The Affordable Care Act (Obamacare) is a way to help lower-income individuals and individuals without health care afford health care. Although health care is still extremely expensive, the Affordable Care Act provides subsidies. This article will look at the subsidy amounts by income for the the Affordable Care Act.
I'm a supporter of ACA despite the trappings of ever bigger government running our lives. Disease and accidents do not discriminate between the rich or poor. In a nation as rich as ours, nobody should die or get stuck in a permanent loop of poverty just because they can't afford medical treatment.
The two most common reasons why people don't retire earlier are: 1) Lack of money and 2) Uncertainty regarding health care access and costs. Soaring medical costs is also consistently a top-3 reason why Americans file for bankruptcy.
As an early retiree in 2012 with a full 30 years to go before being eligible for Medicare benefits, I was worried about health care. That is, until I did hours upon hours of research on the ACA and cheaper health care alternatives.
Now that I've spent a good amount of time studying what healthcare.gov has to offer, I'm no longe as worried about health care benefits. For those with low-enough income, I'm thrilled for the potentially millions of other people who don't have health care or who have no desire to work into their 60s for health care benefits.
I've also discovered that even millionaires will be eligible for health care subsidies. The reason why even millionaires can get health care subsidies is because the subsidy amounts are based off income, not net worth.
Obamacare (ACA) Subsidy Amounts By Income
When it comes to paying income taxes and receiving health care subsidies, it's generally better to be middle to lower middle class. The philosophy on Financial Samurai is to be wealthy but blend in with the crowd. Staying in the shadows is even more important as an early retiree because we are no longer contributing as much to society, yet we don't look as old as we should which may anger some people.
We already paid our dues in the form of taxes, hence why we retired. One tip for early retirees is to never tell anybody you've retired. Instead, tell them you are unemployed, a consultant, or an entrepreneur to deflect envy and potentially garner sympathy.
The below are four charts I painstakingly put together by inputting income levels in the Kaiser Family Foundation Subsidy Calculator. A Silver Plan is used in the example where the insurer will pay for 70% of the medical expense.
Premium expense is capped at 9.5% of income, and out of pocket expense excluding premium expense ranges from $6,350 for a single individual up to $12,700 for a family of four. You are welcome to play around with the calculator to fit your situation.
The key to getting health care subsidies is to have your income less than 400% of the Federal Poverty Limit (FPL). The FPL changes every year to account for inflation. However, these figures below are more or less the same on a percentage basis.
Based on household size, so long as you make 400% or less of FPL, you will be eligible for health care subsidies. The less you make, the more health care subsidies you will receive.
Subsidy Amounts By Income For A Family Of Four
Subsidy Amounts By Incomee For A Family Of Three
Subsidy Amounts By Income For A Married Couple With No Children
Subsidy Amounts By Income For A Single Individual
Analysis Of Income Limits For Subsidies
Poverty levels are dependent on FPL
Income under $25,100 to be exact for a family of four (two adults, two children), $20,780 for a family of three, and $12,140 for an individual are considered poverty levels in the United States. The calculator spits out $0 subsidies, which is a glitch, implying such applicants pay $0 to next to nothing for annual health care premiums.
Phaseout levels
After earning an income of $100,400 or higher for a family of four, $83,120 for a family of three, $65,840 for a married couple with no kids, and $48,560 for single individuals, you will no longer receive government health care subsidies.
The basic math is 4X the Federal Poverty Level (FPL) as determined by the government. Despite the phaseout, the good thing is that it looks like the max % of income one has to pay annually in premiums gets fixed at 9.5% of gross salary no matter what you make.
Other levels of coverage
The premium and subsidy amounts above are based on a Silver plan. You have the option to apply the subsidy toward the purchase of other levels of coverage, such as a Gold plan (which would be more comprehensive) or a Bronze plan (which would be less comprehensive).
Out of pocket costs
The out of pocket costs excluding premium costs are capped, depending on your situation. For example, a family of four making $50,000 cannot exceed $10,400 for the silver plan for example.
