What is a Health Insurance Subsidy?
A health insurance subsidy is financial assistance that helps lower the cost of Marketplace health coverage, either by reducing your monthly premium, lowering out-of-pocket costs, or both, depending on your household income and eligibility.
This guide explains how Affordable Care Act subsidies work, who may qualify, and how they affect the total cost of coverage. It also helps clarify the difference between premium tax credits and cost-sharing reductions, so you can better understand how financial help is applied when comparing plans.
Your Income
Should Include
- Tips and gratuities
- Capital gains from selling property or investments
- Social Security income
- Social Security Disability income
- Excluded (untaxed) foreign income
- Retirement or pension income
- Alimony finalized before Jan 1, 2019
- Taxable disability pensions
- Jury duty pay
- Canceled debts
- Gambling, lottery, or court awards
Taxable Income
Should Not Include
- Worker’s compensation
- Home sale gains under IRS exclusion limits
- Supplemental Security Income (SSI)
- Child support
- Gifts
- Veterans disability payments
- Loan proceeds
- TANF payments
- State tax refunds
- Alimony finalized after Jan 1, 2019
- Non-taxable disability pensions
The Marketplace uses specific income rules to determine subsidy eligibility. Income that should be included affects how much financial help you receive. Income that should not be included must be left out to avoid incorrect subsidy calculations or future repayment issues.
Premium Contribution Limits
This table shows the maximum percentage of household income required for the benchmark Silver plan. Any cost above this amount is offset by a subsidy.
| Household Income (FPL) | Maximum Premium Contribution |
|---|---|
| Up to 133% | 2.10% |
| 133% – 150% | 3.14% – 4.19% |
| 150% – 200% | 4.19% – 6.60% |
| 200% – 250% | 6.60% – 8.44% |
| 250% – 300% | 8.44% – 9.96% |
| 300% – 400% | 9.96% |
How CSR Tier Affects Cost-Sharing
Cost-Sharing Reductions (CSR) lower deductibles, copays, and out-of-pocket limits on Silver plans when household income falls within specific Federal Poverty Level ranges.
| CSR Tier | Household Income | Out of Pocket Max | Deductible | Hospital Visit | Doctor Visit |
|---|---|---|---|---|---|
| Standard Silver | Above 250% FPL | $10,600 | $7,000 | 40% | $45 |
| CSR Tier 1 | 200% – 250% | $8,450 | $5,000 | 40% | $45 |
| CSR Tier 2 | 150% – 200% | $3,500 | $650 | 20% | $20 |
| CSR Tier 3 | 100% – 150% | $3,500 | $150 | 10% | $5 |