Subsidies are a key part of the Affordable Care Act (ACA). When you buy a health plan on the public Marketplace (also known as the public exchange), the government offers subsidies to help you cover the costs.
Read our FAQs for answers to common subsidy questions. Don’t recognize some of the insurance terms we use? Check out our glossary for easy-to-understand definitions.
General Subsidy Questions
What is a subsidy? Is there more than one kind of subsidy?
You could qualify for two types of subsidies:
- Advance premium tax credit (also call a tax subsidy) – reduces the amount you spend on your monthly premium.
- Cost-sharing subsidy – lowers your out-of-pocket costs for healthcare coverage, including deductibles, copays, coinsurance and your out-of-pocket maximum.
How do I get a subsidy?
You can get the tax subsidy two ways:
- Immediately reducing your monthly premium amount (the government then pays Medical Mutual).
- Getting credited on your tax return at the end of the tax year.
Medical Mutual receives the cost-sharing subsidy each month directly from the government on your behalf.
How do I qualify for a subsidy?
To qualify for the tax subsidy, you must make less than 400 percent of the federal poverty level. To qualify for the cost-sharing subsidy, you must make less than 250 percent of the federal poverty level. In Ohio, if you earn less than 139 percent of the federal poverty level, you will be eligible for Medicaid. Learn more about the federal poverty guidelines.
Do I have to buy a certain plan to get a subsidy?
You must buy a silver plan on the public Marketplace to get the cost-sharing subsidy.
You don’t have to buy a certain plan to get the tax subsidy. If you fall between 139 and 400 percent of the federal poverty level ($45,960 for an individual and $94,200 for a family of four), you just have to buy a plan on the public Marketplace.
How do I know if I qualify for a cost-sharing subsidy?
Your income and family size determine if you get a cost-sharing subsidy. If you get a cost-sharing subsidy, you must buy a silver plan on the public Marketplace to get the savings.
What if I use the cost-sharing subsidy but then make more than 250 percent of the federal poverty level? Will I have to pay back the difference?
Yes, it’s likely, but guidance on how you would pay it back is still being developed. More information will be posted when additional guidance is given.
If I don’t use my entire subsidy, do I lose the remaining amount?
Talk to your tax advisor about this situation.
Will my tax subsidy apply toward my total monthly premium (including fees) or just the medical portion of my premium? For example, I get a $600 subsidy. My monthly premium is $500 plus reform fees ($40/month), so my total monthly bill is $540/month. Am I responsible for the $40/month, or does the subsidy make the cost $0?
The tax subsidy applies to your total billed premium, which includes fees.
If my employer offers coverage for my dependents but that coverage is more expensive for my dependents than it is for me, can my dependents get a subsidy and coverage from the public Marketplace?
No, as long as the coverage qualifies as “affordable” under the Affordable Care Act. Your spouse and dependents must get individual coverage, but they aren’t eligible for the tax subsidy. According to the Affordable Care Act, coverage is affordable if it costs 9.5 percent or less of your earned wages.
If my employer doesn’t offer coverage for spouses, will my spouse be eligible for subsidies?
Your spouse can shop on the public Marketplace if he or she isn't covered by your employer's insurance and doesn't have insurance through his or her own employer. Your spouse can use a subsidy if he or she qualifies.
I am a Veterans Affairs (VA) member. Can I get a subsidy?
Yes, in some cases. Veterans have several options:
- Cancel your VA coverage, buy a plan on the public Marketplace and choose a subsidy (if you qualify).
- Keep your VA coverage and get supplemental coverage on the public Marketplace (you would not qualify for a subsidy).
- Keep your VA coverage and have your spouse and children get coverage on the public Marketplace.
Can I get a subsidy if I’m 65 years or older but not eligible for Medicare because I don’t have enough work hours?
I’m younger than 65 and have Medicare Parts A and B. Can I get a subsidy?
No. Anyone on Medicare, regardless of age, is not eligible for a subsidy.
Are non-citizens with a green card or Visa eligible for health insurance plans in 2014? Can they also quality for a subsidy?