The out of pocket increases to a maximum of $12,700 for a family of four making $94,000. The out of pocket costs for an individual making $30,000 cannot exceed $6,350. It's good to see these out of pocket costs limited, however, they still seem quite high.
A family making $50,000 a year should bring home roughly $35,000-$40,000 after taxes. To spend 30% of their after tax income on health care is a large percentage. Hence it is always important for people to continue saving no mater what their income level. The point is at least we know our backstop cost and can plan accordingly.
Related: The Health Affordability Ratio
How To Take Advantage Of Health Care Subsidies
It's obviously better to make so much money where you have no problem affording unsubsidized health care. However, let me share some ways in which everybody can better benefit from government subsidies.
1) Maximize contribution to pre-tax retirement accounts.
Contribute the maximum $20,500 to your 401k to reduce your taxable income by $20,500. If you have a working spouse, do the same thing to get a combined $41,000 reduction to your MAGI.
You can contribute $6,000 each to your IRA as well pre-tax if you make under ~$122,000 as a single and under $193,000 as a married couple. But your goal is to get way down the charts so you start receiving subsidies.
Related: How Much Should You Have Saved In Your 401k By Age
2) Start an S-Corp or LLC.
Starting a business is a way to reduce your taxable income by deducting all business related expenses. Everyone should check with an accountant first about deductions before going ahead because each business is different. There is a lot of overlap in terms of business expenses and general lifestyle expenses.
For example, if you are a Scuba Diving Instructor, how are you going to put together your course and write about your experiences online about scuba diving in the Maldives without going to the Maldives? There's no law saying you can't enjoy yourself on business.
You can start your own website to legitimize your business with Bluehost. You get a free domain name for a year. There's not a day that goes by where I'm not thankful for starting FinancialSamurai.com in 2009. I no longer ever have to work for someone else. I pay ~$750 a month for excellent healthcare, and it's tax deductible.
3) Become a rental property owner.
All expenses related to operating your rental property are tax deductible. Add on the non-cash expense of depreciation and you'll easily be able to reduce your rental income and pay less taxes.
If you have a rental property in Bora Bora, you can deduct your transportation costs to get there. Not bad at all. In fact, I believe there's a golden opportunity to buy real estate in 2021 because mortgage rates are low. Meanwhile, the time spent at home is way up.
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Both platforms provide investors the ability to diversify their real estate investments into commercial real estate across the country. There is a demographic shift towards the heartland of America due to technology and the rise of remote work.
4) Own income producing assets and be debt free.
Let's say you own $1 million dollars worth of property outright. It generates operating income of $45,000 a year (4.5% net rental yield). You have no other income, but you have no debt so life isn't too hard supporting your family of four. Your family qualifies for $5,640 a year in health care subsidies and you only have to pay $2,650 a year.
Another example is amassing a $3 million dollar stock portfolio yielding $90,000 a year in dividends. In addition, you have a $25,000 a year deduction in primary mortgage interest. Your MAGI is $65,000 meaning that you and your family of four still qualify for $2,600 a year in health care subsidy as multi-millionaires.
Related: Ranking The Best Passive Income Streams
5) Check with private exchanges online.
Like every good deal shopper, you shouldn't just rely on one source. I checked online for very similar plans for a family of four and for an individual and here's what I came up with: $950 a month for a family of four with a $5,000 max deductible and $210 a month for a 35 year old individual in good health with a max deductible of $2,000.
There are many options tailored to each individual case. For those of you who have much higher incomes than $94,000 for a family of four and more than $30,000 per individual and can't adjust your MAGI down any further, going the private exchange looks like the better option.
Bottom line: It is much better to have a high net worth and low adjusted gross income instead of a high adjusted gross income and low net worth to take advantage of government subsidies.
I'm sure the government realizes this as well. It is the government's way of encouraging individuals to save and invest for their future. By accumulating a healthy amount of assets, the government will also reward you with subsidies.
(Read The Average Net Worth For The Above Average Person and What Should My Net Worth Be By Income?)
Affordable Health Care For All
The charts demonstrate that income plays the key role in how much subsidy an individual or a family gets. Together, we are helping subsidize lower income groups to gain health care access that they deserve. Helping others is what being a good citizen is all about.
