Get answers to the common questions about health insurance subsidy eligibility, how to obtain subsidies, and how the use of a subsidy may affect your choice when selecting health insurance pans.
Updated August 30, 2019
VIDEO: How do Obamacare subsidies work?
Video: How can I get an Obamacare subsidy?
What Are Obamacare Subsidies?
The Affordable Care Act – also known as Obamacare and the ACA – provides government subsidies to certain eligible consumers.
The goal of these subsidies is to make individual and family health insurance more affordable for households with middle to low annual incomes.
Below are some questions about subsidies which are commonly answered by the licensed agents in our Customer Care Center.
Please note that a final determination of any consumer’s eligibility for a subsidy will be made by the government during the application and enrollment process.
QUESTION: How do I know if I qualify for a health insurance subsidy?
Eligibility for subsidies are based on the federal poverty level (FPL). Every year the government determines the FPL, those households who make between 100% and 400% of the FPL are usually eligible for subsidies.
These subsidies help individuals and families afford their monthly premiums, and in some cases, out-of-pocket expenses.
Whether you receive a subsidy – and the amount of any subsidy you receive – may also depend on the cost of coverage offered in your area.
To receive a subsidy, you must also be a legal resident of the United States, not incarcerated, and not eligible for other forms of minimum essential coverage – for example: Medicare and Medicaid. Additionally, you cannot have had the opportunity to join an employer-sponsored plan and denied it.
Q: Where can I figure out what my subsidy will be?
A: When shopping health insurance plans on eHealth, you’ll be able to receive a subsidy estimate.
Keep in mind that a final determination of your subsidy eligibility will be made by the government during the application and enrollment process.
Q: If I qualify for a subsidy, will I pay less for my insurance or does the government send me a check?
A: If it’s determined that you are eligible for a government subsidy during the application and enrollment process, you may have your subsidy applied towards your health insurance premiums on a month-to-month basis or claim it instead on your federal tax return.
If you qualify for an additional subsidy to help lower your copayments and deductibles, those funds will be provided directly from the government to your health insurance company.
Q: When applying for a subsidy, do I need to submit a tax form to prove my income?
A: Subsidies are based on your modified adjusted gross income for the current year.
You should use your best estimate of what your household modified adjusted gross income for the current year will be.
Any discrepancy in the amount of subsidy you were due and the amount you actually received will be reconciled in your federal tax return.
Q: What happens if my income changes after I’ve already received a subsidy?
A: If you applied and received a government subsidy this year, any amount you overpay or underpay will be reconciled when you file your federal taxes.
If your income increases, you may have to pay the government back for all or a portion of the subsidies you received. The government will take what you owe out of your tax return, or you may have to write a check to the Internal Revenue Service.
If you opted not to have your subsidy applied towards your monthly premiums but instead to get your subsidy when you file your income taxes, the correct subsidy amount will be determined when completing your tax return.
If your income changes mid-year, you have the option of going back to the government exchange (or the other site where you originally applied for your subsidy) to have your subsidy amount adjusted for the remainder of the year, based on your updated income information.
Make sure to report any changes in income throughout the year, as you may become eligible or ineligible for subsidies mid-year. If you don’t report your income, you could end up with a large tax bill at the end of the year or miss out on subsidies you could have received.
Q: What if I’m offered coverage through my employer but it’s too expensive? Can I still qualify for a subsidy?
A: Generally, you cannot use a subsidy to pay for the cost of employer-based health insurance. You may be eligible for a government subsidy to purchase insurance through a government-run exchange if your employer’s coverage is considered unaffordable or if it is considered inadequate (that is, if it covers less than 60 percent of the cost of covered benefits).
Q: What if I still can’t afford subsidized insurance, are there other options?
A: If you’ve explored your options with a licensed agent and still cannot afford coverage even with a subsidy, double-check to see if you may qualify for Medicaid.
Even if you believe that you do not qualify for Medicaid based off of income alone, apply anyway especially if you are pregnant or disabled since you are more likely to be qualified.
The government health insurance exchange for your state can provide you with information on Medicaid coverage.
While the individual mandate tax penalty does not apply from 2019 on, some states have a tax penalty at the state level. This means that if you go without coverage you may face a tax penalty depending on where you live.
Q: If I get a health insurance subsidy, is that the same as being on Medicaid?
A: No. Medicaid is a government-sponsored health insurance program.
Government health insurance subsidies are provided to qualifying consumers to help them purchase private health insurance for themselves in the open market.
Q: Do I get to keep my doctor if I get a subsidy?
A: The answer depends on whether your doctor is within your health plan’s network of accepted providers.
If your doctor isn’t in the plan’s network, you’ll likely pay a higher amount towards your medical bills. In some cases, your plan may pay nothing at all when you visit an out-of-network doctor or hospital.
You can use eHealth’s Find a Doctor tool to find health insurance plans with your doctor!
Q: Can I choose from the same selection of health insurance plans if I get a subsidy?
A: No. Subsidies can only be applied to qualified health plans that are purchased through a government health insurance exchange or through a qualified online insurance marketplace partnering with a government exchange – like eHealth.
Insurers are offering additional plans outside of exchanges which will still meet the coverage requirements of the Affordable Care Act, but these off-exchange plans are not eligible for purchase with a subsidy.
Q: Where do I go to get a subsidy? Am I limited to my state’s government health insurance exchange?
A: Since subsidy determinations can only be made by the government, you will need to work with your state’s government exchange – or through a licensed agent or qualified online insurance marketplace partnering with a government exchange, such as eHealth – in order to obtain a subsidy.
Q: Can I get a subsidy through my local insurance agent?
A: If your local licensed health insurance agent has received the proper certification, he or she can help you enroll in a subsidy through the government exchange in your state.
Q: Are subsidized insurance plans the same as unsubsidized insurance plans?
A: Health insurance plans are not subsidized per se. Rather, consumers meeting certain qualifications may be eligible for a subsidy when purchasing a plan.
Qualifying consumers who want to use their subsidies to help cover the cost of health insurance will be limited to plans eligible for purchase with a subsidy. These plans are available through the government health insurance exchange in your state or through licensed agents and other 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 current health insurance plans are required to provide coverage for the same suite of “essential health 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 the state exchange for purchase without a subsidy.
However, there are many ACA-compliant plans 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 the scope of the provider network they offer.
Q: If I’m eligible for a subsidy, am I required to buy an exchange plan? Can I choose an off-exchange plan instead and not use a subsidy at all?
A: Being eligible for a subsidy does not mean that you are required to use one. You can choose to forgo your subsidy and purchase an off-exchange plan instead.
This is an individual decision and depends on your personal preferences. Things to consider include the amount of subsidy for which you qualify, and whether your preferred doctor is a participant in the provider network of any plan you may be considering.
A licensed agent can help you understand your different options.