In 2014 Individuals and families may qualify for government assistance on their monthly health insurance premium. It is not intended to be a credit on your tax return. Instead the government will pay part of your monthly premium directly to the insurance carrier that you choose. Here are some specifics on what you need to know.
- In order to qualify you must buy a new ACA compliant plan on your state’s health insurance exchange. If your state does not have an exchange then you will be able to buy a plan on the federal exchange.
- Individual plans brought prior to 2014 will not qualify for the credit.
- If your employer offers an ACA compliant plan you will not qualify for the subsidized premium. However you may still purchase an exchange plan at full cost.
- Your family Income and household size will determine the amount of gov’t assistance you qualify for. It does not matter how much the premium cost is, instead there will be a cap on how much you are to pay for a Silver Level plan.
First, determine if you qualify. Check to see if your modified adjusted gross income is under 400% of the Federal Poverty Line. 2013 Federal Poverty Line (FPL) Guidelines *
|Household Size||100% of FPL **||400% of FPL|
* Different FPL Guidelines apply to Alaska and Hawaii. ** For families/households with more than 8 persons, add $4,020 for each additional person. Souce: www.HHS.gov
Second, calculate how much greater your income level is compared to the federal poverty line. This will determine how much percent of your income you should pay for a qualified health plan.
Income Level Premium as a Percent of Income
|Min Income(% of FPL)||Max Income(% of FPL)||Min Premium Cap(% of Income)||Max Premium Cap(% of Income)|
The most an individual will pay who qualifies for the tax credit is 9.5% of their Modified Adjusted Gross Income. If the cost of the plan is over 9.5%, then the gov’t will pay the difference directly to the insurance carrier you choose.
If your employer has more then 50 employees they will have to provide an ACA plan where the cost to you is no more then 9.5% of your income. The employer is subsidizing the difference like the gov’t is for individual/family plans
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