Good healthcare is a must-have whether you’re a single individual or you are married with children. And affordable health insurance makes good healthcare more accessible. There are so many health insurance options on the market. However, not everyone can afford them.
That’s why the Affordable Care Act (Obamacare) was passed into law. But even with more accessible healthcare and health insurance, some families struggle to meet their financial obligations. That is where Obamacare subsidies can make a difference, although they’re determined by income level.
What are the Obamacare 2023 subsidies by income level, and how do you know if you meet the requirements? Read on to find out who is eligible and how to calculate whether or not you qualify for ACA subsidies in 2023.
What Are Obamacare Subsidies?
Obamacare is the popular name for the Affordable Care Act (ACA). It’s a comprehensive healthcare law that was passed in the US by the president at the time, Barack Obama, in 2010. The ACA/Obamacare expands access to healthcare and health insurance for lower-income earners.
The ACA also created subsidies targeted at Obamacare enrollees on the health insurance marketplace.
There are two kinds of Obamacare subsidies: Advance Premium Credits and Cost-Sharing Reductions. We’ll have an in-depth look at each of these terms in a moment but their aim is the same. They make Obamacare even more affordable for people from low-income households.
Who Is Eligible For Subsidies?
Most people who enroll in Obamacare find that they qualify for these subsidies. But there are some basic rules governing eligibility.
- US citizenship or ‘legally present in the US” status
- No access to affordable health insurance through Medicare, Medicaid, or employee-sponsored insurance
- You must not be incarcerated at the time of application
- An income of no more than 400% of the Federal Poverty level
Obamacare Subsidies By Income Level
Obamacare subsidies are open only to those individuals with an income of 400% or less of the Federal Poverty Level (FPL).
At the time of writing, the FPL is set at $14, 580 for the district of Washington DC and all US states except for Alaska and Hawaii. In Alaska, the FPL for an individual is $18, 210 and in Hawaii, it is $16, 770.
In the case of households with more than one occupant, $5,140 is added for each additional person. As such, the FPL of a household of 4 people will be higher than that of an individual.
Federal poverty levels are used to calculate eligibility for government-funded programs and benefits and are not exclusive to Obamacare. The FPL is reassessed yearly.
To give you an idea of what different percentages of the FPL will look like for different size households, these are the FPL guidelines for 2023 for all US states (except Alaska and Hawaii).
|# of people in the household||100% of FPL||150 % of FPL||200 % of FPL||300 % of FPL||400% of FPL|
|1 person||$14, 580||$21,870||$29,160||$43,740||$58,320|
Cost Sharing Reductions (CSR) And Premium Tax Credits
Let’s get back to the two types of Obamacare subsidies: Cost Sharing Reductions (or CSR) and Premium Tax Credits.
Premium Tax Credits
A net income of between 100% and 400% of the FPL qualifies you for Premium Tax Credits, and this is certainly the most popular subsidy.
Obamacare Premium Tax Credits allow you to pay reduced premiums on the benchmark Silver Plan on the state or federal Obamacare Health Insurance Exchange.
If your net income is below 150% of the current FPL, you may be eligible for a zero-premium benchmark Silver Plan.
Can My Qualification Status Change?
Yes, you may find that you qualify for Obamacare Premium Tax Credits one year and not the next. Or the level of subsidy may differ. This is why:
How much you should spend on health insurance differs according to your age, marital status, or family size. As your needs and responsibilities change, so too will your financial obligations. Your income will also change, and this is the main criterion for qualification for Obamacare subsidies.
Depending on what percentage of the FPL your income amounts to, your expected premium contributions can be anywhere from 0% and 8.5% of your total income.
But regardless of whether you choose individual or family coverage, you’ll be entitled to this reduction if you meet the income-based and other criteria in the current year.
Unlike Premium Tax Credits, CSR subsidies don’t lower the amount you pay for your monthly health insurance premium. However, they save you money when you use your health insurance.
CSR offers discounted deductibles, co-insurance, and co-payments associated with marketplace-based health insurance plans approved under Obamacare. As a result, your out-of-pocket expenses before your health insurance covers all costs, are reduced.
These CSR savings only apply to Silver Plan options.
Do I Really Need Reduced Co-Payments?
Yes, you do. Co-payments and other up-front expenses apply at various medical facilities.
Even most urgent care facilities, while they will accept your health insurance, will have some form of co-payments, co-insurance, or deductibles. But these amounts may differ depending on the specific health insurance plan you’re on.
How To Determine Your 2023 Obamacare Subsidy
To get assistance under the Affordable Care Act/Obamacare, you must earn between 100% – 400% of the federally determined poverty level.
In 2023, the minimum end of that federal poverty level scale is $14,580 per year in most US states. But how do you calculate what percentage of the FPL your income is? It’s a simple calculation. Just follow the steps below.
Step 1: Determine Your Net Income
Look at your paycheck. Your gross income is the top figure, the amount of remuneration that you receive from your employer in return for your work. However, certain things are deducted from that top figure, such as taxes or contributions to pension plans.
After those deductions, you’re left with your take-home pay, the money you actually get out each month. That figure is your net income. Once you have determined your net income, do the same for any additional income earners in your household.
For example, say you earn $1,700 monthly before deductions. After deductions, you’re left with $1,300 – this is your net income.
Once you’ve determined your monthly net income, multiply it by 12 to get your annual net income. In this example, your total net income for the year would be $15,600
Step 2: Divide Net Income By The FPL
Now divide the full net annual income figure by the poverty guideline income level for your household size.
Remember, the FPL in 2023 is $14,580 per individual for the District of Columbia (Washington D.C.) and every US state except for Alaska where it’s $18,210, and Hawaii where it’s $16,770.
Don’t forget to add $5,140 for each additional household occupant. In the case of a married couple, the annual FPL in most US states would be $19,720.
So, in our example, as a single individual, you would divide your annual net income of $15,600 by the FPL of $14,580:
$15,600 / $14,580
Note that your real-life results depend on your unique net income figure.
Step 3: Calculate The Percentage Of The FPL
Now, multiply the result by 100 to get the percentage of the FPL for your household.
1.06 x 100
If you get a percentage between 100 and 400%, you could qualify for Obamacare subsidies.
However, don’t forget that certain other criteria apply (see above). Also, if you are married and filing taxes separately, or refuse to file income taxes, you will not be eligible for Premium Tax Credits or similar subsidies.
Frequently Asked Questions About Obamacare In 2023
Can I enroll in Obamacare at any time?
No, you can’t enroll in Obamacare at any time of year.
There’s an open enrollment period that usually runs from Nov 1 – Dec 15 each year. Certain individuals may qualify for Special Enrollment, due to life events that prohibited timely enrollment.
Is Obamacare available to me if I’m unemployed?
Yes, you can still qualify for Obamacare even if you have been dismissed or retrenched and are receiving unemployment benefits.
But to be sure of your eligibility, check the government’s Healthcare.gov website for all qualifying criteria. There is also a program called COBRA, which allows continued coverage under your employer-sponsored insurance, for a limited time.
Obamacare subsidies make access to affordable health insurance, and this affordable healthcare, available to all. But the Obamacare income limits have to be adhered to, for qualification for these subsidies.
We understand that it can be quite confusing. If you need additional help finding budget-friendly health insurance, we can help. We have assisted countless individuals and families to find the healthcare plan they can afford. Contact our team of experts here at Enhance Health for more information.