Understanding Health Insurance Subsidies

When planning for monthly expenses, it is important for every household budget to include health insurance costs. However, we understand it is not always easy to add this kind of expense into your monthly finances. That is where subsidies can help.

What is a health insurance subsidy?

If you do not have health coverage provided through an employer, or eligible for Medicare, or Medicaid, you may qualify for federal financial help, called a health insurance subsidy, established by the Affordable Care Act (ACA) to help cover some of the premium and out-of-pocket costs of health coverage.

Available health insurance subsidies

There are two types of health insurance subsidies:

1. Advanced Premium Tax Credit helps lower monthly premiums. The ACA premium tax credit is based on your estimated income and household size (including yourself, your spouse, and anyone you will claim as a tax dependent – even if they do not need coverage). It also considers the cost of health coverage in your state. If you qualify, you can choose to apply your premium tax credit to your monthly insurance premium as an advance premium tax credit (APTC). This means you will not have to pay the full amount of your monthly premium. If, at the end of the year you’ve taken more premium tax credit in advance than you’re due based on your final income, you’ll have to pay back the excess when you file your federal tax return. If you’ve taken less than you qualify for, you’ll get the difference back when you file your tax return.

2. Cost-Sharing Reductions (CSRs) are extra savings that reduce out-of-pocket costs by lowering your deductible, coinsurance or copays, and your out-of-pocket maximum. If your income qualifies you for CSRs, you must enroll in a plan in the Silver category to get the extra savings on out-of-pocket costs.

Keep in mind, you may be eligible for both the APTC and the CSRs, which can help you save on all your annual health plan costs.

How to know if you are eligible for a health insurance subsidy

Your eligibility for a health coverage subsidy depends primarily on how much you earn compared to yearly updated federal poverty level (FPL) guidelines. As part of the American Rescue Plan Act passed on March 11, 2021, new federal guidelines went into effect that impact access to financial help.

If your household income is between 100% and 250% of FPL, you could be eligible for both the APTC and CSRs.

If your household income is more than 250% of FPL, you could be eligible for the APTC, and pay no more than 8.5% of your expected annual income toward premiums.

The number of people in your household and the cost of health coverage in your state also affect eligibility.

Learn more about insurance subsidies under the Affordable Care Act

The ACA Health Insurance Marketplace offers approved health insurance plans in four metal plan categories: Bronze, Silver, Gold, and Platinum. The categories differ by what percentage you pay of your yearly costs of care.

If eligible, the APTC (subsidy) is available in any of the four metal categories. CSRs are only available if you select a Silver plan.

The estimates in the table below are based on an average population. Your costs will vary.

Learn more about ACA open enrollment for health insurance for individuals and families, so you know when to apply.

Health insurance subsidies for dental and vision

While health coverage eligible for a subsidy includes dental and vision care benefits for children, it may not always include them for adults. If you need coverage for the whole family, stand-alone dental and vision plans are also available and may provide the additional coverage you need at a budget friendly cost.

Find the right health insurance coverage option

Receive the support you need to enroll in health coverage. With Empire, you will have help choosing a health insurance plan and guidance through the process of signing up for subsidized health coverage. We can even help you find out if you are eligible for savings.