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Low and middle income earners can benefit from affordable health insurance. The Affordable Care Act (ACA) has helped expand coverage to millions of people, including many who previously had trouble getting affordable health insurance. This is great news for families with low incomes since these families tend to have higher costs for health care. If your family earns $25,000 or less annually, you are eligible for financial help through the ACA’s cost-sharing subsidies. These subsidies help make insurance more affordable by reducing monthly premiums and other out-of-pocket expenses. In addition, the ACA offers several other benefits that can make insurance more affordable for low income families. We’ll cover each of these below:
The Affordable Care Act’s Premium Tax Credit
The ACA’s premium tax credit is available to help low income families pay for health insurance premiums. The credit may reduce your monthly insurance premium by as much as $2,000 per year. This can reduce your family’s overall out-of-pocket expenses such as deductibles, copayments, and premiums. The credit is worth between 60 and 90% of your monthly insurance premium depending on your income and the cost of your plan. If you qualify, you may receive the full or partial tax credit to help you pay for insurance. The premium tax credit is available only for health insurance. It doesn’t apply to other types of coverage, like dental or vision care. You can apply for the premium tax credit when you go shopping for coverage through HealthCare.gov or by calling the consumer helpline operated by the Centers for Medicare and Medicaid Services (CMS). You can find more information about applying for the credit on the CMS’s website.
What’s the difference between a Premium Subsidy and Financial Help?
A premium subsidy reduces the cost of monthly insurance premiums. A premium subsidy isn’t cash; it comes in the form of a lower monthly premium. The amount of the subsidy you may receive depends on your income. The subsidy is only available if you buy insurance through one of the Marketplace’s qualified health plans. You can find a full list of the plans currently available through the Marketplace on the CMS website. Most people with low incomes can buy a silver-level plan, which is a good option because it offers an average premium of only $97 per month.
Health Insurance Marketplace Availability
The Marketplace makes it easy for low income families to find affordable health insurance. Low-cost bronze plans are available to people with incomes between 100% and 250% of the federal poverty level ($10,628 – $46,483 for an individual) and bronze plans are available in all 50 states. For people with lower incomes, extra help is available in the form of lower cost silver plans. Silver plans are only available in the states that use the federally run HealthCare.gov website. If you have an income of up to $30,000 and live in one of the 38 states that use the federally run Marketplace, you can buy a low-cost silver plan (see table). The Marketplace also makes it easy to apply for financial assistance and sign up for health insurance. You can get a quote for your insurance, apply for financial help with your premiums, and enroll in coverage all on the same page.
Mental Health and Substance Use Benefits
The ACA has helped dramatically expand the number of people with health insurance. This has led to a greater demand for mental health care. However, the cost of mental health services remains largely unaddressed. The ACA has helped expand coverage for mental health services by expanding Medicaid eligibility. This helps people with very low incomes access treatment for mental health conditions. The ACA also helps with substance use disorders. The Act expanded the Children’s Health Insurance Program (CHIP) to help more low income families with children access treatment for substance use disorders. CHIP provides the same level of care as Medicaid, but it pays for services exclusively. No coinsurance, copayment, or deductible amounts are required. CHIP is available to all families with incomes below 200% of the federal poverty level. Both of these benefits help address important health care issues facing low income families.
Access to Medicaid for Low Income Families
Medicaid is a program for low income people that covers people with disabilities, pregnancy, and children under age 19. Under the ACA, people with a household income up to 133% of the federal poverty level can qualify for Medicaid. This means that people with incomes between $15,000 and $50,000 can qualify for Medicaid. The federal government matches state funding for Medicaid and the federal funds that states receive are based on a percentage of a state’s total Medicaid costs. This means states that expand Medicaid under the ACA are eligible for much more federal funding for the expansion than states that don’t expand. Therefore, it is in a state’s best interest to expand Medicaid under the ACA. If you live in one of the states that hasn’t expanded Medicaid, your low income family may be eligible for Medicaid under the ACA.
Help with Co-Payments and Out-of-Pocket Costs
The ACA helps people with low incomes pay their health care costs. The Act has a major impact on cost-sharing subsidies. Co-payments are required before certain medical services, including some medication, are covered by health insurance. Co-payments are also required for some services, like emergency room visits or surgery. Co-payments are often $20 for an office visit, $30 for a hospital stay, and $100 for a surgical procedure and are required before services are covered. If your family earns less than $20,000, many of these co-payments may be waived under the cost-sharing subsidies. The ACA also helps people with out-of-pocket costs such as copayments, coinsurance, and deductibles. These cost-sharing subsidies are available to people with incomes between 100% and 190% of the federal poverty level. The subsidies reduce copayments (ie, out-of-pocket expenses like copayments, coinsurance, and deductibles), premiums, and even out-of-pocket maximums. For example, a 40-year-old making $25,000 would have an out-of-pocket maximum of $13,000 under the ACA. The same person would have an out-of-pocket maximum of $27,000 if they didn’t have the cost-sharing subsidy.
Other Financial Assistance through the ACA
The ACA has a few more financial aid perks for low income families. If your child qualifies for the Children’s Health Insurance Program (CHIP), you may qualify for a tax credit. This credit is based on how much your child is covered by CHIP and can reduce your income taxes by as much as $750 per child.
Summary
Health insurance can be expensive. When you earn less than $30,000 a year, you may face high premiums and cost-sharing. Unfortunately, many low income families can’t afford to buy coverage on the open market. The Affordable Care Act helps these families by providing premium subsidies, mental health and substance use benefits, access to Medicaid, and other financial assistance. The ACA can help make health insurance more affordable for millions of low income families.
