Frequently Asked Questions about the Affordable Care Act (ACA)

Click on any of the frequently asked questions about the Affordable Care Act below to see an answer from HealthKY.com.

Help Paying Private Health Insurance Premiums

Who is eligible for Marketplace premium tax credits?

Premium tax credits will be available to U.S. citizens and lawfully present immigrants who purchase coverage in the Marketplace and who have income between 100% and 400% of the federal poverty level. Premium tax credits are also available to lawfully residing immigrants with incomes below 100 percent of the poverty line who are not eligible for Medicaid because of their immigration status. (Generally, immigrants must lawfully reside in the U.S. for five years before they can become eligible for Medicaid.)

In addition, to be eligible for the premium tax credits, individuals must not be eligible for public coverage—including Medicaid, the Children’s Health Insurance Program, Medicare, or military coverage—and must not have access to health insurance through an employer. (There is an exception in cases when the employer plan is unaffordable because the employee share of the premium exceeds 9.5% of the employee’s income. There is also an exception in cases where the employer plan doesn’t provide a minimum level of coverage.)

Can I get premium tax credits for health plans sold outside of the Marketplace?

No. Premium tax credits are only available for coverage purchased in the Marketplace.

Can I use the premium tax credit to reduce the cost of any Marketplace health plan?

You can apply the premium tax credit to any Bronze, Silver, Gold, or Platinum plan offered through the Marketplace. Premium tax credits cannot be applied to Catastrophic plans or to stand-alone dental plans. If you are also eligible for cost sharing reductions, be aware that these can only be obtained through Silver plans offered in the Marketplace.

How do the premium tax credits work?

Premium tax credits reduce your premium for most Marketplace policies. The amount of the tax credit you may receive depends on your income and the cost of Marketplace health plans in your area. The Marketplace will determine the expected contribution you are required to pay toward the premium for a mid-range (Silver) benchmark plan. The  expected contribution will increase on a sliding scale based on your 2014 income. If your income is near the poverty level, the expected contribution you would be required to pay toward the benchmark plan is 2 percent of your income. As your income gets closer to 400% of the poverty level, the expected contribution you would be required to pay toward the benchmark plan is 9.5% of your income.  The difference between the premium for the benchmark plan and your expected contribution equals the amount of your tax credit. (You do not have to pay more than the actual premium for the plan.) The Marketplace will tell you what that dollar amount is. You can use that amount to help pay the premium for any Bronze, Silver, Gold, or Platinum plan offered in the Marketplace. The credit cannot be used to pay for a Catastrophic plan.

 

Premium tax credits may be claimed at the end of the year, or you can apply for an advanced premium tax credit based on your estimated income for the up-coming year. If you elect to receive an advanced credit, the government will pay 1/12 of the credit directly to your insurance company each month and the insurer will bill you for the rest of the premium.

It’s important to keep in mind that when you apply for the premium tax credit this fall, during Open Enrollment, you won’t necessarily know for sure what your 2014 income will be, so you will apply based on your best estimate of your 2014 income.  Later, when you file your 2014 tax return, the IRS will compare your actual income to the amount of premium tax credit you claimed in advance. If you underestimated your income and claimed too much premium tax credit, you might have to pay back the difference. If you didn’t receive all of the premium tax credit you’re entitled to during the year, you can claim the difference when you file your tax return. You should report any changes in your income during the year to the Marketplace, so your credit can be adjusted and you can avoid any significant repayments at the end of the year.

How do I apply for premium tax credits?

On the health insurance Marketplace web site, you will find an Application for Health Coverage and Help Paying Costs. Filling out the application online is the fastest, though you can also submit a paper application or call your Marketplace call center and apply over the phone. The Application will ask you basic information about yourself (and any family members who are applying for coverage with you) including your Social Security number and information about your citizenship or immigration status. It will also ask employment and income information, including what’s on your most recent income tax return. Once you’ve submitted the application, the Marketplace will let you know if you qualify for help paying for Qualified Health Plans it offers. It will also let you know if you (or any members of your family) may be eligible for coverage through Medicaid or the Children’s Health Insurance Program.

When can I apply for Marketplace premium tax credits when other coverage is available?

