In 2014, all Americans are required to have health insurance or pay a fine. This fact has many worried about being able to afford individual health insurance because they can’t afford an individual health insurance policy as they currently exist. The good news is, the Affordable Care Act took a proactive stance and included a provision that created individual subsidies to help offset the cost of coverage. In order to be considered eligible for the subsidies, there are two tests that have to be passed.
One way to gain individual subsidies is to purchase insurance through an exchange and have income that is less than 400 percent of the federal poverty level. In 2011, the FPL amount for a family of four was $89,000 in gross income. The other option is when employer-offered health insurance is more than 9.5 percent of the total household income. A policy that costs this much is deemed to be unaffordable by the federal government.
There are two types of subsidies that help pay for individual health insurance. One is a premium assistance tax credit that is given monthly and lowers the cost of the premium. The other is cost-sharing assistance that limits the maximum costs that are paid for out of pocket such as deductibles and co-payments.