Are You Eligible for a Government Health Insurance Subsidy in 2014?

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As the time nears for the Affordable Care Act to fully take effect in 2014, many Americans have questions about how they will acquire mandatory health insurance. Consumers have been aware of government health insurance subsidies that will be available to some who purchase coverage through a health exchanges. But who will be eligible for these subsidies and how much of a discount will they participants receive?

How the Affordable Care Act Offers Health Insurance Subsidies

The government has spent a lot of time discussing various aspects of the Affordable Care Act, which requires most Americans to purchase health insurance coverage by the year 2014.

Another facet of the Affordable Care Act that has been revealed is that health insurance policies will be offered as four levels of coverage ranging from Bronze to Platinum under what is known as the Essential Health Benefits (EHB) package. These package options, which will include HMO, PPO and POS plans and will be available through health insurance exchanges offered at the state level.

But not much information has been shared about the government health insurance subsidies that the Obama administration promises will help soften the blow of having to pay for mandatory health insurance.

Individuals and families can qualify for subsides if their income is less than 400 percent of the federal poverty line (about $46,000 for an individual and $94,000 for a family of four in 2013).

The subsidy represents the difference between the amount policyholders are expected to contribute based on income and the cost of the benchmark plan (ranging from bronze to platinum) chosen under a specific age in a specific state.

Will Government Health Insurance Subsidies Offer Big Discounts?

The Kaiser Family Foundation offers a health insurance subsidy calculator that provides insight into the discount amount a person or family could receive based on income, age and family size.

Using this calculator, a 35-year old single non-smoker who expects to earn an income of $35,000 in 2014 is expected to have an income that lands at 305% the of poverty level. Their unsubsidized health insurance premium would be $3,688. Based on income and age, the person would pay a premium of $3,325 (9.5 percent of household income) and be granted a subsidy of $363 (10 percent of premium).

On the other hand, a non-smoking family of four (two parents ages 40 and 38 and two children) that expects to earn $51,000 next year is expected to have an income that lands at 217% of poverty level. Their unsubsidized health insurance premium would be $11,451. Based on income and age, the person would pay a premium of $3,509 (6.88 percent of household income) and be granted a subsidy of $7,942 (69 percent of premium).

These calculations apply to the Silver Plan under the EHB package, which is slightly more comprehensive than the Bronze Plan, but less so than the Gold and Platinum plans. The cap for out-of-pocket expenses under the Silver plan (not including the premium) is $10,400.

To learn more about how federal health subsidies could reduce your health insurance premium amount, visit the Kaiser Family Foundation’s website and utilize its government health insurance subsidy calculator.

(Image courtesy of Vichaya Kiatying-Angsulee / FreeDigitalPhotos.net)