ACA News: Subsidy refresher – who’s eligible and how they work

ACA News: Subsidy refresher – who’s eligible and how they work

open-enrollment-crop-600x338Open enrollment, the time to sign up for a 2016 health care plan starts November 1, 2015 and ends January 31, 2016. For those employees who will have to buy coverage on their own, instead of getting it through an employer, knowing how subsidies work can help them protect their health and savings. They also need to sign up by December 15, if they want their coverage to start on January 1.

What is a subsidy?
The Affordable Care Act (ACA or health care reform law) set up premium and cost-sharing subsidies to help individuals and families pay for their coverage. They can qualify for these subsidies only if they meet certain income rules and buy on the exchange. If they buy a plan sold off the exchange, they will not get any subsidy. But if they don’t buy any coverage at all, they may face a tax penalty.

Types of subsidies and what income qualifies
Premium subsidies are based on a sliding-scale for individuals and families with incomes between 138 and 400 percent of the federal poverty level (FPL).

  • For a single person, that’s less than $47,080 per year (for 2015).*
  • For a family of four, that’s less than $97,000 per year (for 2015).*

*Individuals earning between 138 and 400 percent of the federal poverty level can qualify for subsidies if they are not eligible for other sources of minimum essential coverage, including government-sponsored programs such as Medicare and Medicaid.

Premium subsidies are in fact tax credits. People can apply all or part of the credit they’re due to help lower the cost of their health plan. The exchange sends the tax credit directly to the insurance company, so the person pays less for premiums each month. This is called advance payment of the premium tax credit or APTC.

If the advance payments applied to a year’s worth of premiums end up being less than the tax credit, the person may get a refund credit after filing a federal income tax return. But if the advance payments are more than the tax credit, the person must repay the excess amount at tax time.

Cost-sharing subsidies help lower out-of-pocket costs, like deductibles, copays, and coinsurance. People with incomes below 250 percent of the FPL who choose a Silver level plan on the exchange may qualify for this extra help.

Subsidy Estimator
Our subsidy estimator tool is now part of the shopping experience for individuals wanting to know if they qualify for financial help. Employees can get an estimate right on our website (, before they go to the exchange. And that estimate carries over into our plan quotes.

Keep in mind that this tool gives only estimates, as its name implies. The exchange determines the final premium or cost-sharing subsidy amounts due to each person who applies.

If you have questions, email Bernard Rubenstein at