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Submitted by: Dennis Jarvis
The FPL or Federal Poverty Level is about to become common knowledge to most Americans, especially the 60% expected to qualify for health subsidies. These numbers which are generated by the Federal Government to determine poverty levels based on income and eligibility for many social safety nets will dictate where billions of dollars of health subsidies go. Let’s take a look at the FPL and understand its new importance.
A quick introduction to the Federal Poverty Level numbers
The FPL are numbers which reflect annual income levels by family type. The numbers are increased with each additional family member added. The base numbers are 100% of the Federal Poverty level. The base numbers increase each year based on CPI or the Consumer Price Index which is a well-used representation of inflation. Otherwise, the numbers would “buy” less and less with each year due to inflation. So why is the FPL so important to health insurance now?
400% rule for health subsidies
The FPL always drove eligibility for Medicaid, Healthy Families, and other Federal safety net medical programs but the range has now been expanded with the ACA Health Reform bill. A core tenant of the bill is that eligible people up to 400% of the FPL will receive subsidies towards specified health plans available as of Jan 1st 2014 (with actual quoting and enrollment available Oct 1st 2013). This means that a person would double the FPL number that applies to him or her (single, family of four, etc) to determine if they are eligible for a health subsidy. Our health quote engine will automatically calculate this for you with entry of your income and family census data starting October 1st, 2013. Some people who make under 150% of the FPL will likely be eligible for fully paid Medicaid. So what will you get if you make under 400% of the Federal Poverty Level?
The 9.5% Rule
Qualifying for a subsidy is based on the 400% rule but the amount of health subsidy you can receive is based on your income and the cost of subsidy-eligible health plans. In general, you will not need to spend more than 9.5% of your income on health insurance premium. If the eligible health plan costs $1200 for a family of four and the family makes $50K/annually, this family should not have to spend more than $495/monthly. They will then receive a health subsidy of $705/monthly towards their health plan premium right away.
Health plan subsidies up to 250% of poverty
In addition to health subsidy towards monthly insurance premium, people that make between 150% and 250% of the FPL will also be eligible for plan benefit upgrades at no additional cost. There will be some differences from State to State on how this works but you can expect that your out of pocket for medical bills will be less due to this 150-250% FPL qualification.
Key points on the Federal Poverty Level and health subsidies
Qualification is generally expected to be your prior year’s income and it’s based on your MAGI or Modified Adjusted Gross Income. This will likely include passive forms of income. If you lose your eligibility status, you may be required at tax time to return the received subsidies (let’s say your income jumped from 350% of the FPL to 500% of the FPL during the prior year.
About the Author: Dennis Jarvis is a licensed health insurance agent who focuses on helping people understand the new
health subsidy
available through Reform for healthcare. More info on
9.5% Rule and Health Subsidies
Source:
isnare.com
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