There are 2 different portions of government assistance in the California Health Exchange; a tax credit, and a cost sharing subsidy. In general, only median and lower income families will qualify for either of these.
How do the tax credits work in the Health Exchange? If you qualify for a tax credit, the government will pay part of your monthly health insurance cost, directly to the insurance company. The Health Exchange tax credits are applied automatically to your insurance bill every month, so you get the credit immediately and don’t have to wait to be reimbursed on your taxes.
Currently you only need to meet 2 criteria to qualify for a tax credit:
- You must earn less than 400% of the Federal Poverty Level (FPL)
- If your employer offers “affordable” health insurance through work, you are ineligible for a tax credit
The state considers the plan affordable if the cost to you is 9.5% of your total income or less. For example:
| Monthly Income | Your Monthly Cost For Plan Through Work | % of Total Income | Qualifies For Tax Credit? |
|---|---|---|---|
| $4,000 | $400 | 10% | Yes |
| $4,000 | $360 | 9% | No |
| $4,000 | $200 | 5% | No |
So if the company you work for offers health insurance that they pay the majority of, you will probably not qualify for a tax credit through the California Health Exchange. Even if you don’t qualify for a tax credit, you can still purchase coverage through the exchange. The chart below lists the FPL based on your household size. These figures are subject to change.
| Household Size | 100% | 133% | 150% | 200% | 300% | 400% |
|---|---|---|---|---|---|---|
| 1 | $11,490 | $15,282 | $17,235 | $22,980 | $34,470 | $45,960 |
| 2 | 15,510 | 20,628 | 23,265 | 31,020 | 46,530 | 62,040 |
| 3 | 19,530 | 25,975 | 29,295 | 39,060 | 58,590 | 78,120 |
| 4 | 23,550 | 31,322 | 35,325 | 47,100 | 70,650 | 94,200 |
| 5 | 27,570 | 36,668 | 41,355 | 55,140 | 82,710 | 110,280 |
| 6 | 31,590 | 42,015 | 47,385 | 63,180 | 94,770 | 126,360 |
| 7 | 35,610 | 47,361 | 53,415 | 71,220 | 106,830 | 142,440 |
| 8 | 39,630 | 52,708 | 59,445 | 79,260 | 118,890 | 158,520 |
| For each additional period, add | $4,020 | $5,347 | $6,030 | $8,040 | $12,060 | $16,080 |
What is a cost sharing subsidy in the Health Exchange? Some families will also qualify for a cost sharing subsidy, which operates differently. With a subsidy, a lower income applicant can pay the cost of a lower tier plan, and get the benefits of a much better plan. If you earn between 138% – 200% of the FPL you will pay the cost of a Silver plan and get the benefit of Platinum. If you earn between 200% – 250% of the FPL you will pay the cost of Silver and get the benefit of Gold.The 4 different plans available in the health exchange are:
- Bronze – Pays 60% of your health expenses, you pay 40% (lowest rates)
- Silver – Pays 70% of your health expenses, you pay 30%
- Gold – Pays 80% of your health expenses, you pay 20%
- Platinum– Pays 90% of your health expenses, you pay 10% (highest rates)
To summarize, a family earning 400% or less than FPL, that does not have access to affordable coverage through work, qualifies for a tax credit. A family earning less than 250% FPL and no affordable coverage through work qualifies for both a tax credit AND cost sharing subsidy.
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Owner of Paul Nelson Insurance, and resident of Santa Cruz and Monterey counties for 30 years.