Beginning in January 2014, the Affordable Care Act, also known as Obamacare, came into effect. Through this legislation, the federal government now requires that every American be covered under a health insurance plan. For many individuals, this has had no impact on their life, as they were already covered under their employer’s healthcare plan. However, many Americans that were self-employed, do not have coverage through their employer, or have a low income had to find health insurance. Several options exist for health insurance for low income individuals.
For low-income individuals, it can be difficult to determine which plan has the most coverage, but has the least impact on their tight budget. Fortunately, there are many government programs and forms of assistance that are available for those with qualifying annual income levels. This article will provide information on several of the primary federal health insurance options on the marketplace today.
Affordable Care Act
Through the Affordable Care Act (ACA), the government developed a health insurance marketplace. States had the option to create their own marketplace system as well. Check here to see if your state has their own health insurance exchange.
The purpose of the ACA is to provide better and more affordable health insurance for everyone. To do this, the program expanded the health insurance options, reduced restrictions to obtaining insurance, and lowering the overall costs.
Low-income Americans can purchase health insurance through the state or federal marketplace by simply going online. Part of the process for selecting a healthcare plan is providing information about your family size and annual income. If your income is between 100 and 400 percent of the poverty level, you may qualify for a discount on your monthly premiums. For example, if you live alone and make between $11,670 and $46,680 per year, then you will have lower premiums for the plan you’ve selected. If you have a family of four and make between $23,850 and $95,400, you will also receive a discount.
To receive a reduced monthly premium on your health insurance plan, the government will give you premium tax credits. This will set a maximum limit to the amount you will pay for your health insurance. For example, if you make between 150 and 200 percent of the poverty income level, then you will have a premium cap between 4.02 and 6.34 percent for the second lowest silver plan.
There are four plan levels: bronze, silver, gold, and platinum. The cap levels are set based on the second-lowest silver plan. So, if you want a more expensive plan, the cap will result in a smaller reduction to your overall premium costs. If you choose a less expensive plan, your savings will be even greater.
If you don’t want to save on your monthly premiums, and would rather receive the discounted amount as part of your annual tax refund, this option is available.
Another way for low-income individuals to save on their health insurance plan is through cost-sharing subsidies. This program provides reduced fees for deductibles, co-insurance, and copayments. For individuals, the amount you pay out of pocket is limited to between $2,250 and $5,200 for 2015. For families it’s between $4,500 and $10,400. The exact spending cap is based on your income.
Unlike the premium tax credits, you can only benefit from this subsidy if you purchase a silver-level plan. You also can only have an income that is between 100 and 250 percent of the poverty level. When you visit the doctor or hospital, the reduced cost is automatically applied to your bill. There is no option to receive that discounted amount in your annual tax refund.
Catastrophic Health Insurance
Catastrophic health insurance is a federal plan that is limited to individuals under the age of 30 or those who have a hardship exemption. The exemption means that you do not have to pay the tax penalty for not having a health insurance plan. There are many hardship exemptions based on income, life situations, and unplanned events, including:
- Homelessness, foreclosure, and eviction
- Victim of domestic violence
- In prison, jail, or living abroad
- Natural or other disaster that severely damaged your home
- Bankruptcy filed in last 6 months
- Additional expenses due to medical issues, or caring for an elderly, ill, or disabled family member
- You are eligible for Indian Health Services or health care sharing ministry
- Your religious beliefs preclude you from partaking in health insurance, social security, Medicare, and other programs
- Your state didn’t expand Medicaid under the ACA, but you would’ve otherwise qualified
- Insurance plan cancellation and other plans are not affordable
Each of these hardship exemptions has specific requirements for qualification. If you believe you qualify, you need to complete and return the pertinent exemption forms. Then, your exemption will be either approved or denied.
If your hardship exemption is approved and you would still like some coverage, you can apply for catastrophic health insurance. This type of insurance is designed to protect you against unexpected or emergency illnesses and injuries. It covers three doctor visits per year as well as preventative health screenings for issues like diabetes and cholesterol.
With catastrophic health insurance, you will still have a deductible and a monthly premium. However, it will be less expensive that the standard ACA plans. The deductible is a bit higher because the plan is intended to be used only for major medical expenses and emergencies.
Medicaid is another federal health insurance program available to those with a low income. It is coordinated at the state level with each state having slightly different requirements for eligibility. States were permitted to expand their Medicaid programs under ACA, but not all opted to take advantage of this opportunity. To find out the enrollment requirements for your state, click here.
The new ACA rules state that individuals can enroll in Medicaid if they are under 65 years of age and have incomes up to 138% of the poverty level. If your state expanded Medicaid, then the maximum yearly income needs to be below $16,243 for an individual and $33,465 for a family of four. If your state did not expand Medicaid, then the levels are $11,670 for an individual and $23,850 for a family of four. Other qualifications include your family size, family status, individuals with disabilities, and pregnant women.
Regardless of whether or not you live in a state that opted to expand Medicaid, every state has the same mandatory services, including doctor and hospital visits, preventative screening, services for pregnant women and newborns, laboratory and x-rays, and rural health services. Your state may also have coverage for prescription medications, dental care, medical equipment, and home or community-based services.
If you are over the age of 65, you should apply for Medicare. However, if your income is low enough, you may qualify for Medicaid assistance to help pay for Medicare premiums and other costs like Medicare Part D (prescription medications). It will also cover dental and long-term care services that are not covered under Medicare.
The Children’s Health Insurance Program, or CHIP, covers children in families that have incomes that are too high for Medicaid, but still too low to be able to afford a plan on the health insurance marketplace. It is also administered at the state level, so qualifications vary. In some cases, parents of CHIP-insured children or pregnant women may also be covered. To see if you qualify, click here. If your children meet the requirements, but you cannot get Medicaid as the parent, there are various low-cost options available through the federal and state health insurance marketplaces.
The benefits for enrolling your children in CHIP include doctor and hospital visits, immunizations, prescription medications, dental and eye care, and screening and testing services.
The out-of-pocket costs depend on the service provided. Routine doctor visits are free, while other services may include a copayment. You state may also require a monthly premium, but the annual total will not be higher than 5 percent of your income.
For both Medicaid and CHIP, you can enroll at any time. There is no specified enrollment period like for the health insurance marketplace.
Speak to your Agent
Contact your local health insurance agent today. They will have the knowledge and experience needed to help you determine which low-cost option is best for you.
While the majority of people want an agent involved in their purchase of insurance, many people want to see if they can save money by buying direct from the insurance company. Others want to try a direct quote to make sure the premium they’re now paying through their local agent is fair. If you want a quote for your coverage, click on the competitive quote button on the right side of this page.