Will I qualify for lower premiums under the Affordable Care Act?

If you don't have access to an affordable health insurance plan through an employer, then you might qualify for lower premiums when you purchase a plan through the exchange. It depends on your income and family size.

Pay Lower Premiums

Based on your household income, you might qualify for a tax credit called the Advance Premium Tax Credit. This credit is applied immediately to your premium to reduce the cost you pay each month for health insurance.

Pay Lower Out-of-Pocket Costs

You might also qualify for lower out-of-pocket costs when you use your health plan based on income. Learn more here.

Estimate Your Savings

You can use these income levels as a guideline to estimate if you might be eligible for lower premiums starting in 2014. The premiums are based on a sliding scale to keep them affordable for you, so the lower your income, the less you pay for insurance. (These are 2013 income amounts and are likely to be higher in 2014)

•  $11,490 to $45,960 for individuals

• $15,510 to $62,040 for a family of 2

• $19,530 to $78,120 for a family of 3

• $23,550 to $94,200 for a family of 4

• $27,570 to $110,280 for a family of 5

• $31,590 to $126,360 for a family of 6

• $35,610 to $142,440 for a family of 7

• $39,630 to $158,520 for a family of 8

• wages

• salaries

• tips

• net income from a business you own

• social security payments

• unemployment pay

• other sources such as alimony, rental income, interest, dividends, capital gains, annuities, and some retirement and pensions

Medicaid

If your income falls below those amounts, then you likely qualified for Medicaid. Medicaid is a federal program that gives low-cost or no-cost insurance coverage based on income, which is run on the state-level. 

The Affordable Care Act expanded the Medicaid program in 2014 to include more people, but not all states agreed to expand the program. And not all states offer coverage to all adults who qualify based on income. So, if you cannot get Medicaid because of your state's rules, then you would qualify for lower premiums by purchasing a plan through the exchange instead. The premiums are on a sliding scale to keep them affordable for you. 

Children's Health Insurance Program (CHIP)

If your household income is too high for Medicaid, you might qualify for CHIP in your state to insure your children. 

Calculating Your Income Level

When you qualify for lower premium plans through the exchange, you'll need to estimate your household income for 2014.

For most people, you can use your household's adjusted gross income for this estimate. You might find that on your tax return from last year to help you estimate.

Another way is to add up all the following income sources for all those in your household in 2014:

Modified Adjusted Gross Income (MAGI)

When you actually apply for coverage, you'll be asked to give your "Modified Adjusted Gross Income" for your household.

Generally speaking, that amount is your household's adjusted gross income plus any tax-except Social Security, interest, and foreign income you have. That's the number you use when you qualify for lower premiums in the exchange, Medicaid or Children's Health Insurance Program.

But don't panic. You don't have to calculate this number yourself. When you complete your application for lower premiums, the math will be done for you. It's just a good idea to see if you might qualify before taking the time to complete the application.