Insuring Your Health columnist Michelle Andrews helps you navigate the new insurance marketplaces that are scheduled to launch on Oct. 1.
Q: Who can get government subsidies to help pay for insurance obtained through a marketplace? How will that work?
A: There are two types of subsidies that will be available. People with incomes up to 400 percent of the federal poverty level–about $46,000 for an individual or $94,000 for a family of four–may be eligible for premium tax credits to reduce the price of a policy. Cost-sharing subsidies that reduce a plan’s deductibles, copayments and total out-of-pocket costs will be available to people with incomes up to 250 percent of the poverty level, or about $29,000.
During the online application process, you’ll be asked to provide information about your income, which will be fed into a centralized data hub to determine your eligibility for subsidies.
Subsidies will generally be sent directly to the insurer, and the amount you owe in premiums or cost-sharing will be reduced.
If your income increases during the year, notify the exchange promptly so that you can avoid having to pay any tax credit overpayments. On the other hand, if your income goes down you could be eligible for a bigger subsidy. Either way it’s important to notify the exchange if your income changes.