaid/CHIP. I tried using HealthCare.gov’s plan finder tool for a rough estimate (just guessing on ages and zip code) and it shows the entire family eligible for premium subsidies at that income level. What tool were… Read more »

nancy mogab

my daughter was homeless, sick andhas no income. we allow her to live in our home. we paid for her health ins in MO . She was recently admitted for in patience treatment in WI residential care facility probably for 90 days. Can she get help to pay for insurance premiums? Does our income knock her out of subsidy? do we have to leave her in a homeless shelter for her to receive assistance?

Nancy, I’m so sorry your daughter is going through such a tough time, and I’m glad she’s now receiving inpatient care. There are a lot of specifics that would be taken into consideration here, including whether your daughter is your tax dependent and how old she is. Assuming she’s an adult and not your tax dependent, her eligibility for premium subsidies in the Missouri exchange would be based only on her own income. If she has no income at all, she’s not eligible for premium subsidies (you have to earn at least the poverty level, which is $12,760 for a… Read more »