Ladies and gentlemen, it’s time for some subsidies! The beauty of the Affordable Care Act (also known as Obamacare) lies in its many subsidies, the majority of which are designed to help out low-income households. In fact, the ACA even offers subsidies to Middle Class individuals! So long as you make no more than $46,000 as an individual or $94,200 as a family of four, you can participate. Excited!?
How Do The Subsidies Work?
These ACA subsidies manifest themselves via tax credits that can be applied right away to drastically reduce your monthly premium. The value of the credit will differ based on numerous factors, including but not limited to your income, your assets and how much you “would pay for the second-least expensive ‘silver’ policy.” That policy, by the way, covers 70% of your expenses.
Obviously, the quantity of the tax credit goes up as your income levels go up. Simply put, somebody making $46,000 a year would get a lot smaller subsidy than someone just making $16,000 a year. Now, the stipulation is that you must purchase insurance through the Obamacare exchange site, obviously. But so long as you do that, the credits will be applied immediately to your required monthly premium.
What Subsidies Exist?
There are two primary forms of subsidies available. They include the premium assistance tax credit (briefly mentioned earlier) that lowers your premium. Then there is the cost sharing assistance. This affects your maximum out-of-pocket expenses.
The premium assistance is based on income, and it reduces your premium. It operates on a sliding scale. Individuals making less than 133% of the official poverty level, for instance, would wind up paying no more than 2% of what they make. Individuals making between 300% and 400% above of the poverty level, on the other hand, would wind up paying about 9.5%.
Keep in mind that these calculations are based on the silver plan. However, the subsidies offered remain the same regardless of which plan you choose. So you downgraded to bronze, you’d pay less, while if you upgraded to gold, you’d pay more.
Cost Sharing Assistance
If you’re eligible for the premium assistance, you’re also eligible for cost sharing assistance as well. If you make between 100% and 200% of the poverty level, there would be a 2/3rd reduction to your out-of-pocket expenses, meaning you as an individual would never pay more than $3,967 within a single year. Theo the rates are ½ and 1/3, but which one you would get would be dependent on your income.
Just to note, yes, you must still pay things like deductibles and copayments. There is no way whatsoever to avoid these standard medical costs. What Obamacare mainly does is just lower your monthly rate, as well as the costs you would otherwise pay. So if you get a $30,000 heart bypass, for instance, you’d only be paying a sliver of that, which means you wouldn’t end up with thousands upon thousands of dollars of debt.
So What To Do Now?
Sign up with the Affordable Care Act as soon as possible! As of mid-November, the Obamacare site is still very malfunctional, so you might have to wait. It’s okay regardless, because there are months before you must sign up. However, try to get signed up as quickly as possible, because you won’t be able to see/know your subsidies until you do! Keep in mind that you can also sign up by dialing to the Obamacare line.
In the meantime, though, if you need anymore information, definitely check out the InsuranceHotline. It’s a great resource for folks with healthcare-related questions. Also stay abreast of the news, because more information about Obamacare is constantly seeping into the papers. And there is still a chance that the whole program will be delayed for several months.
Good luck, and we sincerely hope you get all the subsidies you need and deserve!