Those with pre-existing conditions and who are considered of lower health can no longer be denied health care or discriminated against. Yes, Obamacare creates somewhat of a moral hazard when it comes to exercising and eating healthy. Perhaps you'll eat one more donut and watch TV for a couple hours longer instead of work out.
However, just as the rich help subsidize the poor through a progressive tax system, the healthy will subsidize the less healthy through the Affordable Care Act. Life is easier with the ACA, which also means our health will unlikely improve.
The largest point of contention will likely be how the government determines what income levels are poverty levels. Such determination will decide on subsidy amounts. It's difficult to live on less than $20,000 a year as an individual in San Francisco for example. Yet the poverty level is only $12,140 and below.
The greatest benefit from the Affordable Care Act is that if you or your family are experiencing hard times, you will be highly subsidized until income improves.
Having at least disaster insurances is tantamount. For those who are considering quitting their jobs to do something new, or others who've decided to get out of the rate race early, you've now got one less thing to worry about.
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I realize this post is older but I was looking for a general guideline of what % might be subsidized when I do retire early. I am totally shocked that you can find a silver plan for the ballpark of $2300/individual per year. Maybe I am missing something here but I have an unsubsidized ACA plan now, bronze level and I pay almost $750 per month/$9000 per year. Last year it was less but nowhere near $200/month. I am an individual in IL. Do the options vary that much in cost by state?
Thanks for all your great posts!
Has this blog article correction already been handled? (I could not scan all the comments to check; apologies if so) …. to calculate the MAGI that is used for ACA subsidy purposes, mortgage interest is NOT something that will reduce that MAGI. I just spent a few hours educating myself on the subsidies, and this fact was rather clear about ACA-flavor MAGI. I believe item 4 about dividend income incorrectly suggests that 90,000 income can be adjusted down to 65K for MAGI by subtracting mortgage interest.
Thanks for the great blog overall.
I live in North Carolina so the options may be different for buying health insurance through the Marketplace. I’m looking for insurance for my 38 year old daughter. Her husband had a stroke and my daughter is his caretaker. He is not capable of taking care of himself fully so my daughter can not work a full time job. When she looked on the Marketplace it said she is not eligible for any subsidy because she does not make enough money. That sounds so ridiculous I don’t know where to go from here. Do you have any ideas?
My son and husband are Native American, so they qualify for free healthcare from tribal clinics based on the “we will stop fighting back in exchange for healthcare” treaty. It is further away, and the doctors aren’t as good, but they will take it! However, since my husband just got a new job that provides healthcare at “an affordable rate” for him only, I am no longer eligible to receive a subsidy through healthcare.gov. If we bought health insurance through his company we would HAVE to buy the family plan for 1000/month which has a 12k deductable and horiffic cost-sharing. So, 24k a year for myself alone at minimum before the plan would actually benefit me at all. This seems like an unintended stab at anyone marrying a native American. My healthcare just went from 1680/year with 0 deductable. (5k deductable for rx) to 24k a year because of this rule. This isn’t even income based. That is basically 35% of our income for bad insurance. It doesn’t seem like it should be legal & there’s nobody to complain to. If you do know of any insurance companies that offer healthcare for less than 500 a month I’d love to hear about them.
I am looking for a change that must have occurred in the law for the upcoming ACA year (calendar year 2021), because I am experiencing the following:
For the 2020 year, my subsidy was $824 on a MAGI of $48,060 (single, age 62, no dependents). For 2021, my MAGI is $48,000. My insurance premium increased $12 (same bronze plan), but my subsidy decreased to $663 (same scenario, but age 63, single, no dependents).
What’s causing this? To get the same subsidy in 2021, my MAGI has to DECREASE to around $32,000.
my wife and i are on medicare next year
income will be about 75k
we have 2 8 year old kids
can we get obamacare and a subsidy, and what is the cost?
all i can find online, assumes that me or my wife are included
will we have to pay 9% of our income just to insure 2 kids, who should be cheap?
>All expenses related to operating your rental property are tax deductible.
