Editor’s note: For people buying on the individual market who want health insurance starting Jan. 1, the deadline to sign up is Monday, Dec. 23. State of Health is running one post a day with questions and answers on both the Affordable Care Act and Covered California until that deadline. This installment comes from KQED’s Obamacare Guide, written specifically for Californians.
I’ve Heard the Government Is Offering Subsidies to Buy Insurance. Tell Me More.
You may qualify for a subsidy — in the form of a tax credit — to help you pay for health insurance. Tax credits are available on a sliding scale, according to your income. More than 2 million Californians will qualify for a tax credit.
If you earn between 138 and 400 percent of poverty ($15,850 – $46,000 for an individual; $32,500 – $94,200 for a family of four), you may qualify for a federal tax credit. The credit will be applied to the cost of your premium. You choose when you want to receive the credit. You might want to receive it monthly, so that you will pay less each month, or you may elect to receive it all at once when you file your taxes in the following year.
In order to receive the subsidy, you must buy a plan through Covered California. You cannot apply the subsidy to a plan you find outside of the marketplace.
Covered California offers a calculator to help you estimate the cost of your insurance after the tax credit has been applied — and to help you compare the prices of the different plans available to you. The tax credit is based on your ability to pay for the second-lowest-cost silver plan. But you can apply the credit to any plan you wish to buy (except for a catastrophic plan).
I Can’t Even Afford the Copayment or Deductible. What Do I Do Now?
In addition to the tax credit, the federal government also offers special subsidies based on income and family size. If your income is less than about 2.5 times the poverty level — that’s $28,000 for an individual or about $58,000 for a family of four — you may be eligible. These subsidies can help reduce what you have to pay — called copayments — when you see the doctor or get other health care.
What If My Income Changes During the Year?
If your income changes, your subsidy amount may go up or down. You should contact Covered California right away to adjust the amount of subsidy you receive. If you estimate your income too low — and get a higher subsidy as a result — you could have to pay back some of the subsidy at tax time. Alternatively, if you estimate too high, you could get a refund.