How To Get Help Paying for Health Insurance

Fact checked by Sheeren Jegtvig

Are you having trouble affording health insurance? You're not alone. Health insurance can be so expensive that many low and middle-income people can’t afford it without help.

This article will explain the financial assistance that's available for health insurance coverage, and how you can apply for it.

The majority of non-retired Americans get their health insurance from an employer, and employers heavily subsidize the cost. Most older, retired Americans get their coverage through Medicare, which is also heavily subsidized. Fortunately, there is also financial help available for people who have to obtain their own coverage.

The Affordable Care Act (ACA) created government subsidies to help low and middle-income people pay for health insurance. These subsidies help pay for monthly health insurance premiums, as well as costs like coinsurance, copays, and deductibles once you have health coverage.

The American Rescue Plan made the premium subsidies larger and more widely available, starting in 2021, and those subsidy enhancements were extended through 2025 by the Inflation Reduction Act. These laws have made health coverage more affordable for millions of Americans.

What Kind of Financial Help Can I Get?

There are three different programs for people who need help paying for health insurance or medical out-of-pocket costs.

• Medicaid: The first program, if you have a very low income, enrolls you in Medicaid. Most often, Medicaid is provided for free to those who qualify. Eligibility varies from state to state, so you won’t know for sure if you qualify until you apply. In most states, eligibility for Medicaid has been expanded under the ACA, so even if you’ve applied before and been turned down, you should apply again through your state’s health insurance exchange. (You’ll learn more about this later.) The Medicaid website has the most recent income limits for Medicaid and CHIP eligibility, by state (CHIP, the Children's Health Insurance Program, is available for kids and sometimes pregnant women, and the income limits are higher than they are for Medicaid). The ACA eliminated asset tests for Medicaid eligibility for adults under age 65, so eligibility is based on income rather than income and assets combined (asset tests are still used for people age 65 or older).

• Premium Tax Credits: The second program, which is also income-based, pays a portion of your monthly health insurance premiums (here's how income is calculated for this). It's like getting a discount on the price of health insurance because the subsidy, which is a tax credit, pays part of your cost (or in some cases, all of the cost). This subsidy money is sent from the government directly to your health insurance company on your behalf each month—or you can pay full price for a plan in the exchange and then claim the premium tax credit on your tax return.
  Although premium subsidies make health insurance much more affordable, unlike the Medicaid option above, you’ll likely still have to pay something toward the cost of your health insurance each month (note that some states do charge modest premiums for Medicaid enrollees with income above the poverty level). But some people do find that they're eligible for $0-premium coverage after the premium tax credit is applied; this varies depending on income, age, and location.
  Premium tax credit eligibility is based on income; assets are not taken into consideration. Premium tax credits are based on keeping the after-subsidy cost of the second-lowest-cost silver plan available, but they can be applied to any metal-level plan.
  There is normally an income cap (equal to 400% of the poverty level) for premium subsidy eligibility. But for 2021 through 2025, the American Rescue Plan and Inflation Reduction Act have eliminated this limit. Households that earn more than 400% of the poverty level can qualify for a premium subsidy if the cost of the benchmark plan would otherwise be more than 8.5% of the household's income.

• Decreased Cost Sharing: For those with fairly low or modest incomes, the third program decreases your out-of-pocket expenses like deductibles, copays, and coinsurance when you use your health insurance. This benefit is available to people who earn up to 2.5 times the poverty level.
  For example, if you bought a health insurance policy that would otherwise require you to pay a $50 copay each time you see the doctor, your cost-sharing subsidy might decrease that copay to $30 each time you visit the doctor. The decreased cost-sharing program also limits the out-of-pocket maximum you’ll pay if you end up using your health insurance a lot. Since the insurance company pays for a larger percentage of your healthcare expenses, the cost-sharing subsidy is like getting a free upgrade on health insurance.
  Cost-sharing subsidies are only available on silver plans sold in the exchange, and are automatically included in all of the available silver plans if your income makes you eligible for them. For those not eligible, the plans that include cost-sharing subsidies don't show up in the available options.

Many lower-income households get help from both the premium tax credit subsidy and the decreased cost-sharing subsidy at the same time, assuming they enroll in a silver plan. People who are eligible for the cost-sharing subsidy will almost always also be eligible for the premium subsidy. But not everyone who is eligible for the premium subsidy is eligible for the cost-sharing subsidy.

In 2023, nearly half (48%) of all the people enrolled in exchange/Marketplace plans nationwide were receiving cost-sharing subsidies. Virtually all of them were also receiving premium subsidies. But far more people—91% of all exchange enrollees nationwide—were receiving premium subsidies.

In addition, several states offer additional state-funded subsidies that help to further reduce premiums and/or cost-sharing for eligible enrollees. These programs vary from one state to another, but can be obtained by enrolling in coverage through the state's exchange and meeting the eligibility rules.

How Do I Get Help Paying for Health Insurance?

You can apply for a health insurance subsidy, as well as for Medicaid, through your state’s health insurance exchange (Marketplace). When you apply for health insurance through your health insurance exchange, the exchange will determine if you’re eligible for Medicaid, or for decreased cost-sharing and/or a premium tax credit.

Will I Qualify for Help Paying for Health Insurance?

Eligibility for a health insurance subsidy is based on your income relative to the federal poverty level. The dollar amount of the federal poverty level changes every year, and varies based on the number of people in your family.

As explained here, the exchange will use the poverty level numbers from the prior year to determine your subsidy eligibility (so for health plans effective in 2024, the 2023 poverty level numbers are used).

