What are the federal subsidies?

 Under the Affordable Care Act (ACA), individuals who purchase insurance after January 1, 2014 through an Exchange will be eligible for subsidies for health insurance premiums and cost-sharing if their income is less than 400 percent of the federal poverty level (FPL) -- $89,00 for a family of four in 2011. FPL amounts are updated annually to reflect inflation. Individuals who get insurance through their employer can get subsidized coverage in an Exchange if their premiums are unaffordable (more than 9.5 percent of their household income) or the plan is inadequate (pays less than 60 percent of the cost of covered benefits).

The ACA provides two forms of subsidies to help pay for health insurance. First, a monthly premium assistance tax credit will lower the premium amount an individual or family must pay. Second, cost-sharing assistance will limit a person's maximum out-of-pocket costs, and for some it will also reduce other cost-sharing requirements (i.e., deductibles, coinsurance, co-payments).

Premium Assistance Subsidies

The premium assistance subsidy reduces the amount that an individual or family pays for health insurance coverage by providing a tax credit. These subsidies are only available through the Exchange. Subsidies are determined on a sliding scale, based on income, so that individuals at the lower end of the income scale get the most help. The subsidy is based on the premium for a benchmark plan (the second lowest cost silver plan available in an Exchange). An individual or family who wants a more expensive or higher tier plan (i.e., gold or platinum) must pay the difference.  

Premium Limits for Consumers Based on Income

Income	Premium Limit
Up to 133% FPL	2% of income
133 - 150% FPL	3 - 4% of income
150 - 200% FPL	4 - 6.3% of income
200 - 250% FPL	6.3 - 8.05% of income
250 - 300% FPL	8.05 - 9.5% of income
350 - 400% FPL	9.5% of income

Cost-sharing Assistance Subsidies

All people who buy coverage through an Exchange will have a cap on their total out-of-pocket spending, including deductibles, co-pays and co-insurance. These limits are based on the out-of-pocket limits that apply to high-deductible plans used with Health Savings Accounts (HSAs). People with incomes under 400 percent FPL will get subsidies to lower those caps based on their income. 

Out-of-Pocket Spending Limits for Consumers Based on Income

Income	Out-of-Pocket Limit (based on 2011 HSA limit)
100 - 200% FPL	1/3 HSA limit ($1,983/individual; $3,967/family)
200 - 300% FPL	1/2 HSA limit ($2,975/individual; $5,950/family)
300 - 400% FPL	2/3 HSA ($3,967/individual; $7,933/family)
Above 400% FPL	100% HSA limit ($5,950/individual; $11,500/family)