The Ultimate Guide to Health Insurance Subsidies

Health insurance subsidies: they’re controversial and confusing, but they could be your ticket to more affordable coverage. In this simple guide, we break subsidies down into simple terms so you can make smarter health care choices. Read on to find out what health insurance subsidies are, how they work, and if you qualify for them.

What Are Health Insurance Subsidies?

A subsidy is money the government will pay towards part or all of your health coverage, depending on your income. There are two types of health insurance subsidies you may qualify for:

  • The premium tax credit subsidy covers a portion of your monthly health insurance payment (a.k.a. your premium). Based on your eligibility, you could pay as little as $1 a month for a health plan!
  • The cost-sharing subsidy makes using your health plan more affordable. It lowers the expenses you have to cover when receiving care, including your deductible, copay / coinsurance, and sometimes your out-of-pocket maximum.

INSIDE TIP: it is possible to qualify for both types of subsidies! In fact, if you qualify for a cost-sharing subsidy, you’re automatically eligible for a premium subsidy, as well.

Subsidies are distributed based on the federal poverty level (FPL), which compares your income and family size to other American households. People who make between 100 and 400 percent of the FPL are eligible for a premium subsidy. In 2016, that was almost half of the U.S. population! Cost-sharing subsidies are available to people under 250 percent of the FPL. Not sure where on the scale you are? Read on to find out how to determine your subsidy eligibility.

Note: If your income is below 100 percent, you’re eligible for Medicaid, a federal health care program for low-income families.

Where Do I Get Health Insurance Subsidies?

You have to enroll through HealthCare.gov or your state exchange to receive a subsidy. This is where you submit the information Uncle Sam needs to determine how much assistance you need. If you submit your application directly to an insurance company, you will have to pay full-price for your plan. You can use Stride to get a subsidy estimate and a tailored plan recommendation. Once you find a plan you like, we’ll get you enrolled through an on-exchange application.

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