No, they aren’t. I learned this the hard way. I had $10K in renovation expenses for a rental property but could only take $5000 off my taxes because that was the limit per calendar year. It was *really* annoying.
I am self-employed and operate a business that is seasonal, making it difficult to estimate my yearly income. For 2019 my estimated Adjusted Gross Income was approx. 18k, however it appears that my AGI is going to be below the FPL at approximately 4k-8k. I am required to provide income verification for 2019 by December 13, 2019. How will this income amount of approximately 4k-8k affect my healthcare for 2019? Also if my projected AGI for 2020 is similar to 2019, will I still be eligible for Obamacare?
I am 63, live in Arkansas and am divorcing this November. I have been receiving subsidies for my health insurance. However, I am concerned that my income level of $12,000 (part time job)will fall below the poverty level and I wouldn’t be eligible for subsidies. Will I have to pay back subsidies received for the full year? I do have a 401k where I could pull funds out of if that would in fact raise my income level. I still haven’t applied for social security and haven’t pulled any funds out of my retirement, as I’ve been wanting to save for retirement. My insurance agent tells me I’d have to make over $18,000 next year to even be eligible to continue receiving subsidies next year. I am so confused. Thanks.
You’ll need to withdraw $6,000 from your 401k to reach the income limit. This link shows what counts as income with respect to Obamacare subsidies:
https://www.healthcare.gov/income-and-household-information/income/
Make sure you DON’T convert all your retirement accounts to Roth accounts, because then you won’t have this flexibility to bump up the income, at least as far as I understand it.
Thank you for commenting. Will I need to pull money out for 2019 taxes to reach 18,000 even though we divorce here in Nov-December? I am really concerned I will have to pay back this years subsidies already received since being married allowed me the subsidies?
You need to research the “clawback” clause from ACA. They cant take as much back as you think from incorrectly estimating your income.
Double check with IRS.gov, but I’m pretty sure your marital status for 2019 will be what it is by the end of the year. So in this case it will help you out as you’ll be considered single and will only need FPL for single person.
When I divorced in October 2002, I filed taxes for that year as single and a CPA did my taxes.
I have a question if anyone might be able to help me, I am divorced and my 23 year old severely autistic daughter pays rent (ssi) to me to live with me so I have to claim that on my taxes, I’ve always stayed home with her since birth and I do receive 3k a month in maintenance from my ex husband But in the decree it states he pays the taxes on that money so basically I have almost zero income other than the rent I receive From my daughter. I was on my ex-husbands payroll for the forest 2 years after our divorce which got me to the minimum needed to even be able to be eligible for a healthcare subsidy But now I am not in that and I have had numerous health issues the past 2 years which I can’t get a job really even if I wanted to, I was thinking of renting out another room in my home to get more income go help me get to the minimum allowed to get a subsidy but I’m not even clear if that counts as the right kind of income to get a subsidy. Medicaid is not expanded in the state I live in so I’m not eligible for that either. I really need to be able to have insurance this coming year as I will likely need some more surgeries. So any help with me understanding how this really works would be greatly appreciated.
This page shows what counts and what doesn’t as income for ObamaCare ACA:
https://www.healthcare.gov/income-and-household-information/income
I assume your daughter is on the Medicaid DD waiver. If not, call Medicaid and find out how to get her qualified ASAP. Once she is qualified Medicaid will pay you to care for her. Then the rent she pays will be active income not passive income for Obamacare. You can also certify to care for other adults who are also on the DD waiver. They pay you rent, food, utilities with their SSI and Medicaid pays you to care for them too. There is a HuGE tax benefit. You do not need to pay taxes on the money Medicaid pays for care because it is considered adult foster care income. Read about it at IRS Medicaid Waiver Notice 2014-7. The first tax return you file with this type of income where you don’t enter the 1099 Medicaid Income but instead write “Medicaid Waiver Notice 2014-7” on other income line 21 of form 1040 the IRS might give you a bit of a hard time but after you defend it they will leave you alone every year there after. I started doing this adult foster care work when, like you, I went through a decline in health. If you just rent out a bedroom to someone it’s considered passive income and doesn’t count for Obamacare last time I checked.
