ACA Subsidy Cliff: How to Keep Your Premiums Low and Avoid the Penalty

The Affordable Care Act (ACA) provides financial assistance to help people afford health insurance. These subsidies are available to people with incomes between 138% and 400% of the federal poverty level (FPL).

For 2023, the FPL is $13,590 for a single person and $27,750 for a family of four. This means that people with incomes between $18,681 and $54,360 for a single person and $37,653 and $111,000 for a family of four may be eligible for subsidies.

The amount of the subsidy you receive is based on your income, family size, and the cost of health insurance in your area. Subsidies can be used to lower the cost of your monthly premiums, your deductible, or your out-of-pocket costs.

If you are eligible for ACA subsidies, you should be aware of the “subsidy cliff.” This is a point at which your income increases by a small amount, but your subsidy decreases by a large amount.

For example, in 2023, a single person with an income of $49,960 would receive a subsidy of $1,000. However, if their income increased to $50,000, their subsidy would drop to $0.

This is because the subsidy is based on a percentage of your income. As your income increases, the percentage of your income that is eligible for the subsidy decreases.

If you are approaching the subsidy cliff, there are a few things you can do to avoid losing your subsidy.

Reduce your income. This can be done by contributing more to your retirement accounts, taking a pay cut, or working fewer hours.
Increase your deductible. This will lower your monthly premiums, but it will also increase your out-of-pocket costs.
Choose a plan with a lower premium. This may mean choosing a plan with a higher deductible or a narrower network of providers.

If you are unsure whether you are eligible for ACA subsidies or how to avoid the subsidy cliff, you should contact a licensed health insurance agent. They can help you determine your eligibility and find a plan that meets your needs and budget.

The Affordable Care Act (ACA), also known as Obamacare, is a health care reform law that was signed into law by President Barack Obama in 2010. The ACA has made health insurance more affordable and accessible for millions of Americans.