This might be the most important question on the list as it means the difference between potentially $1000 of health subsidies and zero. The health subsidy eligibility is primarily income based and it's important to understand that it is graded on a sliding scale as your income increase up to a certain amount. Let's first define what the income basis and then look at actual numbers.
Between 138% and 400% of Federal Poverty Level
The ACA laws states that eligible individuals (citizens, residents, not offered affordable Minimum Value group coverage, etc) that make between 138% and 400% of the Federal Poverty Level may be eligible for health subsidies. The law looks at the household income and the number of household eligible members to establish this requirement. They also go based on the MAGI or Adjusted Gross Income (Definition on right). This is essentially line 37 on the 1040 plus some additions (foreign income, etc). We can walk you through the income submission process step by step. People who make under 138% are eligible for Medi-Cal. So what happens if you fall between 138% and 400%?
Premium caps as a percentage of income
Here's how it works. If you fall within the 138% to 400% range, your share of health insurance premium cannot exceed certain percentages of your gross income. Here are the bands:
250-400% premium cannot exceed between 8 - 9.5% of MAGI
200-250% premium cannot exceed between 6-8% of MAGI
150-200% premium cannot exceed between 4-6% of MAGI
138%-150% premium cannot exceed between 2-4% of MAGI
Let's take an example:
Tina makes 300% of the Federal Poverty Level or approx $34K as a single person. The cap on her share of premium will be 9.5% of $34K or approximately $300/monthly. If she chooses a health plan that costs $600, her monthly out of pocket (if she takes full Advanced Tax Credit) will be the $300.
The actual FPL Amounts
When you complete the enrollment process, you will be asked for current income information. Essentially, the income basis is your best estimate for this year's income and assumes next year will be about the same. The system may "ping" this data off of your prior year's tax filing and or EDD (State payroll tax system) to look for major discrepancies but it's based on your current info. You will be able to address discrepancies during the process in case of changes which will be common (loss or addition of job, change in income, etc).
There's a lot of math here but the system should automate much of the calculation. You just need to provide your number of eligible household members, gross income for eligible members, and general information. We're happy to help you with this process. Keep in mind that the subsidy, if eligible, will only be available in the Exchange.
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