Texas health insurance quotes  Texas Health Reform Center Health Subsidy in Texas

Health Insurance Subsidies Available in 2014

Effective January 1, 2014 millions of consumers who qualify are eligible for premium assistance as part of the Affordable Care Act (ACA). Individuals and families who meet defined income requirements will be able to receive premium subsidies and financial assistance for out-of-pocket expenses. The goal of the subsidies is to help consumers who cannot access affordable coverage from employers or the private insurance market.

Introduction to the Federal Poverty Level

In order to be eligible for the subsidies and assistance with out-of-pocket expenses, an individual or family's gross income will be compared to the federal poverty level (FPL). The level of assistance will be determined by the percentage of gross income to the FPL as determined by number of family members. For example, in 2016 the FPL is $11,770 for a one-person household and rises by $4,160 for each additional family member.  The FPL for a four-person family is $24,250.  The FPL benchmark will be adjusted for inflation each year, so these amounts will increase in 2017.

Who Will Qualify For Subsidies?

Subsidies will be available according to ACA rules for individuals and families with incomes ranging from 100% to 400% of the FLP. The subsidies will be used to reduce the premium cost for health insurance coverage offered within the health insurance exchanges. Assistance will be available for out-of-pocket expenses for those with incomes ranging from 100% to 250% of the FPL. Examples of out-of-pocket costs for which assistance will be provided are copays and deductibles that would typically be the responsibility of the policyholder.

The New Texas Exchange Health Plans

Health insurance plans offered within the exchange will consist of four levels of coverage designated as metallic plans because they are titled platinum, gold, silver and bronze. Each plan has a different actuarial value, which is the percentage of costs each plan will cover. For example, platinum plans will have an actuarial value of 90%, which means the plan will cover 90% of healthcare costs, and the remaining 10% will be the responsibility of the insured. Gold plans will provide an actuarial value of 80%, silver plans 70% and bronze 60%. The bronze plan is excluded from subsidies and assistance for out-of-pocket expenses.

The Silver Exchange Plan Becomes The Benchmark

The premium for the silver plan will establish the level at which subsidies will be accessed. Since healthcare costs vary from state to state, silver premiums will also vary depending on the state. The percentage of premium paid by the insured will be tied directly to the individual's actual income as a percentage of the FPL. For example, individuals and families with incomes at 133% of the FPL will be required to pay 2% of their income toward the health insurance premium.

The following is a list of FPL percentages and the percentage of income that the policyholder must pay for health insurance premium.  
 

Income Level	Annual Premium Not To Exceed Percentage of Income
Up to 133% FPL	2% of income
133 to 150% FPL	3 to 4% of income
150% to 200% FPL	4 to 6.3% of income
200 to 250% FPL	6.3% to 8.05% of income
250 to 300% of FPL	8.05% to 9.5% of income
300% to 400% FPL	9.5% of income

An Example of Subsidies

To illustrate the health insurance premium cost for plans in an exchange, assume a family of three had an income of $38,180. The FPL for this family would be $19,090 so their income places them at 200% of the FPL. The family would be required to pay 6.3% of their income or $2,405 towards the premium cost of the plan. Using the silver plan premium of $12,000 as the benchmark, the premium paid by the family would be $2,405 and the remaining $9,595 would be paid as a health subsidy. The family can purchase any plan available from the exchange, excluding the bronze plan, and the premium difference between the premium cost and the $2,405 will be made up by the subsidy.
In addition to assistance with premiums, financial support for out-of-pocket expenses such as copays and deductibles are available to individuals and families whose incomes do not exceed 250% of the FPL. In order to qualify for financial support the individual or family will be required to purchase at least a silver plan within the exchange. The amount paid by the insured for out-of-pocket expenses is based on a scale from 6% of out-of-pocket expenses for the lowest income levels up to 27% of out-of-pocket expenses for income levels up to 250% of the FPL.

Financial Assistance Summarized

1. Individuals and Families Up To 250% FPL
2. Premium cost capped to be between 2% and 8.05% of income based on amount earned.
3. Financial support for out-of-pocket expenses to be between 65% and 27% based on amount earned.
4. Individuals and Families with Income From 250% to 400% FPL
5. Premium cost capped to be between 8.05% and 9.5% of income based on amount earned.

The Congressional Budget Office estimates that a combination of the two benefits - premium subsidy and out-of-pocket expense assistance - will result in average subsidy of $5,000 a year for individuals and families participating. Benefits will be much higher for families with lower incomes or several children.
 

 

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