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- Healthcare does not depend on income but many features use income to qualify applicants
- Eligibility to participate on the Obamacare Marketplace is based on annual family income
- Marketplace assistance programs are based on annual family income
- Premium tax credits are based on annual income
- Health insurance from Medicaid and the CHIP depends on annual income
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One can purchase health insurance outside of the Obamacare system without regard to income. Only the basic eligibility for qualified health insurance through the federal Marketplace or state exchanges depends on annual income.
The Marketplace entry level is essentially the minimum needed to have a taxable income. The Marketplace moves applicants to Medicaid when they may not qualify for Obamacare. The Marketplace does not treat individuals differently because of income, but it is true that tax credits and costs reduction assistance involve the annual income of the applicants.
For example, applicants must earn less than 250 percent of the federal poverty level to get cost-sharing reduction assistance.
Persons at every income level can benefit from comparison shopping when selecting a health insurance plan. Comparison shopping can focus on costs or any other feature that the consumer may choose.
If you need to find healthcare and explore your options, enter your zip code above and get free online health insurance quotes today!
Obamacare Reform
Prior to the enactment of the Affordable Care Act, insurers used medical underwriting to decide whom to insure. They investigated applicants to discover things about their personal or medical history that might suggest a significant medical expense.
The ACA banned this practice and insurers had to accept every applicant that met the minimum income level. They also used annual income and sought to insure high-income individuals in good health. They used price to discourage some applications and denied coverage to many more when they rated as poor risks in the underwriter process.
After the ACA, insurers were required to accept applicants, and the law barred the practice of using annual income or any factors other than the below-listed items when setting prices.
- Age is a permissible factor but must fall within bounds. The oldest member of an insured group cannot pay more than three times the price paid by the youngest.
- Location is permitted as a price factor because it can be an inflator in many geographic areas. Rural and low population areas can present additional costs factors
- Tobacco usage is permitted because of the strong policies in the ACA to promote tobacco cessation. Tobacco usage contributes enormous national costs for avoidable illness. Smokers can get lower prices when they complete cessation programs
Counting People and Income
The Marketplace counts all of the people in the family group and the money they earn from all sources including jobs, investments, government programs, retirement, and self-employment. The people in the family unit must be counted if they meet the filing threshold for filing a federal tax return.
Premium Tax Credits
The annual income is the basis for premium tax credits. These payments to the selected insurer reduce the amount one must pay out of pocket per month. The credits can make premiums much more affordable.
Those with incomes between 100 percent and 400 percent of the federal poverty level can qualify for premium tax credits.
Annual income does not determine the right to have or use the credits; it simply advises how much credit may be available based on estimated earnings.
Affordable Insurance Depends on Family Income
The Affordable Care Act and the rules that carry it out define ”affordable”. A policy is not affordable if it requires 8.1 percent of the annual family income or more. If there is no available policy that costs less than 8.1 percent of annual income, then the applicant can claim an exemption from the individual mandate.
Personal Income Creates Options
Those with incomes at or above the 400 percent of Federal Poverty level will get little or no assistance from the marketplace. These applicants can buy a policy on the marketplace but should search the private markets outside of the Obamacare system to get offers that respond to their needs and preferences.
The private insurance market features a greater customization than Obamacare, and price may be less of a factor that for those with lower incomes.
Medicaid and the CHIP
Some health insurance coverage depends on having a qualifying income that falls beneath a certain threshold. The coverage provided through Medicaid is available to those near or below the federal poverty level.
States set the income limits for their residents, but the federal government adds to the eligibility in states that adopted the Medicaid Expansion. Medicaid expansion also depended on income.
The expansion includes more individuals with incomes near the top of Medicaid rules and slightly below Marketplace requirements.
Health Care Reform removed Income Tests
The Affordable Care Act removed income as a basis for insuring individuals. All persons that should file tax returns were treated equally with a limited discretion for age, location, and tobacco usage. The use of income as a basis for insuring an individual or family group was banned.
The law favors low-income people in many ways intended to bring fairness. The affordability exemption is an example; both individual plans and employer-sponsored plans must not exceed a maximum percentage of annual family income.
Health Care Reform Urges Universal Acceptance
Prior to the Affordable Care Act, insurers would refuse low-income persons and favor upper-income applicants. This made perfect business sense in a contract that used regular monthly payments and provided benefits only after the customer pays a deductible. Before the reforms of the Obamacare legislation, insurance companies used prices to discriminate against low-income buyers and to ration health care towards the wealthy.
The Affordable Care Act sought to end health care rationing that used an artificial barrier to limit services. The law expanded coverage and encouraged growth among medical care providers to respond to increased demand for regular medical care, prevention, and wellness.
Get Your Money’s Worth with Health Insurance
One must have a minimum annual income to be eligible for a Marketplace health insurance policy. One must have an income less than 400 percent of the federal poverty level to get tax credits or other financial assistance from Obamacare.
Obamacare does not depend on income beyond the minimum of the federal poverty level and the federal income tax filing threshold.
Comparison shopping is a great way to find the best values and costs savings when selecting health insurance. Depending on annual income, one can combine premium tax credits and cost-sharing reduction assistance to get the best coverage at the lowest price.
Click here to compare costs and companies through free online quotes!
[su_spoiler title=”References:” icon=”caret-square” style=”fancy” open=”yes”]
- http://obamacarefacts.com/private-health-plans-outside-the-marketplace/
- http://obamacarefacts.com/obamacare-control-costs/
- https://www.healthcare.gov/income-and-household-information/income/
- http://obamacarefacts.com/questions/what-happens-if-i-overestimate-income-for-tax-credits/
- https://www.irs.gov/pub/irs-pdf/i8965.pdf
- http://obamacarefacts.com/obamacare-subsidies/
- http://obamacarefacts.com/2016/04/12/the-difference-between-medicare-and-medicaid/
- http://obamacarefacts.com/2016/12/12/why-guaranteed-coverage-for-preexisting-conditions-matters/
- http://obamacarefacts.com/federal-poverty-level/
- http://obamacarefacts.com/questions/what-if-income-is-just-under-obamacare-threshold/
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