In an earlier post we defined adequate and affordable health insurance, noting that beginning on January 1, 2014, the Affordable Care Act (ACA) states that those people whose employer does not offer adequate and affordable group coverage will be able to purchase insurance on the exchange.
One of the ways the new law attempts to make insurance “affordable” is through government subsidy for plans bought on the exchange.
Last week, the Internal Revenue Service (IRS) issued proposed guidelines regarding who will be eligible for the subsidy and how much it will be. Why did the IRS issue the proposed guidelines? Because the subsidy will come in the form of tax credits.
How much? It will vary based on income.
Who will be eligible? The proposal is this:
Tax credits will be issued to people who purchase insurance on the exchange whose household income is between 100% and 400% of the federal poverty level.
Let’s take a look at some numbers to put this into perspective:
In 2013, the federal poverty level for an individual is $11,490. So the credit will be available to individuals earning between $11,490 and $45,960 per year. For a family of 4, the subsidy will go to folks with household incomes between $23,550 and $94,200. For a chart showing 2013 federal poverty levels click here.
The IRS has opened up a 60 day comment period during which the public may provide feedback before the guidelines are finalized in early July.
Let us know what you think!