Some legal aliens can get coverage on the marketplace and receive subsidies:
- Naturalized citizens and legal permanent residents who have lived here for more than five years. Naturalized citizens and green card holders who have been in the country for five years or more will be able to enroll in the healthcare program just like U.S.-born citizens. They will also qualify for Medicaid, which is income-dependent. Medicaid coverage is available to people younger than 65 who earn up to 138 percent of the federal poverty level.
- Legal permanent residents who have lived here for less than five years. Legal permanent residents with incomes up to 400 percent of the federal poverty level can qualify for a subsidy. Those who have been in the country less than five years do not qualify for Medicaid.
- Individuals who are exempt on humanitarian grounds (refugees, immigrants and those who are seeking or have been granted political asylum). All of these individuals qualify for health insurance coverage and Medicaid, even if they have lived in the United States for less than five years.
Tax and Family Questions
What qualifies as a household for cohabitating families?
A tax return is the only factor for a cohabitating family to qualify as a household. The traditional IRS tax return rules apply. For example, friends who cohabitate in a house are most likely not required to report their roommate’s income on each other’s tax return. This means the roommates would not be considered a household based on income calculation. However, a domestic partner who claims the other domestic partner as a dependent would be included on a tax return (and is included in the household income calculation).
If my family lives together and two of my children work, do my children need to file their own tax returns to get a subsidy?
A family’s subsidy depends on whether the household income falls within 100 to 400 percent of the federal poverty level. To find out if you are eligible for a tax subsidy, you generally must include the income of everyone listed on your tax return. If your dependents listed on your tax return earn income, but not enough to file their own tax return, their income is not included. However, that dependent(s) will be counted when determining family size.
In a split family (one family member is age 65 or older and on Medicare/Social Security and the other is under age 65), how will Social Security income or Social Security disability affect the family member under age 65 when applying for a subsidy?
Social Security benefits not included in gross income are considered for subsidy eligibility (household income). This means that when the individual under age 65 determines if he or she falls within the household poverty level, he or she must include Social Security in the household income.
If a spouse has Medicare, it doesn’t prevent the other spouse from receiving a subsidy if the spouse isn’t claimed as a dependent by the spouse with Medicare. Married couples must file a joint tax return to get a subsidy.
I’m applying for a subsidy. Do I need to include my partner’s income even if we would file separate federal tax returns?
Same-sex and opposite-gender spouses must file a joint tax return to get a subsidy for the public Marketplace. Based on recent Supreme Court decisions, “spouse” now includes same-sex spouses legally married in a state recognizing same-sex marriage for federal tax purposes (but not for state tax purposes). Same-sex spouses must file a joint tax return in order to get a subsidy.
Household income includes anyone who is also included on a tax return. Non-married partners would simply follow the standards for individuals with dependents. Basically, if a non-married person is claimed as a dependent by his or her partner, then the dependent isn’t eligible for a subsidy.
What does the Defense of Marriage Act (DOMA) Supreme Court ruling mean for subsidies?
Based on recent Supreme Court decisions, “spouse” now includes same-sex spouses legally married in a state recognizing same-sex marriage for federal tax purposes (but not for state tax purposes). Same-sex spouses must file a joint tax return in order to get a subsidy.
My husband and I both have access to employer coverage and we have two children. My husband’s coverage isn’t considered “affordable,” and my coverage doesn’t let my husband or children join because my husband has access to coverage. My children must go on my husband’s coverage because of certain rules. In this situation, are my husband and children eligible for a subsidy?
Yes, assuming your family falls within the poverty limits. Your husband can go on the public Marketplace and get a subsidy for him and your children. You and your husband must report all household income and file a joint tax return to get a tax subsidy, if eligible.
Is severance considered income when determining subsidies?
Anything included on your income tax return would affect qualifying for a subsidy.
Does disability income (not including Social Security) count as income when applying for a subsidy?
Some disability is taxable and some is not. Disability income is considered income if it’s included on your annual tax return (so it would be used to determine subsidy eligibility). Learn more about what disability income counts when applying for a subsidy at the Ameriprise website.