Federal Poverty Level & Health Insurance Subsidies

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Federal poverty level defines who's poor and who's not. It's also an eligibility factor in health insurance subsidies. Image © Jon Boyes/Getty Images

What Is Federal Poverty Level?

There are lots of programs designed to help the poor, but determining who is poor and who isn’t poor can be tough. The federal government of the United States 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, and they're used to determine eligibility for health insurance subsidies as well as other programs.

Federal Poverty Level Changes With 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.

Different Guidelines for Different Places

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.

So, What Are the Numbers?

You can see the guidelines for several years here. The numbers in the tables below are for 2015.

FPL for the 48 Contiguous States and Washington DC

Household Size

Poverty Guideline

 

1

$11,770

2

15,930

3

20,090

4

24,250

5

28,410

6

32,570

7

36,730

8

40,890

 

FPL for Alaska

Household Size

Poverty Guideline

 

1

$14,720

2

19,920

3

25,120

4

30,320

5

35,520

6

40,720

7

45,920

8

51,120

 

FPL for Hawaii

Household Size

Poverty Guideline

 

1

$13,550

2

18,330

3

23,110

4

27,890

5

32,670

6

37,450

7

42,230

8

47,010

 

3 Things to Know About FPL & Health Insurance Subsidies

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

  • The premium tax credit health insurance subsidy uses last year’s FPL, not this year’s FPL. For example, if you’re applying for health insurance coverage for 2016, you’ll use the 2015 guidelines. This is because open enrollment for 2016 health insurance coverage happens in autumn of 2015, before 2016 guidelines are published.
  • 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 with the FPL for your family size and geographic area.
  • Since health insurance subsidies are based on a percentage of FPL, you’ll need to use some basic math to change the guideline for your family size into something you can actually use. Here are a couple of examples:
    1. The premium tax credit health insurance subsidy is available to people making less than 400% of FPL. If you’re a single guy living in Miami and applying for 2016 health insurance coverage in the autumn of 2015, your FPL is $11,770. To find out what 400% of FPL is, multiply the guideline by 4. For example, $11,770 x 4 = $47,080. If you make less than $47,080, you may be eligible for government help paying your monthly health insurance premiums.
    2. 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 2016 health insurance coverage, your FPL from the 2015 Hawaii table is $27,890. To find out what 250% of FPL is, multiply the guideline by 2.5. For example, $27,890 x 2.5 = $69,725. If your family’s modified adjusted gross income is less than $69,725, you may be eligible for the cost-sharing subsidy in addition to the premium tax credit subsidy.

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