By Kyle Maziarz
Open Enrollment for 2024 is currently underway, and as a result of a temporary extension of federal premium subsidies, most Marketplace enrollees are eligible for coverage at a very nominal monthly expense. This week, we’re highlighting frequently asked queries (FAQs) from our Navigator Resource Guide concerning the financial aid accessible through the Marketplace.
Who qualifies for Marketplace premium tax credits?
U.S. citizens and lawfully present immigrants who buy coverage in the Marketplace are eligible for premium tax credits. Generally, individuals must also have household income exceeding 100 percent of the federal poverty level. Premium tax credits are also accessible to lawfully residing immigrants with incomes below 100 percent of the poverty line who are not qualified for Medicaid due to their immigration status. (Typically, immigrants must lawfully reside in the U.S. for five years before they become qualified for Medicaid. However, states have the option to waive the 5-year waiting period for children and pregnancy coverage. See our state fact sheets for more details.)
Additionally, to qualify for the premium tax credits, individuals must not be qualified for public coverage—including most Medicaid, most Children’s Health Insurance Program coverage, Medicare, or military coverage—and must not have access to affordable, sufficient health insurance through an employer. There are exceptions. For instance, there is an exception in cases when the employer plan is unaffordable because the employee’s share of the premium exceeds 8.39 percent of the employee’s household income in 2024 (for 2023, it was 9.12 percent). There is also an exception in cases where the employer plan doesn’t meet a minimum value (the plan must cover at least 60 percent of the cost of covered services for a standard population, and it must include substantial coverage of physician and inpatient hospital services). (26 C.F.R. 1.36B-6; 26 U.S.C. §36B; IRS Revenue Procedure 2023-29.)
What earnings are considered in determining my eligibility for premium tax credits?
Eligibility for premium tax credits is based on your anticipated household income for the year in which you are applying for coverage. For instance, if you are applying for coverage commencing in January 2024, you should estimate your projected income for 2024.
The Marketplace evaluates your Modified Adjusted Gross Income, or MAGI, to establish your eligibility for premium tax credits. When you file a federal income tax return, you must report your adjusted gross income (which involves wages and salaries, interest and dividends, unemployment benefits, and several other sources of income). MAGI adjusts your adjusted gross income by incorporating any non-taxable Social Security benefits you receive, any tax-exempt interest you earn, and any foreign income you earned that was excluded from your income for tax purposes.
To understand what specifics to include in your household income estimate, refer to HealthCare.gov’s table on what to include in your income estimate.
Keep in mind that eligibility for Medicaid and CHIP is also founded on MAGI (unless you qualify based on disability or are dually eligible for Medicare), though some additional adjustments may be made in determining eligibility for these programs. Contact your Marketplace or your state Medicaid program for further information. (26 C.F.R. § 1.36B-1; IRS, Questions and Answers on the Premium Tax Credit.)
I am unable to afford substantial payments for deductibles and co-pays. Is there any assistance available in the Marketplace for cost-sharing?
Yes. If your income falls between 100 percent and 250 percent of the federal poverty level, you may be eligible for cost-sharing reductions in addition to premium tax credits. These will decrease the deductibles, co-pays, and other out-of-pocket expenses that would otherwise apply to covered services.
The cost-sharing reductions are accessible through modified versions of silver plans offered on the Marketplace. These plans will include lower deductibles, co-pays, coinsurance, and out-of-pocket limits in comparison to regular silver plans. Once the Marketplace determines your eligibility for cost-sharing reductions, you will be able to select one of these modified silver plans, depending on your income level. (45 C.F.R. § 155.305.)
Keep an eye out for additional FAQs of the week during Open Enrollment, and explore the Navigator Resource Guide for more FAQs and other valuable resources.