The Affordable Care Act, also known as Obamacare, requires all Americans to have some form of health insurance coverage. Some people are covered through their employer, and others qualify for federal programs like Medicare or Medicaid. All others are required to purchase their own health insurance plan or pay a penalty.
Individual health insurance can be quite costly, and you might be worried that you will not be able to afford a good plan. But there are effective ways to save money on your health insurance.
The first method is to inquire at multiple insurance companies about their rates and plans to ensure that you are getting the most bang for your buck. The second is to apply for subsidies to help cover the cost of health insurance.
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Subsidies are quite simple to understand. A subsidy is financial assistance. A health insurance subsidy comes from the federal government to help cover the cost of individual health insurance.
Subsidies are not loans, therefore you do not need to pay them back.
You will be required to report subsidies on your taxes, using a 1095 form. It will come with all the necessary information on how to file it properly.
Unfortunately, health insurance subsidies are not offered to everyone. Your eligibility is determined based on three factors:
The main qualifying factor is income. If you make the equivalent of or less than four times the amount of the Federal Poverty Limit, then you will qualify for subsidies.
The Federal Poverty Limit is a yearly income, below which an individual is impoverished. The amount is subject to change from year to year based on the economy and inflation.
Both types of health insurance subsidies use the same qualifying factors, but they have different requirements:
Due to the nature of their requirements, you will either have just the Advanced Premium Tax Credit, or you will have both the Advanced Premium Tax Credit and the Cost Sharing Reduction.
As for the other qualifying factors, the number of people in your household will alter what the Federal Poverty Level is for your family. As well, the higher the price of health insurance plans in your area, the more likely you are to qualify for subsidies.
All three of these qualifying factors will also determine the amount of financial assistance you receive.
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Margaret Huntley Margaret Huntley is a creative writing and philosophy student at Western University. She has been working as a freelance writer for over two years and has written about everything from insurance, to poker, to health and wellness for international businesses.