In general, if you have any of the following types of coverage, you would be ineligible for premium tax credits through the Marketplace:

  • Employer-sponsored coverage, unless the coverage is unaffordable (your required contribution to premium for self-only coverage costs more than 9.5% of household income) or does not meet minimum value (an actuarial value of less than 60%).  Special rules apply when the affordability of family coverage is a concern.
  • Government-sponsored coverage, including Medicare Part A coverage, Medicare Advantage plans, Medicaid coverage and the Children’s Health Insurance Program coverage, Veterans health coverage and TRICARE (coverage for members of the military)
  • Coverage for Peace Corps volunteers

I’m single and I’m offered health benefits at work. Can I try to find a better deal in the Marketplace?

Usually no. If you are offered health benefits at work and your required contribution costs no more than 9.5 percent of your household income, you will not be eligible for premium tax credits through the Marketplace. If you are required to pay more than 9.5% of your income to enroll in coverage for a single person under your job-based health plan, then you could qualify for premium tax credits in the Marketplace.

In addition, if your job based health plan doesn’t meet the standards for minimum value (for example, if it has an annual deductible higher than $6,350 per person), then you could also qualify for premium tax credits.

When you apply for a premium tax credit in the Marketplace, the application will include a form with questions about the affordability and minimum value of any job-based coverage you may be eligible for. Take that form to your employer and ask them to fill it out. The Marketplace will review the information and let you know whether you qualify for premium tax credit

I’m married. I work full-time for a large employer that offers me health benefits, but won’t cover spouses. Is that allowed? Can my wife apply for coverage and subsidies in the Marketplace?

Beginning in 2015, large employers will be required to offer health benefits to full-time workers and to their dependent children, or face a penalty. A large employer is one that employees at least 50 workers. Once the provision takes effect in 2015, your employer would not have to pay a penalty for refusing to offer coverage to your spouse.

Meanwhile, because your spouse is not offered health benefits through your job, s/he may be eligible to apply for coverage and premium tax credits through the Marketplace.

My family and I are offered health benefits through my job, but we can’t afford to enroll. My employer pays 100% of the premium for workers, but contributes nothing toward the cost of adding my wife and kids. Can we try to find a better deal in the Marketplace?

You can always shop for coverage on the Marketplace, but your family members won’t be eligible for tax credits to help pay the premium. When people are eligible for employer-sponsored coverage, they can only qualify for Marketplace premium tax credits if the employer-sponsored coverage is unaffordable. The way this is calculated, coverage is unaffordable only if your cost for coverage for a single person under the employer plan is more than 9.5% of your income. So although you may feel your family coverage is unaffordable in practical terms, it is considered technically affordable.

If your family members end up uninsured because family coverage is unaffordable, they will not have to pay a tax penalty under the “individual mandate.”

If I’m eligible for other coverage but haven’t enrolled in it yet, can I qualify for premium tax credits in the Marketplace?

For certain types of coverage, if you are eligible but not enrolled, then you can still qualify for premium tax credits. These include:

  • Retiree health coverage offered by a former employer
  • COBRA coverage
  • Student health plan coverage
  • Medicare Part A coverage requiring payment of premiums

However, if you are eligible for job-based coverage (that is affordable and meets minimum value) or for Medicaid or CHIP, but you didn’t enroll, then you are not eligible for premium tax credits.

My kids are eligible for the Children’s Health Insurance Program. Can I enroll them in our Marketplace health plan and get premium tax credits for them instead?

You can add your children to your Marketplace plan, but because they are eligible for your state’s Children’s Health Insurance Program (CHIP), they are not eligible for premium tax credits. The exception to that is if you live in a state that has a waiting period for enrolling in CHIP. During the waiting period, your children are eligible for a premium tax credit; when the waiting period has ended they can enroll in CHIP and will become ineligible for the tax credit.

How much can I earn and qualify for premium tax credits in the Marketplace?

Premium tax credits are available to people who buy Marketplace coverage and whose income is between 100% and 400% of the federal poverty level.

Will I qualify for lower costs on monthly premiums?

When you get health insurance coverage in the Marketplace, you may be able to get lower costs on monthly premiums. This depends on your income and family size.