I’ve had Medicaid through Michigan’s Medicaid expansion for a few years now. I originally tried to buy insurance through the ACA Marketplace but I was denied because my income was too low and they said I had submit a letter of denial and surprisingly I was approved. I foster children of all different ages therefore I can’t work. I want to buy ACA insurance but want to know what I will pay if my income is only 11,700 (rental property). I want a decent plan. I can’t wait a month to find out, I need to prepare now. What would be the most I would pay? Thank you!
I am somewhat confused. According to the Marketplace my family of 6 qualifies for Subsidies in the amount of $2,014 per month. We can’t really afford insurance so we got a bronze plan. When we did our taxes this year, we found that our income was $124,000 which is below the cap is it not? but we got a bill for over $24,000. How is it possible that we owe back all of our subsidies.
If you look at the chart accompany this article, you are at about 380% of poverty level for your household size and income.. at 400% not qualified for ANY Subsidy .
So someone grossly underestimated your income. Are you a business owner who’s income varies (the reason for not having correct year end? ).
I ended up using an insurance broker no cost paid for by insurance company that you end up going with. Reason why is a customer rep people at the marketplace are very kind whatever they’re using to enter in what you report on the phone to calculate…very inaccurate! After three phone calls on my part never came back accurate to what it actually was.
Madw me very nervous , so that is one of the reasons I ended up going with a private broker who used old fashioned calculator, not a system calculator and software adding and told me we did not qualify for subsidy, presently the case.
The cap for a family of 4 is $100,400. If you make over that amount you will have to pay all of your subsidy back because there is no subsidy available for incomes over that amount. If you were receiving $2014 per month in subsidies then you entered an estimated income in your marketplace application that was less than $100,400. Since your final taxable income was $124,000 then you do owe all of your subsidy back; therefore the $24,000 bill.
Good evening. It is below the cap; however the APTC (subsidy) that you are receiving during the calendar year is off an adjusted income. whatever income you reported on your initial application was not updated. so when you filled your tax return the adjustment was made as in the amount you owed. according to my calculations which will vary from your state and your household ages at the time you should have been receiving an APTC (subsidy) lower than $500 per month. At any time you believe your income will be more than initial reported update that information so it adjust during the cal/yr instead of having to pay it back at the year. Some families will even go the opposite way and only use a portion of the amount and take the credits back at the end of the year. Hope this help.
I have a couple of questions regarding what qualifies as MAGI for Healthcare.Gov healthplan purposes. I’m real close to the 400% target in 2019, which I believe is $64,597. Right now I am receiving a credit, but looking for a way to reduce MAGI to be on the safe side, as I don’t want to go over and have to pay back the monthly credits.
First, do capital gains from a Roth IRA qualify as income for MAGI purposes? I don’t believe they do, but want to do sure.
Second, do qualified distributions or withdraws from a Roth IRA reduce MAGI?
Third, if I opened and funded a Traditional IRA by rolling over funds from a 401K Plan, would those funds reduce MAGI?
Thank you for your help. I certainly appreciate it.
We make 113,000 Annually. We pay 1300 a month for the bronze plan. Our maga is around 87000. We are over 9.5 % Annual income. Is this correct?
My husband and I are retired. He is 73 and I am 64. He has Medicare but I am on the ACA. Our income is social security and a small retirement. Last year we owe $0 in taxes. Subsidies paid for almost all my premium. This year I received a taxable inheritance that will add $30000 to my income for this year. Even putting the maximum into my IRA will put me over the subsidy limit and I will have to pay back almost $12000 this year. Ouch!
I was also looking into this and it seems that an inheritance is NOT considered as taxable income for the purposes of the ACA (or taxes in general). I believe you are in the clear!
https://www.npr.org/sections/health-shots/2015/12/08/458807324/mom-left-me-money-do-i-owe-uncle-sam-for-my-health-subsidy
Are you able to contribute to an HSA? That will reduce your MAGI.
cap gains from a ROTH IRA do not qualify. infact, no cap, div or int gains…or distributions will effect MAGI from a ROTH.