The lower threshold for premium subsidy eligibility is a household income equal to 100% of the poverty level in states that have not expanded Medicaid, and more than 138% of the poverty level in states that have expanded Medicaid (which is the majority of the states; only 10 states have not expanded Medicaid as of 2024).

In states that have expanded Medicaid, adults under the age of 65 are eligible for Medicaid if their income doesn't exceed 138% of the poverty level. For 2023 coverage, 100% of the poverty level for a single person in the continental U.S. is $14,580.

(Medicaid eligibility is based on the current year's poverty level numbers, unlike premium subsidy eligibility, which is based on the prior year's poverty level numbers. The new numbers are announced by the federal government in mid-late January, and are in use by state Medicaid offices by March or April.)

There is normally an upper threshold for premium subsidy eligibility that's set at 400% of the poverty level. However, the American Rescue Plan and Inflation Reduction Act have eliminated this from 2021 through 2025. Depending on how much a person would have to pay for the benchmark plan, subsidies can be available with income well above 400% of the poverty level.

The closer you are to the poverty level (or 138% of the poverty level in states that have expanded Medicaid), the more subsidies you’ll get, and subsidies will get smaller as your income increases. This is true for premium subsidies as well as cost-sharing subsidies.

What Will Disqualify Me From Getting a Health Insurance Subsidy?

You won’t qualify for a health insurance subsidy if you can get affordable health insurance by other means. For example, if you could get affordable health insurance through your job, but you’d rather have a health plan purchased through your health insurance exchange, you won’t qualify for a subsidy.

The law makes an exception about this if the health insurance your employer offers is lousy, or if the coverage isn’t affordable:

• The Affordable Care Act and subsequent regulations define "affordable" as health insurance that costs you less than 9.12% of your income in 2023. (Note that if family coverage is offered, two separate affordability determinations are conducted: One for the employee alone and one for the family. This is due to a rule change that took effect in 2022 in order to fix the "family glitch.")

• If the health coverage available through your job doesn’t provide minimum value, then it won’t disqualify you from getting a subsidy just because it’s available. For a plan to provide minimum value, it has to pay an average of 60% of covered costs, and include "substantial" coverage for inpatient and physician care.

However, if you choose to enroll in employer-offered health insurance even though it’s not affordable or doesn’t provide minimum value, then you won’t be eligible for a subsidy as long as you’re enrolled in the employer's health plan. The government isn’t going to give you help paying for health insurance if you already have job-based health insurance.

You won’t qualify for a subsidy if you’re enrolled in (or in some cases, eligible for) government-sponsored health insurance such as the Children’s Health Insurance Program, the Veterans Administration, Medicaid, or Medicare (note that you can receive premium subsidies if you're eligible for Medicare but would have to pay a premium for Medicare Part A, due to not having enough work history to get premium-free Part A).

You won’t qualify for a subsidy if you’re in prison or if you’re not living in the United States legally. (Note that Washington state has obtained a federal waiver that allows the state-run Washington exchange to let undocumented immigrants enroll in coverage and receive state-funded subsidies. And Colorado has a separate platform that allows undocumented immigrants to enroll in coverage with state-funded subsidies.)

If you’re married, your tax filing status must be “married filing jointly” in order to qualify for a subsidy. You won’t qualify for a subsidy if your filing status is “married filing separately," except in limited circumstances involving domestic abuse or spousal abandonment.

Ridiculous as it sounds, you won't qualify for a subsidy if your income is less than 100% of FPL, even if you're in a state that hasn't expanded Medicaid (unless you're a recent immigrant who has been in the U.S. for under five years). That's right; the poorest of the poor don't get premium tax credits or cost-sharing subsidies in some states.

That's because the lawmakers who wrote the Affordable Care Act intended that everyone earning less than 138% of FPL get Medicaid. However, the Supreme Court ruled that the federal government couldn't force states to give all of those people Medicaid. This means each state can decide whether or not it will expand Medicaid coverage to everyone earning less than 138% of FPL, or limit it to only the people who qualified for Medicaid under the older, stricter criteria.

And as of late 2023, there are still ten states that have chosen to not expand Medicaid eligibility, despite the fact that the federal government will cover 90% of the cost.

If your state has chosen not to expand its Medicaid program and you're living below the poverty line, you're in what's called the Medicaid coverage gap—which was not part of the ACA, and was never expected to be an issue—and you won't be eligible for help paying for health insurance.

The coverage gap exists in nine of the ten states that haven't yet expanded Medicaid under the ACA (Wisconsin is the exception, as the state provides Medicaid to adults earning up to the poverty level).

If you're in this situation, you may be able to find charity care in your area. Or you may be able to take advantage of a Community Health Center that provides primary care services regardless of your ability to pay. Find your nearest Community Health Center.

Summary

Nearly all Americans are eligible for some form of subsidized health insurance. This includes employer-sponsored health plans (subsidized by employers and by the fact that premiums are paid pre-tax), Medicare, Medicaid/CHIP, and premium tax credits for Marketplace/exchange health plans. Medicaid, CHIP, and premium tax credits have income-based eligibility rules. But most people who aren't eligible for employer-sponsored coverage or Medicare are eligible for some sort of assistance via Medicaid/CHIP or premium tax credits.

A Word From Verywell

If you're not eligible for an employer's health plan or Medicare, it's well worth your while to explore your health coverage options in the exchange/Marketplace. You can start by going to HealthCare.gov (it will redirect you to a different site if your state runs its own exchange). You may be surprised by how much assistance is available to you, and how low your monthly premiums could be. And there are assisters—brokers and Navigators—throughout the country who can help if you have questions.

Read the original article on Verywell Health.