Health Care Reform School, Lesson #5 - Tax Credits to help pay for health Insurance

Healthcare Reform school is back in session.  This is lesson #5 Financial Assistance provided for Health Insurance. 
Just to review very quickly, in my previous blogs I covered briefly the following topics.  For a reminder just click on them and you will be brought to that blog post.

• Lesson #1 - Introduction 
• Lesson #2 - The basic reasons for creating the Patient Protection and Affordable Care Act
• Lesson #3 - The public exchanges for purchasing insurance
• Lesson #4 - The Essential Health Benefits that will be added to all Health Insurance Policies in 2014.

A big part of the law is to get the large group of uninsured people with low income into the insurance pool.  Very often a big reason this group of people does not have insurance is the prohibitive cost of health insurance.  Therefore in order to get them into the "pool" the federal government will provide assistance.  Eligibility will be based on the previous years filed income taxes and will be determined through the application process through the Public Exchanges.  The amount of tax credit will be based on income and family size and the benchmark to which aid is being tied is the Federal Poverty Level (FPL).  There is a sliding scale of financial aid based on the income level and family size.  The concept is to have the insured people pay a specific percentage of their income towards health insurance.  Following is the scale that the government  is using:

Image courtesy of hin255 / FreeDigitalPhotos.net

• People earning up to 133% of Federal Poverty Level (FPL) will pay 2% of income towards insurance

• People earning from 133-150% of FPL will pay 3 – 4% of income towards insurance

• People earning from 150-200% FPL 4 – 6.3% will pay 3 – 4% of income towards insurance

• People earning from 200-250% FPL 6.3 – 8.05% will pay 3 – 4% of income towards insurance

• People earning from 250-300% FPL 8.05 – 9.5% will pay 3 – 4% of income towards insurance

• People earning from 300-400% FPL 9.5% will pay 3 – 4% of income towards insurance

Now to to put these numbers into context, review the following chart.

 2013 Federal Poverty Guidelines

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48 Contiguous States and DC

Note: The 100% column shows the federal poverty level for each family size, and the percentage columns that follow represent income levels that are commonly used as guidelines for health programs. 

Household Size	100%	133%	150%	200%	300%	400%
1	$11,490	$15,282	$17,235	$22,980	$34,470	$45,960
2	15,510	20,628	23,265	31,020	46,530	62,040
3	19,530	25,975	29,295	39,060	58,590	78,120
4	23,550	31,322	35,325	47,100	70,650	94,200
5	27,570	36,668	41,355	55,140	82,710	110,280
6	31,590	42,015	47,385	63,180	94,770	126,360
7	35,610	47,361	53,415	71,220	106,830	142,440
8	39,630	52,708	59,445	79,260	118,890	158,520
For each additional person, add	$4,020	$5,347	$6,030	$8,040	$12,060	$16,080

Is that all clear?  Well if it is not, then feel free to contact me.