How To Get Help Paying for Health Insurance

Are you having trouble affording health insurance? You're not alone.

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Health insurance can be so expensive that many low and middle-income people can’t afford it without help. The majority of non-retired Americans get their health insurance from an employer, and employers heavily subsidize the cost. Most older, retired Americans get their coverage through Medicare, which is also heavily subsidized. Fortunately, there is also financial help available for people who have to obtain their own coverage.

The Affordable Care Act created government subsidies to help low and middle-income people pay for health insurance. These subsidies help pay for monthly health insurance premiums, as well as costs like coinsurance, copays, and deductibles once you have health coverage.

What Kind of Financial Help Can I Get?

There are three different programs for people who need help paying for health insurance.

  • Medicaid: The first program, if you have a very low income, enrolls you in Medicaid. Most often, Medicaid is provided for free to those who qualify. Eligibility varies from state to state, so you won’t know for sure if you qualify until you apply. In most states, eligibility for Medicaid has been expanded under the ACA, so even if you’ve applied before and been turned down, you should apply again through your state’s health insurance exchange. (You’ll learn more about this later.) The Medicaid website has the most recent income limits for Medicaid and CHIP eligibility, by state (CHIP, the Children's Health Insurance Program, is available for kids and sometimes pregnant women, and the income limits are higher than they are for Medicaid). The ACA eliminated asset tests for Medicaid eligibility for people up to age 64, so eligibility is based on income rather than income and assets combined (asset tests are still used for older people).
  • Premium Tax Credits: The second program, if you have either a low income or moderate income (up to four times the poverty level, which extends well into the middle class), pays a portion of your monthly health insurance premiums. It's like getting a discount on the price of health insurance because the subsidy pays part of your cost (or in some cases, all of the cost). This subsidy money is sent from the government directly to your health insurance company on your behalf each month—or you can pay full price for a plan in the exchange and then claim the premium tax credit on your tax return.
    Although premium subsidies makes health insurance much more affordable, unlike the Medicaid option above, you’ll likely still have to pay something toward the cost of your health insurance each month (note that some states do charge modest premiums for Medicaid enrollees with income above the poverty level). Premium tax credit eligibility is based on income; assets are not taken into consideration. Premium tax credits are based on keeping the after-subsidy cost of the second-lowest-cost silver plan available, but they can be applied to any metal-level plan.
  • Decreased Cost Sharing: For those with fairly low or modest incomes, the third program decreases your out-of-pocket expenses like deductibles, copays and coinsurance when you use your health insurance (this is available to people who earn up to 2.5 times the poverty level). For example, if you bought a health insurance policy that would otherwise require you to pay a $50 copay each time you see the doctor, your cost-sharing subsidy might decrease that copay to $30 each time you visit the doctor. The decreased cost-sharing program also limits the out-of-pocket maximum you’ll pay if you end up using your health insurance a lot. Since the insurance company pays for a larger percentage of your health care expenses, the cost-sharing subsidy is like getting a free upgrade on health insurance. Cost-sharing subsidies are only available on silver plans, and are automatically included in all of the available silver plans if your income makes you eligible for them. For those not eligible, the plans that include cost-sharing subsidies don't show up in the available options.

Many low-income people get help from both the premium tax credit subsidy and the decreased cost-sharing subsidy at the same time, assuming they enroll in a silver plan. People who are eligible for the cost-sharing subsidy will almost always also be eligible for the premium subsidy. But not everyone who is eligible for the premium subsidy is eligible for the cost-sharing subsidy. In 2019, just over half of all the people enrolled in plans through the exchanges were receiving cost-sharing subsidies. Virtually all of them were also receiving premium subsidies. But far more people—87% of all enrollees—were receiving premium subsidies.

How Do I Get Help Paying for Health Insurance?

You can apply for a health insurance subsidy, as well as for Medicaid, through your state’s health insurance exchange. When you apply for health insurance through your health insurance exchange, the exchange will determine if you’re eligible for Medicaid, or for decreased cost-sharing and/or a premium tax credit.

