2014 Health Insurance Subsidies FAQ

December 23, 2013

The Affordable Care Act – also known as Obamacare – provides government subsidies tocertain eligible consumers beginning in January 2014. The goal of these subsidies is tomake individually-purchased health insurance more affordable for households with annualincome below thresholds specified by the law.

Through its Customer Care Center – staffed with over 100 licensed health insuranceagents – eHealth receives questions from numerous consumers who are confused abouttheir eligibility for a subsidy, how to go about obtaining one, and how the use of a subsidymay affect their choices when selecting a health insurance plan for 2014. The answersbelow address some of these questions.

A final determination of any consumer’s eligibility for a subsidy will be made by thegovernment during the application and enrollment process.

Consumers earning less than 400% of the federal poverty level (about $46,000for a single person or $94,000 for a family of four) may be eligible for a governmentsubsidy to help them buy coverage in 2014. Whether you receive a subsidy – and theamount of any subsidy you receive – may also depend on the cost of coverage offered inyour area. In order to receive a subsidy, you must also be a legal resident of the UnitedStates, not incarcerated, and not eligible for other forms of minimum essential coverage(for example, coverage through an employer-based plan or through Medicare orMedicaid).

To receive an estimate of any subsidy amount you may be eligible for, use thesubsidy calculator provided at eHealth’s Affordable Care Act Resource Center. A finaldetermination of your subsidy eligibility will be made by the government during theapplication and enrollment process.

If it’s determined that you are eligible for a government subsidy during theapplication and enrollment process, you will have the option to have your subsidy appliedtowards your health insurance premiums on a month-to-month basis or to claim it insteadon your 2014 federal tax return. If you qualify for an additional subsidy to help lower yourcopayments and deductibles, those funds will be provided directly from the government toyour health insurance company.

Subsidies for 2014 are based on your modified adjusted gross income for 2014.You should use your best estimate of what your household modified adjusted grossincome for 2014 will be. Any discrepancy in the amount of subsidy you were due and theamount you actually received will be reconciled in your 2014 federal tax return.

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If you applied and received a government subsidy in 2014, any amount youoverpay or underpay will be reconciled when you file your 2014 federal taxes. If yourincome increases, you may have to pay the government back for all or a portion of thesubsidies you received. The government will take what you owe out of your tax return, oryou may have to write a check to the Internal Revenue Service. If you opted not to haveyour subsidy applied towards your monthly premiums but instead to get your subsidy whenyou file your income taxes, the correct subsidy amount will be determined whencompleting your 2014 tax return.

If your income changes mid-year, you have the option of going back to the governmentexchange (or the other site where you originally applied for your subsidy) to have yoursubsidy amount adjusted for the remainder of the year, based on your updated incomeinformation.

Generally, you cannot use a subsidy to pay for the cost of employer-basedhealth insurance. You may be eligible for a government subsidy if your employer’scoverage is considered unaffordable (that is, if your share of your individual premium ismore than 9.5 percent of your household income for 2014) or if it is considered inadequate(that is, if it covers less than 60 percent of the cost of covered benefits).

If you’ve explored your options with a licensed agent and still cannot affordcoverage even with a subsidy, double check to see if you may qualify for Medicaid. Thegovernment health insurance exchange for your state can provide you with information onMedicaid coverage. Otherwise, if you go uninsured for more than three consecutivemonths in 2014, be aware that you may face a tax penalty on your 2014 federal tax returnin the amount of $95 per person or 1% of your income, whichever is greater. If you don’tearn enough money to be required to file a federal tax return for 2014, you will not besubject to a tax penalty.

No. Medicaid is a government-sponsored health insurance program. Bycontrast, government health insurance subsidies are provided to qualifying consumers tohelp them purchase health insurance for themselves in the open market.

The answer depends on whether your doctor is within your health plan’snetwork of accepted providers. If your doctor isn’t in the plan’s network, you’ll likely pay ahigher amount towards your medical bills. In some cases, your plan may pay nothing at allwhen you visit an out-of-network doctor or hospital.

No. Subsidies can only be applied to qualified health plans that are purchasedthrough a government health insurance exchange or through a qualified online insurancemarketplace partnering with a government exchange. Insurers are offering additional plansoutside of exchanges which will still meet the coverage requirements of the AffordableCare Act, but these off-exchange plans are not eligible for purchase with a subsidy.

Since subsidy determinations can only be made by the government, you willneed to work with your state’s government exchange – or through a licensed agent orqualified online insurance marketplace partnering with a government exchange – in orderto obtain a subsidy.

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If your local licensed health insurance agent has received the propercertification, he or she can help you enroll in a subsidy through the government exchangein your state.

Health insurance plans are not subsidized per se. Rather, consumers meetingcertain qualifications may be eligible for a subsidy when purchasing a plan. Qualifyingconsumers who want to use their subsidies to help cover the cost of health insurance willbe limited to plans eligible for purchase with a subsidy. These plans are available throughthe government health insurance exchange in your state or through licensed agents andother websites authorized by the exchange to assist subsidy-eligible consumers.

Though some plans are eligible for purchase with a subsidy and others are not, all 2014health insurance plans are required to provide coverage for the same suite of “essentialhealth benefits.” The degree of coverage may vary between “bronze,” “silver,” “gold,” and“platinum” plans. Plans offered through your state exchange may also be available off thestate exchange for purchase without a subsidy. However, there are many ACA-compliantplans that are only available outside of government exchanges and only without a subsidy.These plans may differ from plans offered through an exchange – for example, in thescope of the provider network they offer.

Being eligible for a subsidy does not mean that you are required to use one. Youcan choose to forgo your subsidy and purchase an off-exchange plan instead. This is anindividual decision and depends on your personal preferences. Things to consider includethe amount of subsidy for which you qualify, and whether your preferred doctor is aparticipant in the provider network of any plan you may be considering. A licensed agentcan help you understand your different options.

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2014 Health Insurance Subsidies FAQ