A rollover will not reduce MAGI. To reduce MAGI you would want to contribute to a Trad IRA…or other pre tax qualifying account….solo 401k, 401k, sep or simple IRA…
1st, thank you for the charts and all the wonderful info you provide.
I live in TX, am unmarried and I am the sole caregiver for my mother who is 87 (she can not care for herself and requires much help). I am not paid for assisting her. I work in a commission only job and I am concerned that my earned income for 2019 may fall below the minimum income required to qualify for the ACA subsidy ($12,700 according to the chart). I have no other sources of income. I have a SILVER health policy in force via the ACA Marketplace. Based on my projected income, I am currently paying only $12.01/month with the remainder of the premium payments going directly to my health insurance company. My mother and I live in the same household and we currently file taxes separately. Her sole income is social security in the amount of $1,785/ month (or $21,420/yr gross) / ($1,730.60/month or $20,767/yr net of her Medicare prescription drug ins premium. Beyond that, she has no other income. Neither of us qualify for Medicaid. My question is this: 1) Will I be subject to an IRS penalty or be required to repay some or all of the subsidy? I have reason to believe that since Texas is NOT a medicaid expansion state, this fact may have a bearing on the answer. Bottom line: If I will be subject to repaying all or most of the subsidy, I may need to leave my commission based sales job in favor of an hourly job which would hopefully assure
that I make >$12,700 for the remainder of the current year. (This is my 1st year in my sales job and with the time demands in caring for my mother, I’ve made next to nothing so far this year. I do expect to make enough next year in my sales position). Any info, advice, suggestions are very much appreciated.
First, I also live in Texas. Second, you are on the right track. In order to qualify for ACA premium tax credit, your income must exceed poverty level. If you are under poverty level, you qualify for Medicaid. Two problems with Medicaid: 1. It is means tested. If you have assets over $3000 (not counting a house and one car) you have to spend down your assets before you qualify. 2. You might have to pay it back. The state of Texas can come after you for reimbursement of Medicaid. So, if your income is going to be below 100% of FPL for a single person, maybe you could have your mother pay you for caregiving to get your income above FPL. (And then, of course, you would buy all the groceries for your aging mother, right?)
Although your income would be subject to FICA tax (12.4%), that is a small price to pay for the ACA subsidy. You might want to talk to a lawyer who practices what is known as Medicaid planning. As it turns out, people without money need expert help at least as much as people with money.
L
Does “unearned” income count towards qualifying for Obamacare? A couple friend who makes their living from rental income (without being set up as employees of their own company) said they don’t qualify for subsidies because their income is not earned income.
If they have rental income they should be reporting it the income and expenses and depreciation on Schedule E. Schedule E net rental income is income and part of agi.
I am 64 and plan on retiring next year when I am on Medicare. But my wife has three more years to go. I work at the local hospital so I went to the people who do the ACA coverage. My SSI check will be about $2100 per month but they told me that doesn’t count towards income since it is tax free. They said that in SC I have to have over $16,000 of taxable income for my wife to be eligible. Has anyone heard about minimum income limits to the ACA or is this just a SC thing?
I just met with my tax preparer. For 2018 I owe the IRS $14,000 dollars. The sum total of the premium from my silver tier plan. I earned $7500 more on the year than the 400% FPL unexpectedly. Imagine my surprise. How would you feel with a surprise $14,000 bill? I think it is all smoke and mirrors. Give me the free market anytime. No to government subsidies.
Yikes, that is terrible.
Obamacare is not working.. the deductions are so high it makes it useless to so many.
See: How To Get Healthcare Subsidies Even As A Multi-Millionaire
Scott – this almost happened to us last year. You have to watch your income constantly and NOT go over the limit or you fall off the cliff. Last year we were lucky enough to fund an IRA to reduce our AGI to meet the ceiling. It’s not the ACA’s fault – you have to manage your income. I cannot wait to get on Medicare. We are 62 and early retired… the ACA has been a god-send but we all need Medicare for All NOW.
