If you're looking for health insurance on the Marketplace, there are three things you should keep in mind when setting a budget for your plan:
- Your monthly premium: the amount you have to pay each month to keep your plan active.
- Your deductible: the amount you have to pay by yourself for your health care before insurance will help cover your costs.
- Your out-of-pocket maximum: the highest amount you will pay all year. Once you pay this amount your insurance covers all the costs for the rest of the year.
Thankfully there’s assistance to help pay for all three for those who need it!
Premium Tax Credits Help Lower the cost of Your Monthly Premium
You might have heard of premium tax credits, but how does the government decide how much you have to pay and how much help you get? It all comes down to income. The Affordable Care Act has set guidelines for the maximum percentage of your income you’ll have to put towards your monthly premium. Those percentages are called premium caps. That cap is used to calculate the dollar amount you will have to pay and then you get a premium tax credit to cover the rest of the cost of your plan. The more you make, the higher your cap, and the less you make the lower your cap. So the lower your income the more you can get in premium tax credits. The table below shows the premium caps based on level of income.
Cost-Sharing Subsidies Help Lower Your Deductible and Out-of-Pocket Maximum
If you make less than 250% of the poverty level and choose a silver plan, then you can get extra help with your out-of-pocket expenses. This extra help is a cost-sharing subsidy. The subsidy works by lowering your out-of-pocket maximum and your deductible, and raising the percentage of costs covered by your insurance. Normally a silver plan covers 70% of the cost and you have to pay the other 30%. But with cost-sharing subsidies your insurance might cover 73%, 87%, or even 94% of your expenses – meaning you have to pay less out of pocket. The amount of help you get is based on your income and, again, the lower your income the more help you receive.
Check out this example to see how premium tax credits and cost-sharing subsidies can work together to make your health care affordable!
If You Make More, You Pay More; If You Make Less, You Pay Less
If your income does not qualify you for significant cost-sharing subsidies on the silver plans, you may find that a bronze, gold, or platinum plan is better for you.
To get an idea of what assistance you might be eligible for, visit the Marketplace at www.healthcare.gov/see-plans.