Will I Qualify for Help Paying for Health Insurance?

Eligibility for a health insurance subsidy is based on your income relative to the federal poverty level. The dollar amount of the federal poverty level changes every year, and varies based on the number of people in your family. As explained here, the exchange will use the poverty level numbers from the prior year to determine your subsidy eligibility (so for health plans effective in 2020, the 2019 poverty level numbers are used).

You’ll qualify for the premium tax credit if your income is between 100% and 400% of last year’s FPL. Note that in states that have expanded Medicaid (which is the majority of them), the lower threshold for subsidy eligibility is 139% of the poverty level, as people below that threshold qualify for Medicaid instead.

For 2020 premium subsidies, the eligible income ranges are: An individual with an income range of $12,490-$49,960, couples with incomes from $16,910-$67,640, and a family of three earning from $21,330-$85,320 (but again, the lower eligibility thresholds are higher in all cases in states that have expanded Medicaid).

The closer you are to the poverty level (or 139% of the poverty level in states that have expanded Medicaid), the more subsidies you’ll get (this is true for premium subsidies as well as cost-sharing subsidies).

What Will Disqualify Me From Getting a Health Insurance Subsidy?

You won’t qualify for a health insurance subsidy if you can get affordable health insurance by other means. For example, if you could get affordable health insurance through your job, but you’d rather have a health plan purchased through your health insurance exchange, you won’t qualify for a subsidy.

The law makes an exception about this if the health insurance your employer offers is lousy, or if the coverage isn’t affordable. In this case, the Affordable Care Act defines "affordable" as health insurance that costs you less than 9.78% of your income in 2020 (note that this is calculated based only on the employee's cost for self-only coverage; the cost to add family members is not taken into consideration, which results in the family glitch). And if the health coverage available through your job doesn’t provide minimum value, in other words, it doesn’t pay an average of 60% of covered costs, including "substantial" coverage for inpatient and physician care, then it won’t disqualify you from getting a subsidy just because it’s available.

However, if you choose to enroll in employer-offered health insurance even though it’s not affordable or doesn’t provide minimum value, then you won’t be eligible for a subsidy as long as you’re enrolled in that health plan. The government isn’t going to give you help paying for health insurance if you already have job-based health insurance.

You won’t qualify for a subsidy if you’re enrolled in (or in some cases, eligible for) government-sponsored health insurance such as the Children’s Health Insurance Program, the Veterans Administration, Medicaid, or Medicare (note that you can receive premium subsidies if you're eligible for Medicare but would have to pay a premium for Medicare Part A, due to not having enough work history to get premium-free Part A).

You won’t qualify for a subsidy if you’re in prison or if you’re not living in the United States legally.

If you’re married, your tax filing status must be “married filing jointly” in order to qualify for a subsidy. You won’t qualify for a subsidy if your filing status is “married filing separately," except in limited circumstances involving domestic abuse or spousal abandonment.

Ridiculous as it sounds, you won't qualify for a subsidy if your income is less then 100% of FPL, even if you're in a state that hasn't expanded Medicaid (unless you're a recent immigrant who has been in the U.S. for under five years). That's right; the poorest of the poor don't get premium tax credit or cost-sharing subsidies.

That's because the lawmakers who wrote the Affordable Care Act intended that everyone earning less than 138% of FPL get Medicaid. However, the Supreme Court ruled that the federal government couldn't force states to give all of those people Medicaid. This means each state can decide whether or not it will expand Medicaid coverage to everyone earning less than 138% of FPL, or limit it to only the people who qualified for Medicaid under the older, stricter criteria.

If your state has chosen not to expand its Medicaid program and you're living below the poverty line, you're in what's called the Medicaid coverage gap (which was not part of the ACA, and was never expected to be an issue) and you won't be eligible for help paying for health insurance. Instead, consider taking advantage of a Community Health Center that provides primary care services regardless of your ability to pay. Find your nearest Community Health Center.

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Article Sources
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