Joan — I coundn’t have said it any better. Watch your income and don’t go over the 400 % FPL. And yes ACA is very helpful and amazing but Medicare for all would be better. At 60 we are self employed flying below the 400% FPL limit until we turn 65.
Indeed. are plan prior to that for good ten years one could go to any shorts company’s website and buy a private.
We funded our Traditional IRAs (6,500 each) to avoid going over the 400% limit. Our CPA sounded the alarm bell and we actually borrowed the money from a credit card offering a special 0% interest 3% transaction fee for 12 months and no interest to avoid paying back our entire subsidy. 13K off our AGI was enough to dodge the penalty.
The “free market” froze out millions of people including me, prior to the ACA. The ACA is a godsend for us. I am literally saving $9000 a year in premiums. You went over the “subsidy cliff”, as it is known. That is a NO-NO. You have to plan ahead and it is your responsibility to avoid that. Blame yourself for not knowing. Blame the GOP for refusing to allow changes the Democrats have been trying to make for over 4 years, to fix that subsidy cliff. The GOP is using this intransigence as a weapon to get people like you to dislike the ACA – it is sinister IMO.
Where do I find the maximum percent of income that I have to pay for coverage? I went to the Kaiser Family website that you linked, and it looks like in North Carolina the subsidy is all or nothing when you go above the $400% of poverty level. The cost of Bronze level coverage goes from $0 to $16,978 per year ($0 if income is 65k and $16978 if income is 66k). It looks like I will have a one time added income that puts me above the 400% level this year. Kaiser does say I could be eligible for “catastrophic coverage” since my premiums would be about 20% of my income!
Thanks for any clarification.
That is the “subsidy cliff” you may have heard about.
Earn $1 over 400% FPL and it can cost you $20,000 more for your health insurance, depending on your age and location.
This could be fixed, but the GOP won’t lift a finger to help a program started by Democrats. Sad!
See my note earlier from “Felisse”. In N.C. a couple cannot exceed $65,839. Should you have excess of that your only option is to fund Traditional IRA with an individual maximum of $6,500 or $13,000 for a couple. If that brings your combined income below the $65,839 you are good. Otherwise you will owe all the subsidy.
Thank you for doing the research for your charts. However, I’m confused about the premium amounts you listed. I’m a family of 2 and the premium for the second lowest silver plan is $1900 per month!. That’s $22800 per year. Your chart lists $5000-9000 yearly premiums. Why the huge difference?
This sentence in your post seems to be incorrect:
“Despite the phaseout, the good thing is that it looks like the max % of income one has to pay annually in premiums gets fixed at 9.5% of gross salary no matter what you make.”
That gave me hope, but as nearly as I can tell once you slip over that 400% FPL line, your premiums can skyrocket. Ours would go up to 29% of our income if we’d stayed in the ACA Marketplace. Completely unaffordable, so we had to go elsewhere for coverage.
I think the ACA was a good step, but needs some serious improvements. The sooner we can get to Single Payer, the better, in my opinion.
I don’t suppose you happen to have an updated chart for 2019? The healthcare.gov website is cumbersome and I am trying to run different income scenarios as we may be selling a rental home this year. I am trying to see how much subsidy we will lose to see if it is worth selling, and so far all I can do is guess because they don’t make it easy to compare without starting brand new applications.
I’ve left the initial charts alone to give readers a sense of how much they have to pay, but I updated the post with two new charts in the middle for 2019. You can just do the math yourself to get a rough estimate on cost based on your income for a Silver Plan.
