Danko Iordanov, EA Premium Assistance Credit and Calculation
This is the portion of the health insurance premiums that the government pays on your behalf. There are several factors that determine if you qualify for it and the amount you get. They are your household income (MAGI), and the cost of the second level (Silver) plan for you. The cost of the silver plan is based on your age and location and the insurance companies set the price. The good news is that having a pre-existing condition does not change the price. The price of insurance is greatly influenced by your age. If you and your spouse make 60,000 and you are both 30, you will get no credit and will have to pay about $390 per month for Bronze coverage. If you make the same money but you are both 50, then you would qualify for $280 credit per month, and would have to pay $345 per month to get Bronze coverage for both. This is cheaper than what the 30-year-olds would have to pay because of the subsidy calculation!
Calculation: The law states that you should not pay more than a certain percentage of your household income for silver insurance. It is a sliding scale and starts at 2% for people making 133% of poverty level up to 9.5% for people making 300-400% of poverty level. In other words if you are single and you make 21,000 (183% of poverty), then you should not pay more than 5.5% of your income for a Silver plan. If the plan costs more than $1,155 per year ($96.25 per month) then you qualify for credit. Currently the National average for a 33-year-old’s silver plan is $3,037 ($253 per month). If you select it through your state’s Exchange you will need to pay only $96.25 per month and the government will cover the rest – $156.83 per month. Even better – if you decide to get a bit lower Bronze coverage, which is still good and costs $2,518 or $209.83 per month, your subsidy credit remains the same at $156.83 and you only need to pay the difference of $53 per month to get good health insurance coverage. Now this looks pretty affordable, doesn’t it? The formulas are the same for families with 2, 3, 4 or more people. Just keep in mind that the whole household income (MAGI) is taken into consideration and the ages of everybody play a role in the price of the insurance plan.