Ways to Save Money on Obamacare
There are three primary ways to reduce the cost of health plans under the Affordable Care Act in Massachusetts.
- You may be able to lower the cost of monthly premiums when you sign up for a private health insurance plan. Your savings will come in the form of a tax credit.
- You may be able to reduce your out-of-pocket costs -- including copayments, deductibles, and coinsurance -- with cost-sharing subsidies.
- You may qualify for free or low-cost coverage through MassHealth, the program that provides benefits through Medicaid and the Children’s Health Insurance Program (CHIP) in Massachusetts. Each of these forms of assistance depends on your income and family size.
Many people who apply for coverage at Massachusetts Health Connector, the health insurance exchange for Massachusetts, will be eligible for some form of financial assistance. Read on to learn more about each option.
1. Lowering Premium Costs with Tax Credits
If you are under age 65 and not eligible for job-based health coverage or MassHealth, a federal tax credit -- called the Advance Premium Tax Credit -- may help you pay your monthly premiums.
The federal tax credit is available for those whose incomes are between 100% and 400% of the federal poverty level. The following chart will help you determine whether you qualify. (These amounts are based on the federal poverty level for 2013 and will probably increase slightly in 2014.)
- $11,490 to $45,960 for individuals
- $15,510 to $62,040 for a family of 2
- $19,530 to $78,120 for a family of 3
- $23,550 to $94,200 for a family of 4
- $27,570 to $110,280 for a family of 5
- $31,590 to $126,360 for a family of 6
- $35,610 to $142,440 for a family of 7
- $39,630 to $158,520 for a family of 8
If you qualify, you won’t have to wait until tax time to claim your credit. It can be sent directly to your insurer to immediately lower your premiums.
These tax credits are in addition to subsidies provided by the commonwealth of Massachusetts to individuals and families earning less than 300% of the federal poverty level.
You'll learn your eligibility for all premium subsidies when you apply for a plan at Massachusetts Health Connector.
2. Reducing Out-of-Pocket Costs with Cost-Sharing Subsidies
Federal cost-sharing subsidies help you pay for out-of-pocket costs like co-pays and deductibles. They also lower the total amount you have to pay for health care in a given year. (The annual out-of-pocket spending limits for plans offered by Massachusetts Health Connector will vary depending on the type of plan – platinum, gold, silver, or bronze. See How Much Does Obamacare Cost in Massachusetts?)
Cost-sharing subsidies are available for people earning between 100% and 250% of the federal poverty level. The following chart will help you determine whether you qualify. (These amounts are based on the federal poverty level for 2013 and will probably increase slightly in 2014.)
- Up to $28,725 for individuals
- Up to $38,775 for a family of 2
- Up to $48,825 for a family of 3
- Up to $58,875 for a family of 4
- Up to $68,925 for a family of 5
- Up to $78,975 for a family of 6
- Up to $89,025 for a family of 7
- Up to $99,075 for a family of 8
Note that these out-of-pocket savings are available only for silver plans. Generally, if you qualify for the subsidy, you’ll get the out-of-pocket benefits of a gold or platinum plan for the price of a silver plan.
Your final eligibility for all tax credits and subsidies will be determined when you apply for a health plan at Massachusetts Health Connector.
3. Getting Free or Low-Cost Coverage through MassHealth
You may qualify for free or low-cost coverage through MassHealth, the program that administers benefits under Medicaid and the Children’s Health Insurance Program (CHIP).
Medicaid. If you are eligible for Medicaid, you will get free or low-cost health care. You will not need to buy a separate health plan through Massachusetts Health Connector.
The good news is that Massachusetts is planning to expand Medicaid eligibility in 2014. That means that even if you were told you didn’t qualify for Medicaid in the past, you may be eligible under the new rules.
When you apply for health coverage at Massachusetts Health Connector, the state will check your application against the Medicaid eligibility rules and tell you whether you qualify for Medicaid or the other savings options described above.
Children’s Health Insurance Program (CHIP). Even if you don’t qualify for Medicaid, your children may be eligible for the Children's Health Insurance Program (CHIP). Kids covered by CHIP don’t need to be included in another health plan.
When you apply for health coverage at Massachusetts Health Connector, the state will check to see whether your children might qualify for CHIP. If so, it will alert the Massachusetts CHIP agency so your kids can get the coverage they need.
You can learn the final costs for specific plans, including whether you qualify for subsidies or low-cost care programs, when you apply for insurance online at Massachusetts Health Connector.