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 premium subsidies and cost-sharing subsidies in each state's exchange, 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.

Families USA also maintains a page that shows incomes for various family sizes and various percentages of the poverty level. This is a particularly useful resource in terms of being able to see at a glance what income will make different-sized families eligible for Medicaid, CHIP, or the ACA's premium subsidies and cost-sharing subsidies.

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. 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.

So, What Are the Numbers?

You can see the guidelines for several years here. The numbers in the tables below are for 2017. These will be used to determine eligibility for premium subsidies and cost-sharing subsidies during the individual market open enrollment period in the fall of 2017, and for anyone who enrolls in 2018 coverage during 2018 as a result of qualifying event. The 2017 federal poverty level numbers will continue to be used to determine eligibility for Medicaid and CHIP only until the 2018 poverty level numbers are published in January 2018.

FPL for the 48 Contiguous States and Washington DC

Household Size

Poverty Guideline

 

1

$12,060

2

16,240

3

20,420

4

24,600

5

28,780

6

32,960

7

37,140

8

41,320

 

FPL for Alaska

Household Size

Poverty Guideline

 

1

$15,060

2

20,290

3

25,520

4

30,750

5

35,980

6

41,210

7

46,440

8

51,670

 

FPL for Hawaii

Household Size

Poverty Guideline

 

1

$13,860

2

18,670

3

23,480

4

28,290

5

33,100

6

37,910

7

42,720

8

47,530

 

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.

  • 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. For example, if you’re applying for health insurance coverage for 2018, you’ll use the 2017 guidelines. This is because open enrollment for 2018 health insurance coverage happens in autumn of 2017, before 2018 guidelines are 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, codified here (on page 30378, first column), and summarized here.
  • 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 (the Families USA chart is useful here in terms of making rough estimates). Here are a couple of examples:​​
    1. The premium tax credit health insurance subsidy is available to people making no more than 400% of FPL. If you’re a single guy living in Miami and applying for 2018 health insurance coverage in the autumn of 2017, your FPL is $12,060. To find out what 400% of FPL is, multiply the guideline by 4. For example, $12,060 x 4 = $48,240. If you make less than $48,240, you may be eligible for government help paying your monthly health insurance premiums (note that even with income below that level, you won't be eligible for subsidies if the unsubsidized cost of your coverage is already considered affordable; here's more on how this works). 
    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 2018 health insurance coverage, your FPL from the 2017 Hawaii table is $28,290. To find out what 250% of FPL is, multiply the guideline by 2.5. For example, $28,290 x 2.5 = $70,725. If your family’s modified adjusted gross income is no more than $70,725, 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).

Sources:

Federal Register / Vol. 77, No. 100 /  Rules and Regulations. May 23, 2012. 

MACPAC. Medicaid and CHIP in the Territories. May 2017.

University of California Berkeley Labor Center. Modified Adjusted Gross Income Under the Affordable Care Act. July 2014.

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