Individual and family health plan affordability

Purchasing affordable health plans and policies can be difficult. Without knowing the basics, it’s hard to understand how things work. Following are some common topics you will encounter while looking for a individual and family health plan.

What are Exchanges?

A key component of the Affordable Care Act (ACA) is the Health Insurance Marketplace, or Exchange. The Exchange is a platform where you can compare and buy private health insurance plans from different companies with different amounts of coverage and costs. If you qualify based on income and family size, the Exchange also provides financial assistance to make coverage more affordable in the form of advanced tax credits and subsidies such as cost-sharing reductions when purchasing a plan.

Federal vs State Subsidies

Federal subsidies, such as Advanced Premium Tax Credits (APTC) and Cost-Sharing Reductions (CSR) are available to individuals and families based on factors such as income, family size, and the cost of health insurance in their area. State subsidies are additional financial assistance programs offered by some states to help make health insurance more affordable. These programs are founded by state governments and the amount of subsidies varies by state. While federal subsidies are available to all eligible individuals in all states, state subsidies are only available in select states and have different eligibility criteria and funding levels.

What are Advanced Premium Tax Credits (APTC)?

For individuals that are eligible, the federal government provides premium tax credits to pay for their monthly health plan payment, (or “premium”), which can significantly lower the cost of health coverage for those who qualify. These credits are also known as subsidies. If an individual is eligible for a subsidy, they can apply any amount of the tax credit in advance to lower their monthly premium.

Individuals and families with income between 1 and 4 times the federal poverty level are eligible for monthly premium discounts. The amount of tax credit is based on the individual or family’s income, family size, and the cost of health insurance in the area. The tax credit is paid directly to the health plan, reducing the out-of-pocket costs for health coverage.

What are Cost-Sharing Reductions (CSRs)?

Cost-sharing reductions are another kind of Affordable Care Act program to help lower the costs of health insurance for individuals and families purchasing healthcare on the Exchange. Individuals and families who have an income between 1 and 2.5 times the federal poverty level and have purchased a Silver-level plan through the Exchange are eligible to receive this subsidy. The CSR program reduces the deductible, copayment, and coinsurance amounts of the purchased health insurance plans, lowering the out-of-pocket costs for medical expenses.