How To Get Help Paying for Health Insurance

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Everyone needs a helping hand now and then. Find out if you can get help paying for health insurance. Image © Vernon Wiley/Vetta collection/Getty Images

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

Health insurance can be so expensive that many low and middle income people can’t afford it without help. But, if you don't have health insurance, you have to pay a penalty. So, what do you do if you have to buy health insurance but you can't afford it? Luckily, there's help available.

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 many states, the rules for Medicaid eligibility have been changed by 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.) Here are the most recent income limits for Medicaid and CHIP eligibility, by state.
  • Premium Tax Credits: The second program, if you have either a low income or moderate income (up to four times the poverty level), 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. This subsidy money is sent from the government directly to your health insurance company on your behalf—you never actually get the money yourself. Although this 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 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.

    Some low-income people get help from both the premium tax credit subsidy and the decreased cost sharing subsidy at the same time. 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.

    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 a premium tax credit, decreased cost sharing, or Medicaid.

    Will I Qualify for Help Paying for Health Insurance?

    Eligibility for a health insurance subsidy is based on comparing your income to the federal poverty level. Federal poverty level changes every year, and is based on both your income and your family size. You can look up this year’s FPL here.

    You’ll qualify for the premium tax credit if your income is between 100 percent and 400 percent of last year’s FPL (with last year being relative to the year in which your coverage will take effect; people applying for 2018 coverage will use 2017's FPL to determine subsidy eligibility). Note that in states that have expanded Medicaid, the lower threshold for subsidy eligibility is 139 percent of the poverty level, as people below that threshold qualify for Medicaid instead.

    To qualify for a subsidy in 2018, use the 2017 levels: an individual with an income range of $12,060-$48,240, couples with incomes from $16,240-$64,960, and a family of three earning from $20,420-$81,680 (but again, the lower eligibility thresholds are higher in all cases in states that have expanded Medicaid).

    The closer you are to poverty level, the more subsidies you’ll get. You’ll qualify for the decreased cost-sharing subsidy if you choose a silver-tier plan from the exchange and your income is between 100 and 250% of last year’s FPL. To qualify for decreased cost sharing in 2018, you’ll use the 2017 FPL guidelines: an individual earning from $12,060-$30,150, couples with incomes from $16,240-$40,600, and a family of three earning from $20,420-$51,050 would qualify for help paying their deductible, copayments, and coinsurance costs (again, Medicaid is available to households with income up to 138 percent of the poverty level in DC and the 31 states that have expanded Medicaid; in those states, subsidy eligibility starts where Medicaid eligibility ends, so the lower thresholds for subsidy eligibility is higher in those states).

    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 9.56% of your income in 2018 (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, 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 eligible for government-sponsored health insurance such as the Children’s Health Insurance Program, the Veterans Administration, Medicare or Medicaid. Note that you don’t have to be enrolled in these programs to be disqualified for subsidies; just being eligible for one of these programs is sufficient to disqualify you.

    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.

    Where Can I Learn More?

    Sources:

    Health and Human Services, 2017 Effectuated Enrollment Snapshot. June 12, 2017.

    Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation. Poverty Guidelines for 2017.

    Internal Revenue Service. Revenue Procedure 2017-36.

    Medicaid.gov. Medicaid and CHIP Eligibility Levels. June 2016.

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