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Health Reform 101

with Lisa Zamosky

WebMD helps readers understand their health insurance and the new health care reform law. The Affordable Care Act is bringing sweeping changes to American health care. Lisa Zamosky is here to help you navigate the health care maze and understand how these changes affect you.

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Thursday, April 25, 2013

Financial Aid for Health Insurance: Who Qualifies

By Lisa Zamosky

girl with calculator

A central feature of the Affordable Care Act is that it provides tax credits to help people afford health insurance.

A new report by the health consumer organization, Families USA, finds that nearly 26 million Americans will qualify for financial help to lower the cost of their health benefits. Will you be among them?

Tax Credits in Action

There are a few requirements for receiving a premium tax credits.

Income: If you’re an individual with an annual income of $47,100 or less, or if as a family of four you earn up to $94,200 a year, you’ll meet the income requirements to qualify for a tax credit.

Where you buy matters: You’ll need to buy insurance through the new online health insurance marketplace being set up in your state. These markets are scheduled to be operational by October 1 of this year for coverage that takes effect January, 2014. If you haven’t heard much about the marketplaces yet (also called exchanges) or how to access the one where you live, don’t worry; a big advertising push by federal and state governments to educate the public is headed your way this summer.

No work-based coverage: You won’t qualify for tax credits if you’re offered affordable health insurance at work. Under the law, “affordable” means your health plan won’t cost you more than 9.5% of your annual income (whether or not you find that affordable is a separate issue!). If you have access to coverage through work, and you buy insurance through the marketplace anyhow, you won’t get the tax credit, even if your income falls within the eligibility range.

Monthly price breaks: The tax credits will be sent directly to the health plan in which you’ve enrolled, which will offset the total cost of your plan’s premiums, thereby lowering your monthly expenses.

Who is Getting Help?

In addition to finding that 26 million Americans will be eligible for financial help under the law, the Families USA report, “Help is at Hand: New Health Insurance Tax Credits for Americans,” found the following:

  • Nearly 9 in 10 people eligible for a tax credit will be part of a working family
  • Over one-third of those eligible – 36% — will be young adults between the ages of 18 and 34
  • 56% will be people earning between $47,100 per year and $94,300 for a family of four
  • The majority will be white and non-Hispanic (58%), about 11% will be African American, 23% will be Hispanic.

The states with the most citizens eligible for tax credits are:

  • Texas
  • New York
  • Florida
  • California

You can see how many people will qualify for the premium tax credit, broken down by employment status, age and ethnicity in each state by checking out the report.

And to see if you personally qualify for a premium tax credit, visit the ACA calculator on the Kaiser Family Foundation website.

Posted by: Lisa Zamosky at 10:23 am

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