Thank you- that is very helpful. I’ve had the hardest time figuring anything out from the healthcare.gov website. My situation is an odd one, because I am trying to sell one rental property to pay off a loan used to purchase another rental property (all of our income, around $40k per year, comes from these properties since my husband was laid off two years ago and is currently in school for another career field), and I would have thought that the loan payoff expense would lower the MAGI from the capital gains, but from what I can see, it does not because it would only affect the capital gains from the other property that I am not selling. I talked to my CPA, and as far as I can tell, that is how it would work, but it’s still very confusing so I am trying to be certain before I decide how to proceed. Overall, we will have no money left from the sale after we pay off the loan, but it seems like it will still count as income in the MAGI that ACA uses, so we would lose any subsidy, even though the reality is that we will have no additional income this year after paying the loan (a loss of $9000+ in subsidies). I am all for Universal Healthcare- nobody should have to make life choices like this- I consider myself a reasonably intelligent person, but I think I need a Master’s degree in accounting and a CPA license just to be able to figure out something that should be made to be easily understandable by the lay person so that ordinary people can make informed decisions. And the fact that even if I carry just the basic Bronze plan (that I currently have) all of my medical costs (assuming no major medical problems) are still out of pocket because of the high deductibles. So, I can choose to pay almost $17k out of pocket this year (from our $40k ‘actual’ income) just for the insurance, plus pay all out of pocket for any minor medical appointments, or I can take a risk of not having insurance. Don’t get me wrong- I am a supporter of the Affordable Care Act, but it needs to go farther and make healthcare truly affordable for all, and I am just fine paying higher taxes to pay for Universal Healthcare. If everyone pays the same taxes, such as the way New Zealand does, then it is a fair system that everyone pays the same share and gets the same care. Our current for profit system doesn’t work and isn’t sustainable- people’s lives shouldn’t be in the hands of capitalist corporations who care more about making money than in helping people who need care, and we shouldn’t have to make the choice between having insurance and risking not having it so that we can pay our bills.
Sorry for the rant- I truly appreciate your assistance.
The tables above provide great information, but are they based on gross or net reported income?
Who else pays almost 17,000 annually with a high deductible? Middle class can’t get a break. The rich get subsidies and the poor get it as well while we end up paying for it all having a difficult time paying our own bills.
I was all in favor of the ACA until it actually got implemented in PA. I was happily paying about $225 a month for individual coverage, then not too much more with ACA the first year.
Then I found out that I’d get zero assistance and my actual bill was double, payable in full at tax time.
I’ve been unemployed with zero income since 2012, and I get about $35k in dividends from stocks. I also get another $10-20k in capital gains, but I never know exactly until December. I want to change my portfolio to produce less income, but I can’t, because selling causes a bigger capital gain that also disqualifies me for subsidy. So I am trapped, trying to toe the limit line by selling only losers.
Worse yet, all insurers except IBX have dropped out of the market in PA, meaning IBX can charge anything it wants, and it does. My policy has jumped from $250/mo to $450 to $909 in the past 3 years.
I’ll be quite happy when ACA goes away, even though I am supposed to be it’s target market.
I’m in exactly the same situation. Almost $1000/mth for Bronze level coverage. I don’t dare go back to work, even part-time. Selling losers and trying to minimize dividends within taxable accounts is about all one can do. HSA contributions are one way to lower MAGI but I haven’t done that as the amount is unpredictable, it limits the choices of “affordable” plans, and it doesn’t cover the biggest component: premiums.
For something that was supposed to lower health care cost, a 300% increase in premiums in the past 4 years shows it to be a complete failure. But, nothing will change to help, especially for those in similar situations.
I’ll bet you were happy paying $ 2,700 a year for healthcare when you have a portfolio worth over $1.8M. Who wouldn’t be? But it’s really not fair is it?
Not fair to who? Like Sam said it’s better to have high net worth and lower middle class income than the reverse.
It’s not fair to future generations funding these subsidies though debt. It’s amoral. Read Washington’s farewell address.
So according to Samurai, it is OK for people to retire in their 30’s as he apparently has done and have the rest of us cover the full cost of his insurance until he hits age 65. Absolutely crazy. If someone can retire at an early age, they should be required to pay the full cost of their health insurance. i don’t need to subsidize his retirement. Health care subsidies should be means-tested on net worth and annual income, not just annual income.
I pay $700 a month for health insurance, and so is my wife. I’m not sure what you’re talking about, but I know I am helping my fellow brothers and sisters on the lower end of the income spectrum afford healthcare.
You are shooting at the wrong target. How about we stop paying for INSURANCE and focus our resources on HEALTH CARE. I’m so tired of this FOR PROFIT insurance game. It has us fighting with each other and distracted from seeing where our money is really going (hint: it’s insurance company profits)