If you purchase coverage through an exchange and your income is low enough, you may qualify for two kinds of subsidies. The maximum eligible income is four times the federal poverty level. (In 2013, that is $45,960 for an individual and $94,200 for a family of four.) You will enter your income when you apply for coverage, and the subsidies will be applied automatically.
You can calculate the subsidy you will be eligible to receive right now with an online tool developed by the Kaiser Family Foundation. You can find the federal poverty level for 2013 for different household sizes here.
However, not everyone will be permitted to purchase insurance on an exchange. You will only be able to do so if your employer fails to offer coverage that meets minimum standards (or you have no employer) or the coverage costs more than 9.5% of your income. If you have access to affordable employer coverage, you will have to obtain health insurance that way, and financial assistance will not be available.
The first kind of subsidy for exchange-based coverage is a premium credit, which lowers the cost. The size of the credit gradually shrinks as your income rises. At the bottom of the range, between 100% and 133% of the poverty level, it will lower your premium to 2% of your income. At 133% of the 2013 poverty level, that would put it at $305 a year for an individual and $626 for a family of four. If your income falls below 133% and you live in a state that has expanded its Medicaid program, you can also receive coverage through that program, which is free. (That includes New Jersey but not Pennsylvania.) If your income is at the top of the range, 300% to 400% of the poverty level, the credit will lower your premium to 9.5% of your income. At 400% of the 2013 poverty level, that would put it at $4,366 a year for an individual and $8,949 for a family of four.
The second kind of subsidy reduces the size of the deductibles and co-payments that you must pay under your plan. It applies if you purchase a silver plan, which is the third most generous kind out of four. As with the premium credit, its value shrinks as your income rises. If you earn between 100% and 133% of the federal poverty level, the government will pick up 94% of those costs. At 300% to 400% of the poverty level, it will pick up 70%.
You may wonder what happens if your income falls below 100% of the federal poverty level but your state (like Pennsylvania) has not expanded Medicaid. There is a good chance you will then be caught in a no-man’s land in which you receive no financial assistance at all. You will not qualify for Medicaid unless you fall within one of the current eligibility categories (pregnant women, families with young children, the elderly, and those who are blind or disabled). And you will not qualify for a subsidy for purchasing coverage on an exchange. The existence of this gap is a major reason that health reform advocates are pushing hard for all states to expand Medicaid.
Robert I. Field, Ph.D., J.D., M.P.H. is a professor of law at the Earle Mack School of Law and professor of health management and policy at the School of Public Health at Drexel University. He also writes for The Field Clinic blog.