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Covered California Premium Subsidies

 Covered California Premium Subsidies

When the Affordable Care Act (ACA) is fully implemented in 2014, 3.1 million Californians will be eligible for premium subsidies, called advanced tax credits, through the Covered California health insurance marketplace and only through Covered California. An eligible individual is a taxpayer whose household income – modified adjusted gross income (MAGI) is between 133 percent and 400 percent of the federal poverty level (FPL) for the appropriate family size. (FPL chart below.)Federal Poverty Guidelines 2011 - Data
Premium Subsidies
The premium subsidy reduces the amount that an individual or family pays for health insurance coverage by providing an advance tax credit. These subsidies are only available through the Exchange. Subsidies are determined on a sliding scale, based on income, so that individuals at the lower end of the income scale get the most help. The subsidy is based on the premium for a Silver Level standardized plan (the second lowest cost silver plan available in an Exchange). An individual or family who wants a more expensive or higher tier plan (i.e., gold or platinum) must pay the difference.
Premium Limits for Consumers Based on Income
For individuals and families who qualify for a premium subsidy, their share of the premium cost is set by their income on a sliding scale as follows:
  • Up to 133% FPL – 2% of income
  • 133 – 150% FPL – 3% – 4% of income
  • 150 – 200% FPL – 4% – 6.3% of income
  • 200 – 250% FPL – 6.3% – 8.05% of income
  • 250 – 300% FPL – 8.05% – 9.5% of income
  • 350 – 400% FPL – 9.5% of income
Subsidy Model
The table below provides an illustration of the value of the tax subsidies for families of four at several income levels for a 45-year-old policyholder based on a “silver” plan. Please note: the “unsubsidized premium” in the chart is an old estimate and not very accurate. The actual premiums will not be available until May or June of 2013. However, for subsidy-eligible consumers, the total premium does not matter. Their cost (premium after subsidy) is fixed by their income. (Click table below to enlarge.)
Subsidy Model