One of the greatest benefits of applying for health insurance under the Affordable Care Act is right in its name: affordable. The federal government has made available enough financial help, in the way of tax credits and subsidies, to make health care affordable for almost everyone.
“In some instances, subsidies can cover everything,” says Paul Rooney, vice president of carrier relations for the online broker eHealth. The average premium for those who qualify is around $89 a month, he says, while it can be up to $400 a month for those who don’t. According to healthinsurance.org, about 85 percent of Americans are eligible for subsidies.
Enrolling for insurance and subsidies is improving and is easier to do this year, Rooney says. There are also many resources available — including at eHealth, the Kaiser Family Foundation and HealthCare.gov — to help people understand how the process works and what their options are. “Do your homework. Spend a few minutes on research,” Rooney says. “It will be worth it.”
[Read: 8 Strategies for Saving Money on Your Health Care.]
Tax Credits
The ACA offers two types of cost-reduction programs to reduce monthly premiums and out-of-pocket expenses for moderate and low-income people. The first is called the premium tax credit, which cuts monthly payments. The second is the cost-sharing subsidy, which reduces the out-of-pocket costs associated with going to the doctor or hospital. Both are available to qualifying individuals and families who enroll through a government-operated health insurance marketplace.
ACA plans come in four levels of coverage: bronze, silver, gold and platinum, which vary by monthly premiums and out-of-pocket requirements. Each of these levels is eligible for the premium tax credit. According to the KFF’s analysis, to receive the premium tax credit for coverage starting in 2019, an enrollee must:
— Have a household income from one to four times the federal poverty level. In 2019, the credit range in the continental U.S. is from $12,140 for an individual and $25,100 for a family of four at 100 percent FPL, to $48,560 for an individual and $100,400 for a family of four at 400 percent FPL.
— Not be eligible for affordable coverage through an employer (including a family member’s employer).
— Not be eligible for coverage through Medicare, Medicaid, the Children’s Health Insurance Program or other forms of public assistance.
— Have U.S. citizenship or proof of legal residency. Lawfully present immigrants whose household income is below 100 percent FPL and are not otherwise eligible for Medicaid can receive tax subsidies through the health insurance marketplace if they meet all other eligibility requirements.
— If married, must file taxes jointly.
[See: 15 Things Millennials Should Know About Open Enrollment.]
Subsidies
Cost-sharing subsidies can lower such out-of-pocket costs as deductibles, copayments and coinsurance. However, these can only be applied to the silver-level plan. Under changes made to the ACA by the Trump administration, insurers are still required to provide subsidies for lower-income enrollees, but the federal government will no longer reimburse the insurers for the subsidies.
According to the KFF, those eligible for a cost-sharing subsidy include people who are eligible for the premium tax credit and have household incomes from 100 to 250 percent of poverty. While the ACA sets a maximum limit for out-of-pocket spending limits, it lets the individual health insurance companies decide how to divide them among copays, deductibles and coinsurance. Some companies offer high-deductible, low-copay plans, others offer the opposite.
Subsidies can lower those costs significantly. The KFF reports that the out-of-pocket maximum without subsidies may be no more than $7,900 for an individual and $15,800 for two or more people in 2019 — though plans often come in below the maximum, KFF says. With subsidies, however, the out-of-pocket maximum can be no higher than $2,600 to $6,300 for an individual or $5,200 to $12,600 for a family in 2019, depending on income.
[See: How to Pick a Health Insurance Plan.]
Help Is Available
Applying for ACA subsidies can be a confusing process. “Getting help may be a good thing to do,” says Karen Pollitz, a senior fellow at KFF. For some, the process will be pretty straightforward; the marketplace portal includes applications for financial assistance. You need your most recent tax return and other basic family information. “It is a very step-by-step application, and it is processed in real time,” she says. “It gives you an answer in five minutes or less.”
You do have to project your income for 2019, which can be tricky for those who are self-employed, seasonal workers or in job transition. In those cases, or just to ensure you get it right, you can use the services of an ACA Navigator. These are individuals or organizations that are trained and able to help consumers, small businesses and their employees through the health insurance marketplace process. They are free to use, and though the Trump administration has drastically cut funding for the program by more than 84 percent over the past two years, according to the Centers for Medicare & Medicaid Services, you can still find a local Navigator for enrollment assistance and questions. Pollitz recommends it: “People should sit down with a Navigator and say, ‘Can you help me with this?'”
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How to Make Health Insurance More Affordable originally appeared on usnews.com
