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What Is an Obamacare Subsidy? Are You Eligible?

By Brett Snider, Esq. | Last updated on

Obamacare subsidies are being discussed as the open enrollment period approaches. But what are these subsidies exactly, and are you eligible for one?

It's true, Obamacare will provide subsidies for many Americans' individual health insurance premiums. But some participants in the health insurance exchange will not qualify.

Here's what you need to know about how Obamacare's subsidies work, and what factors may affect your eligibility:

Understanding Obamacare


About This Series: From the Editor

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Obamacare Individual Tax Subsidy

In order to encourage uninsured Americans to participate in Obamacare's health insurance exchanges, the federal government is offering participants a break on the annual insurance premiums.

By signing up for a plan (offered at four levels: Bronze, Silver, Gold, or Platinum) starting on October 1, you may receive government assistance in the form of a tax subsidy which can be used to significantly reduce the cost of these plans' premiums.

As CNN has explained, the subsidy can be taken as a tax credit, or the government can pay the insurance company you choose.

The Obamacare subsidy amount will remain the same regardless of which plan you choose, so the same subsidy will go further with a less expensive -- but likely less comprehensive -- plan.

But how much will you receive in subsidies?

Factors Determining Subsidy Amount

Just like the factors used to determine the cost of your premium, Obamacare uses certain key factors to determine how much government help you will receive in paying for your plan. Those factors include not only which state you're in, but also:

  • The availability of employee insurance. If your employer offers you health insurance, regardless of the cost, then you are ineligible for a tax subsidy under Obamacare.
  • Family size. Depending on the number of people in your family, you may receive a larger subsidy -- especially if you have three or more children.
  • Household income. Subsidies will only be available to those below 400 percent of the poverty level, which according to Forbes, is less than $88,000 for a family of four.

There are various third-party subsidy calculators available online. Prior to the opening of the health insurance exchanges on October 1, these calculators may be the best way to estimate your potential Obamacare subsidy.

Aside from the Obamacare subsidy, there are nine categories of individuals who are explicitly exempt from Obamacare's individual mandate. We'll explain who's exempt from the mandate as our "Understanding Obamacare" series continues tomorrow.

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