Understanding the Federal Poverty Level and Health Insurance Subsidies

There are lots of programs designed to help the poor, but determining who is poor and who isn’t poor can be tough. The United States federal government has a solution for this dilemma.

Each January, the Department of Health and Human Services issues that year’s federal poverty guidelines to define just who, exactly, is poor. These guidelines are commonly referred to as the Federal Poverty Level (FPL), and they're used to determine health insurance eligibility for premium subsidies and cost-sharing subsidies in each state's exchange, as well as other programs like Medicaid and the Children's Health Insurance Program (CHIP).

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Effect of Family Size

Since it costs more to feed, house, and clothe a large family than a small family, the guidelines vary by family size. The bigger your family is, the higher an income you may have and still fall beneath the Federal Poverty Level. The guideline tables list figures for family sizes of up to eight family members. What if you have more than eight people in your family? The guidelines include a simple formula to account for each additional family member.

Effect of Location

Since it’s more expensive to live in some places than others, HHS publishes three separate guidelines:

  1. Alaska
  2. Hawaii
  3. The other 48 states and Washington DC

There are no specific guidelines for Puerto Rico, the U.S. Virgin Islands, American Samoa, Guam, the Marshall Islands, Micronesia, the Northern Mariana Islands, or Palau. If you live in one of these areas and are applying for assistance from a program that uses federal poverty guidelines to determine if you’re eligible, you’ll have to ask which guideline the program uses. It’s up to the agency administering the aid program to decide.

There are no health insurance exchanges (and thus, no premium subsidies or cost-sharing subsidies) in the U.S. territories. Medicaid and CHIP are available, and the territories have their own—local and unique—income-based eligibility determinations.

2020 and 2021 Guidelines

You can see the poverty guidelines for previous years here. The guidelines for 2020 are here; they are used to determine eligibility for premium subsidies and cost-sharing reductions for plans with 2021 effective dates. This includes people who enrolled during the open enrollment period in late 2020, people who are enrolling in coverage during the COVID/American Rescue Plan enrollment window in 2021, and people who enroll in 2021 coverage during special enrollment periods triggered by qualifying events.

Even though the 2021 poverty level guidelines have now been published—they're available here—they won't start to be used for subsidy eligibility determinations until November 2021, when people begin enrolling in coverage for 2022.

However, eligibility for Medicaid and CHIP is based on real-time poverty level rules. So once the new numbers are published in January, these programs switch over to the updated poverty level guidelines. So 2021 poverty level rules are now in use for Medicaid and CHIP eligibility determinations, but the 2020 numbers are being used to determine subsidy eligibility (Medicaid/CHIP eligibility is determined first; if a person isn't eligible for one of those programs, they can be eligible for subsidies instead).

So the 2021 Federal Poverty Level numbers shown in the table below are being used to determine Medicaid and CHIP eligibility, and will be used to determine subsidy eligibility during the open enrollment period in the fall of 2021.

2021 FPL for the 48 Contiguous States and Washington DC:


Household Size

Poverty Guideline

1

$12,880

2

$17,420

3

$21,960

4

$26,500

5

$31,040

6

$35,580

7

$40,120

8

$44,660

2021 FPL for Alaska:


Household Size

Poverty Guideline

1

$16,090

2

$21,770

3

$27,450

4

$33,130

5

$38,810

6

$44.490

7

$50,170

8

$55,850

2021 FPL for Hawaii:


Household Size

Poverty Guideline

1

$14,820

2

$20,040

3

$25,260

4

$30,480

5

$35,700

6

$40,920

7

$46,140

8

$51,360

A Few Things You Should Know

If you’re comparing your income to the FPL to see if you’re eligible for one of the Affordable Care Act’s (ACA's) health insurance subsidies, there are a few things you need to know first.

Eligibility for the premium tax credit (premium subsidy) and the cost-sharing subsidy are based on the FPL from the year before your coverage takes effect, not the FPL for the year your coverage takes effect. But they'll compare that number with your income for the year your coverage will be in effect. So if you’re applying for health insurance coverage for 2021, the exchange will use the 2020 FPL guidelines—compared with your 2021 income—to determine your subsidy eligibility. This is because open enrollment for 2021 health insurance coverage happened in the fall of 2020, before 2021 guidelines were published. Eligibility for Medicaid and CHIP start to use the new FPL numbers as soon as they're published. But to maintain consistency for the premium subsidies and cost-sharing subsidies, the new guidelines don't start to apply until the fall, during open enrollment for the coming year.

There are all sorts of income definitions: gross income, net income, etc. The Affordable Care Act’s health insurance subsidies compare your modified adjusted gross income (MAGI) with the FPL for your family size and geographic area. The ACA has its own calculation for MAGI which differs from the MAGI for other tax purposes. Health insurance subsidies are based on a percentage of FPL, so the exchange does some basic math to determine how much your subsidy will be.


The premium tax credit health insurance subsidy is normally available to people making no more than 400% of FPL, but the American Rescue Plan (ARP) has eliminated this upper cap on income for 2021 and 2022. As a result of the ARP, premium subsidies can be available to people with income above that level if they would otherwise have to spend more than 8.5% of their income to buy the benchmark silver plan.

Note that even in prior years, when there was a subsidy eligibility cap equal to 400% of the FPL, a person with income below that level would sometimes find that they weren't eligible for subsidies because the unsubsidized cost of coverage was already considered affordable; here's more on how this works

The cost-sharing subsidy to help lower your deductible, copay, and coinsurance is available for people making below 250% of FPL. If you’re a family of four living in Hawaii and applying for 2021 health insurance coverage, your FPL (from the 2020 Hawaii table) is $30,130. To find out what 250% of FPL is, multiply the guideline by 2.5. For example, $30,130 x 2.5 = $75,325. If your family’s MAGI is no more than $75,325, you may be eligible for the cost-sharing subsidy in addition to the premium tax credit subsidy (keep in mind that you have to buy a silver plan to utilize the cost-sharing subsidy, although you can apply the premium subsidy to any metal-level plan; also note that the American Rescue Plan provides full cost-sharing subsidies to households receiving unemployment compensation in 2021, regardless of their actual income).

But never fear... the exchange will do all of these calculations for you! The above examples are just so that you can understand what's involved in terms of eligibility for financial assistance based on your income. 

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Article Sources
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  1. HealthCare.gov. Federal Poverty Level (FPL).

  2.  U.S. Department of Health & Human Services. Poverty guidelines. January 13, 2021.

  3. MACPAC. Medicaid and CHIP in the territories. July 2019.

  4. healthinsurance.org. modified adjusted gross income (MAGI).

  5. healthinsurance.org. The ACA’s cost-sharing subsidies. September 23, 2019.