How Secure is Your Health Insurance Subsidy?

By Tim White on August 6th, 2014
Filed: Health Insurance, Health Insurance, Health Reform, Health Reform

For four years, the Affordable Care Act  (ACA) has provided richer medical benefits to American health insurance consumers, primarily through expanded benefits but also through federal subsidies to help people afford the coverage they need.

Subsidies may be available to you if your income falls below 400% of the federal poverty line (FPL). A lot of people have received these subsidies since the beginning of 2014. However, an unexpected increase in your household income or a legal challenge of the ACA could put those subsidy dollars at risk.

 What should consumers know?

• Subsidies are based on your estimated income for the year, not on your past income. So, when applying for a subsidy, estimate your annual income as accurately as you can, but remember that changes to your income during the year may alter your eligibility for a subsidy.
• If you qualify for one, a government subsidy can have a significant financial benefit. According to a recent eHealth study, individuals who purchased a non-subsidized health insurance plan through eHealth paid an average premium of $189 per month ($2,268 per year) more than consumers receiving government subsidies.
• On average, consumers would need to pay an extra $189 per month for their health insurance if they lost their subsidy.

Two ways your health insurance subsidies could be reduced:

1.  Changes in Household Income

Consumers whose income was lower at the beginning of the year, due to unemployment or a mid-year promotion, may have a dramatic increase in monthly earnings.

While you might be excited about your new job or promotion, you might also now be ineligible for government health insurance subsidies that you were approved for at the beginning of the year.

In this case, you may be required to repay some of the subsidy you received during that year, although this value will be capped if you’re still under the 400% of the FPL. For example, if your income increases from 300% to 399% of the FPL, the law caps your liability to repay no more than $1,250.1

2. Court Challenges to the ACA

Although none of the recent court cases challenging ACA subsidies have been reviewed by the Supreme Court yet, there is still a chance that the law or sections of it could be repealed, thereby forcing individuals to repay any subsidies that were applied to their monthly health insurance premiums.

Although the Affordable Care Act has great benefits for the consumer, anyone enrolling in a health insurance plan should be fully aware of their commitment and potential financial liabilities, and also should be aware of circumstances that may modify the plan’s cost.

1 KaiserHealthNews – “What Happens If My Income Changes After I Receive An Insurance Subsidy?”

- See more at: http://blog.ehealthinsurance.com/2014/08/how-secure-health-insurance-subsidy/#sthash.f1IFnnbh.dpuf

Click to shop and compare Health Insurance Rates with the nations leading online health insurance provider