This year, more than ever, it’s very important for you to determine if you think you’ll qualify for premium tax credits (subsidies) under Obamacare. Subsidies are determined by where you fall on the Federal Poverty Level, which is a function of household size and household income.
Here’s a table with the 2017 Federal Poverty Levels. Take a look and then see below for an explanation as to what you need to look for:
First you need to determine your household size. In general, this is based on who you claim as dependents on your federal tax return. If you’re married, you have to file a joint return to be eligible for subsidies.
Then determine your estimated household income for 2018. This can obviously be tricky because a lot of people don’t know exactly how much money they’re going to earn in 2018. We’re aiming for your MAGI – Modified Adjusted Gross Income that will be reported on your taxes. You have to make the best estimate you can. If it’s markedly different than your most recent federal tax return, you may be asked to verify your income with the Marketplace.
Now, where does your income place you on the table?
Between 100 and 250%: Not only are you eligible for premium tax credits that lower your monthly bill, you will also be eligible for cost-saving subsidies that lower certain out-of-pocket costs like deductibles and copays. These are only available on “Silver” level plans.
There are actually 3 levels of cost-sharing subsidies: 100-150%, 150-200%, and 200-250%. Cost sharing subsidies go up and out-of-pocket costs go down in the lower tiers.
Under 300%. We list this because we’ve been told that BlueCross BlueShield in South Carolina will have a pretty solid-looking Bronze level plan that will wind up being $0 to those making 300% of the federal poverty level or below. Stay tuned.
Higher than 400%. If your income exceeds 400% based on your household size, then you will not be eligible for subsidies. If this is where you land, we strongly advise that you do not buy a plan through the Marketplace. In most cases (certainly in South Carolina), there will be plans off the Marketplace that will be significantly less expensive than the un-subsidized Marketplace plan prices.