Explaining Health Care Reform: Questions About Health Insurance Subsidies – KFF

Overview of Financial Assistance under the Affordable Care Act (ACA)

Health insurance can be expensive and unaffordable for individuals with lower or moderate incomes. To address this issue, the ACA offers financial assistance in the form of sliding-scale subsidies and reduced out-of-pocket costs for eligible individuals. This report provides an overview of the financial assistance available through the ACA for people purchasing coverage on their own through health insurance Marketplaces.

Health Insurance Marketplace Subsidies

There are two types of financial assistance available to Marketplace enrollees: premium tax credits and cost sharing reductions (CSR). Premium tax credits lower monthly insurance payments, while CSR reduces deductibles and other out-of-pocket costs for healthcare services. To qualify for these financial assistance programs, individuals and families must enroll in a health insurance plan offered through a Marketplace.

Premium Tax Credit

Premium tax credits can be applied to Marketplace plans in four “metal” levels of coverage: bronze, silver, gold, and platinum. Bronze plans have the lowest premiums but the highest deductibles and out-of-pocket costs. Platinum plans have the highest premiums but very low out-of-pocket costs. Catastrophic health plans, which have even lower premiums and higher cost sharing compared to bronze plans, are also available on the Marketplace.

Eligibility for Premium Tax Credit

• Household income must be at least equal to the Federal Poverty Level (FPL).
• No access to an employer plan that meets minimum value and affordability requirements.
• Not eligible for coverage through Medicare, Medicaid, or CHIP.
• U.S. citizenship or proof of legal residency.
• If married, must file taxes jointly.

Income: Household income is defined as the Modified Adjusted Gross Income (MAGI) of the taxpayer, spouse, and dependents who are required to file a tax return.

Employer Coverage: Employer coverage is considered affordable if the required premium contribution is no more than 9.02 percent of household income. The coverage must also meet a minimum value standard and have an annual out-of-pocket limit.

Eligibility for Medicaid: In states that have expanded Medicaid, adults earning up to 138 percent FPL are generally eligible for Medicaid. In non-expansion states, adults with income as low as 100 percent FPL can qualify for Marketplace subsidies.

Cost Sharing Reduction

Cost sharing reductions lower out-of-pocket costs for deductibles, copayments, and coinsurance for eligible individuals. These reductions are only available for silver plans on the Marketplace.

Eligibility for Cost Sharing Reduction

People eligible for premium tax credits and have household incomes between 100 to 250 percent FPL are eligible for cost sharing reductions.

Amount of Cost Sharing Reductions: Cost sharing reductions are determined on a sliding scale based on income. The most generous reductions are available for individuals with income between 100 and 150 percent FPL, while less generous reductions are available for those with incomes between 150 and 250 percent FPL.

Insurers have flexibility in setting deductibles and copays to achieve actuarial value benchmarks set by the ACA for Marketplace plans.

SDGs, Targets, and Indicators

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 1: No Poverty
• SDG 3: Good Health and Well-being
• SDG 10: Reduced Inequalities

2. What specific targets under those SDGs can be identified based on the article’s content?

• SDG 1.3: Implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the vulnerable.
• SDG 3.8: Achieve universal health coverage, including financial risk protection, access to quality essential health-care services, and access to safe, effective, quality, and affordable essential medicines and vaccines for all.
• SDG 10.2: By 2030, empower and promote the social, economic, and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion, or economic or other status.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Indicator 1.3.1: Proportion of population covered by social protection floors/systems, by sex, distinguishing children, unemployed persons, older persons, persons with disabilities, pregnant women, newborns, work-injury victims, and the poor and the vulnerable.
• Indicator 3.8.1: Coverage of essential health services (defined as the average coverage of essential services based on tracer interventions that include reproductive, maternal, newborn and child health, infectious diseases, non-communicable diseases, and service capacity and access, among the general and the most disadvantaged population).
• Indicator 10.2.1: Proportion of people living below 50 percent of median income, by age, sex, and persons with disabilities.

Table: SDGs, Targets, and Indicators

Source: kff.org