What You Need to Know
2021 health plans are measured against your projected income for 2021 and the benchmark plan cost. You qualify for subsidies if pay more than 8.5% of your household income toward health insurance.
In 2021, premiums will drop on average about $50 per person per month or $85 per policy per month. If you already enrolled in an ACA plan and got a subsidy, you can change your plan and get the added savings.
If you decide to keep your current plan, you will receive a refund for the subsidy difference at tax time next year.
How do you get help paying for health insurance and health coverage? It depends on how much you earn. In 2021, Obamacare subsidies begin if your health plan cost is greater than 8.5% of your household income towards the cost of the benchmark plan or a less expensive plan (the benchmark plan is the second-lowest silver plan). The discount on your monthly health insurance payment is also known as a premium tax credit.
How Do You Figure Out Your 2021 Obamacare Subsidy?
Subsidies, or premium tax credits, are based on three things: your income, the price of the benchmark plan and how much the Affordable Care Act requires you to pay toward your health insurance.
The actual subsidy is the difference between the benchmark plan and your expected contribution.
You have to understand how much you’ll make in advance since you generally apply for coverage before the year starts.
You also have to compare the total plan premium and your household income before coverage starts.
Prior to 2021, you were expected to chip in anywhere from 2% to 9.83% of your income. And prior to 2021, you could earn up to 400% of the federal poverty level to qualify for subsidies (also known as the subsidy cliff). For a family of four, that number equaled $104,800 a year.
Previous 2021 Total Household Income for Maximum ACA Subsidy
|Household Size||Household Income|
What’s Different in 2021 for Obamacare Subsidies?
The American Rescue Plan changed everything for up to two years.
The American Rescue Plan Act of 2021 improved the affordability of the Affordable Care Act (ACA).
It removed the federal poverty level requirement based on income.
So, there is technically no cap on how much you can earn to qualify for help paying your insurance premium. It’s only a percentage of your income.
It also increased the amount of subsidies you can receive.
Prior to 2021, you were expected to spend from 2% to 9.83% of your household income toward health insurance.
That number has dropped from 0% to to 8.5% for two years.
Lastly, as of July 1, 2021, anyone who got or was approved for unemployment benefits can enroll in a low-cost to free health plan after federal subsidies.
The American Rescue Plan also opened a Special Enrollment Period on the federal Health Insurance Marketplace. Many states with their own exchanges have also followed suit. Even if you’ve already enrolled in a health plan, you can go back and get a different plan (or re-enroll in the same one).
The federal government estimates premiums will drop on average about $50 per person per month or $85 per policy per month.
How Much You Pay for a Benchmark Silver Plan
|Income (by federal poverty level)||% of Your Income (before 2021)||% of Your Income (in 2021)|
|100% – 138%||2.07%||0%|
|138% – 150%||3.10% – 4.14%||0%|
|150% – 200%||4.14% – 6.52%||0.0% – 2.0%|
|200% – 250%||6.52% – 8.33%||2.0% – 4.0%|
|250% – 300%||8.33% – 9.83%||4.0% – 6.0%|
|300% – 400%||9.83%||6.0% – 8.5%|
|Over 400%||Not eligible||8.50%|
Households with more than 8 people should add $4,480 per person.
What About Medicaid Instead of Subsidies?
In most states, those who make under 139% of the federal poverty level qualify for Medicaid eligibility instead of subsidies.
In 2021, for a single person, the poverty level equates to $12,880; for a family of four, that amount equals $26,500.
Alaska and Hawaii are unique states with higher income guidelines – those can be found here.
What Are These Subsidies For?
This information – and these household income amounts – apply to health insurance plans that cover you and your family during 2021.
ACA subsidies are available to reduce your monthly payments or as a credit for next year’s tax filing with the IRS.
New federal poverty level income levels are released annually in January. Those numbers are used immediately to determine eligibility for Medicaid and the Children’s Health Insurance Program (also known as CHIP). They are also used in November when the ACA Open Enrollment Period begins.
What Counts As Income?
The right income to submit is your modified adjusted gross income or MAGI (basically, the annual income you report on your tax return, with a few tweaks).
What If You Earn Too Much or Too Little to Qualify for Subsidies?
You can still “get Obamacare” no matter how much you make per year. You simply won’t qualify for monthly premium assistance if you make more than the income limit.
Less Than 100% of FPL: If your household makes less than 100% of the federal poverty level, you don’t qualify for premium tax credits (“Obamacare subsidies”). However, you’re probably eligible for Medicaid, depending on your state’s rules. To learn more, it’s important to apply directly to your state’s Medicaid program.
2021 Total Household Income for Minimum ACA Subsidy
|Household Size||Household Income|
If You Don’t Qualify: If your household makes too much to qualify for a subsidy, you can also consider off-Marketplace insurance.
These plans are generally identical to subsidy-eligible plans, generally cost the same, and follow ACA rules. But depending on the area, you may find that different insurers offer plans outside the exchange, giving you more options from which to choose.
What About Expanded Marketplace Subsidies?
Under the 2021 American Rescue Plan, individuals with up to 150% FPL can enroll in a Silver benchmark plan for $0 and reduced deductibles. Previously, no matter how poor you were, people had to contribute something toward the cost of the benchmark Silver plan.
If you received unemployment benefits or were approved for them, you also qualify for the expanded subsidies through the federal Health Insurance Marketplace.
On the other end of the spectrum, people who make more than 400% FPL can also qualify for a premium subsidy. In the past anyone making more than the income cap were unable to qualify and could have purchased off the exchange.
Bottom line – it pays to check your eligibility level no matter what your income is. You can check resources like HealthCareInsider.com or the calculator above to figure out your subsidy rate or to see if switching is the right choice for you.