California health insurance    Health Reform in California    400% of Federal Poverty Level

400% of Federal Poverty Level


RAF and California group health insurance 400% of FPL determines if a person is eligible for subsidy (detail below)
Risk Adjustment Factor in California insurance market 2014 subsidies based on 2012 income (2013 tax filing) (detail below)
California RAF for Small Group Subsidies can be $1000's of dollars per person per year (detail below)
RAF affects group health insurance rates by up to 20% Starting Oct 1st, 2013, quote Exchange plans below with income info for subsidy qualification

This is the number you really need to know going forward into the 2014 Health Reform changes.  Are you under 400% of the Federal Poverty Level for the year of 2012 (tax filing of April 2013)?  That lone fact will dictate whether you receive sizable California health insurance subsidies or whether you pay much higher premiums than prior to Jan 2014.  We are talking about billions of dollars flowing to and from (through taxes) millions of people.  Let's check out the 400% Federal Poverty limits and also really understand what's at stake.

 
Why 400% of the Federal Poverty Level?

The ACA bill sets 400% of the FPL as the dividing line between those that will qualify for a subsidy and those that will not.  If your MAGI (Modified Adjusted Gross Income...think both active and passive income) is under 400% of the the FPL number, you may qualify for subsidy.  The subsidy is based on keeping your share of health insurance premium below a certain amount (9.5% at the most) of your income.  For example, if you make 350% of the FPL and your premium is $1000 with an income of $3,000 monthly, you may receive a subsidy of approximately $700.  Your net premium in this simplified example would be $300/monthly of the original $1000.   We'll provide a calculator at the bottom of this article.

What if you make over 400% of the FPL?

You receive no subsidy.  It's a very steep line...there is no gradual scale but a drop off and those making over 400% of poverty can expect health insurance premiums to be quite a bit more expensive. This is why the 400% rate is so important.  It's literally the difference between $1000 of dollars in health subsidies versus none.  We expect to have two distinct camps of health care shoppers...those with a subsidy (pleased) and those without (irate).  It's going to be an interesting 12 months in the California health insurance market!  So why does the 2012 FPL matter? 

The Federal Poverty Look Back Period

To qualify for the health subsidy, income will be the primary basis.  The only official settling of income is the Federal tax return.  Since the subsidy is slated to start being advanced Jan 1st, 2014, the most recent tax filing is April 2013 which reflects income levels from 2012.  The FPL numbers go up each year with an inflation index so we really need to look at 2012 numbers for a Jan 2014 eligibility.  Similarly, eligibility for 2015 (will need to be re-qualified each year) will be based on 2013 numbers (tax filing in April, 2014) and so on.  What happens if your income changes significantly during the period that you are receiving the advanced subsidy?

Settlement of subsidies received

If your income goes up significantly during the year that you are receiving the health subsidy, you may have to pay back part of the advanced subsidy as part of your tax filing in the following year.  the amount to be paid back is based on your % of FPL and the amount you received.  People who still make under a certain level will not need to pay back the full amount they had received. 

Here are the 2013 400% of Federal Poverty Levels:

 Household Size  100%  133%  150%
200% 
 300%
400% 
 1 $11,490 $15,282 $17,235 $22,980 $34,470 $45,960
 2 15,510  20,628 23,265   31,020 46,530 62,040
 3 19,530  25,975 29,295   39,060 58,590 78,120
 4 23,550  31,322 35,325   47,100 70,650 94,200
 5 27,570  36,668 41,355   55,140 82,710 110,280
 6 31,590  42,015 47,385   63,180 94,770 126,360
 7 35,610  47,361 53,415   71,220 106,830 142,440
 8 39,630  52,708 59,445   79,260 118,890 158,520
 For each additional person, add $4,020  $5,347 $6,030   $8,040 $12,060 $16,080

NEW!  California Health Subsidy Calculator  (until we have exact rates October 1st, 2013)

Starting Oct 1st, 2013, you can quote Health Exchange and Non-Exchange plans with subsidy calculations built in HERE.

 

 



 

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