Healthcare Reform: Applying for Marketplace Subsidies and Reporting

Health Insurance Marketplaces (also known as Exchanges) are organizations set up to provide alternative markets for buying health insurance. They offer a choice of different health plans, certify plans that participate and provide information to help consumers understand their coverage options

Individuals can purchase insurance through a Marketplace if they are:
• Not currently incarcerated;
• A lawful citizen or U.S. resident; and
• Living in the service area of the Marketplace.

Household income levels do not impact eligibility to purchase coverage through a Marketplace. Likewise, an individual may purchase coverage through the Exchange even if he or she is eligible for other health insurance (such as coverage under a government-sponsored program or an eligible employer-sponsored plan). Federal subsidies are available to help individuals purchase coverage through a Marketplace. The subsidies are designed to make coverage through a Marketplace more affordable by reducing premiums or other out-of-pocket health care costs.

Types of Marketplace Subsidies: There are two federal health insurance subsidies available for coverage through a Marketplace—premium tax credits and cost-sharing reductions. Both of these subsidies vary in amount based on the taxpayer’s household income and reduce the out-of-pocket costs of health insurance for the insured.

Federal subsidies are available to help individuals

purchase health insurance through a Marketplace.

• Premium tax credits are available for people with somewhat higher incomes (up
to 400 percent of the federal poverty line (FPL)), and they reduce out-of-pocket
premium costs for the taxpayer.
• Reduced cost-sharing is available for individuals with lower incomes (up to 250
percent of FPL). Through cost-sharing reductions, these individuals are eligible to
enroll in plans with higher actuarial values and have the plan, on average, pay a
greater share of covered benefits. This means that coverage for these individuals
has lower out-of-pocket costs at the point of service (for example, lower
deductibles and co-payments).

Eligibility for Subsidies
To be eligible for the subsidies, a taxpayer:
• Must have household income for the year within the limits described above;
• May not be claimed as a tax dependent of another taxpayer; and
• Must file a joint return, if married.

In addition, to receive the premium assistance, a taxpayer must enroll in one or more qualified health plans (QHPs) through a Marketplace. For the cost-sharing reductions, the taxpayer must enroll in a plan that is at least the silver level of coverage.