What Are Health Insurance Subsidies?
A subsidy is money the government will pay towards part or all of your health coverage, depending on your income. There are two types of health insurance subsidies offered to Maine residents that you may qualify for:
- The first is a premium tax credit subsidy covers a portion of your monthly health insurance payment (a.k.a. your premium). Based on your eligibility, you could pay as little as $1 a month for a health plan!
- The second is a cost-sharing subsidy makes using your health plan more affordable. It lowers the expenses you have to cover when receiving care, including your deductible, copay / coinsurance, and sometimes your out-of-pocket maximum.
INSIDE TIP: it is possible to qualify for both types of subsidies! In fact, if you qualify for a cost-sharing subsidy, you’re automatically eligible for a premium subsidy, as well.
Subsidies are distributed based on the federal poverty level (FPL), which compares your income and family size to other American households. People who make between 100 and 400 percent of the FPL are eligible for a premium subsidy. In 2020, 87 percent of those who enrolled through the marketplace were eligible for subsidies.
Cost-sharing subsidies are available to people under 250 percent of the FPL; for a family of four, that’s an annual income of less than $64,000. Not sure where on the scale you are? Read on to find out how to determine your subsidy eligibility.
Where Do You Get Health Insurance Subsidies?
You have to enroll through the Health Insurance Marketplace or Exchange to receive a subsidy. This is where you submit the information Uncle Sam needs to determine how much assistance you need.
If you submit your application directly to an insurance company, you will have to pay full-price for your plan. You can use the Marketplace to get a subsidy estimate and a tailored plan recommendation. Once you find a plan you like, we’ll get you enrolled through an on-exchange application.
How Do I know If I Qualify?
To receive help covering your health insurance, you have to meet a few requirements:
- Income: Your estimated annual income largely determines the subsidy type(s) and amount you’ll receive. It’s very important to calculate this number correctly for maximum savings.
- Family size: The government takes into account how many people your household income has to support; this includes your spouse and any children you claim as dependents on your taxes. In 2021, a single person would have to make less than $31,225 to receive a subsidy, but a family of four could make up to $64,375.
- Filing status: If you are married, you’ll have to file your taxes jointly to qualify for a subsidized health plan. This is important because couples who file separately are not eligible. This is because the government allocates subsidies on a household level and reconciles those amounts at tax time. When you file separately, it’s too difficult to ensure you got an accurate subsidy amount.
- Location: How much you pay for health insurance depends on where you live. Since the cost of living, local legislation, and number of insurance providers vary from state to state, so will your subsidy.
I Just Lost my Employer Coverage. Can I Get a Subsidy For My New Plan?
In short, yes you can! To see how much of a subsidy you’ll receive, follow the steps above by first estimating your annual income. This can be hard to do after just losing a job, but remember, you can always update it throughout the year as your income changes. Just make sure you meet the requirements listed above to make sure you can receive your subsidy.
You can always reach out to our team anytime if you need help.
What Happens at Tax Time?
Unless you have a supernatural ability to predict the future, there’s a good chance you won’t perfectly estimate your annual income on your application. Don’t worry—everything gets sorted out at tax time. If you make more money during the year than you expected (woo hoo!), you’ll repay a portion of your subsidy. If you make less, you’ll receive a refund.
Get Started with a Subsidy Estimate
Health insurance can be a hefty financial investment. However, without health insurance, surprise medical bills can cost tens of thousands of dollars, leaving you with a difficult choice: invest in a health insurance plan, or run the risk of massive health costs and possibly having to file bankruptcy.
Fortunately, there’s a good chance you will qualify for a health insurance subsidy, especially if you’re self-employed; most people in Maine qualify for $4,800 a year in health insurance savings! A health insurance subsidy gives you the security of quality coverage without requiring an arm and a leg.
Want to see if you’re eligible?