Last week we provided information on the Federal Exchange Subsidies of the Patient Protection and Affordable Care Act, a/k/a Federal Healthcare Reform Law (the “Law”). Beginning in 2014, the Law will provide premium tax credits and cost sharing subsidies to applicable taxpayers who enroll in health insurance through the Exchange. The Law is intended to provide affordable healthcare coverage to those that may not otherwise be able to afford coverage while encouraging enrollment. The Law provides for two varieties of subsidies: premium subsidies and cost-sharing subsidies.
The premium subsidy is available to individuals and families with household incomes between 100% – 400% of the Federal Poverty Level. These individuals and families would receive a defined percentage as the subsidy to offset the cost of the healthcare. The percentage of income available as a subsidy ranges from 2% – 9.5%, depending on the household income level.
Cost-sharing subsidies will provide individuals and families with lower out-of-pocket costs at the time of service. Lower income families with household incomes between 100% – 400% of the federal poverty level will be eligible for a reduction in the out-of pocket costs, ranging from two-thirds – one-third of the maximum liability. Generally the limits of the out-of-pocket costs are based on the maximum limits on Health Savings Account (HSA) plans.
To read more about the premium subsidy and the cost-sharing subsidy, visit the Kaiser Family Foundation article: Healthcare Reform – Federal Exchange Subsidy