Understanding Health Insurance Subsidies under the Affordable Care Act (ACA)

The Affordable Care Act (ACA) provides financial assistance to individuals and families who struggle to afford health insurance. These subsidies, known as premium tax credits, make health insurance more accessible to those within certain income brackets.

Eligibility Requirements for Premium Tax Credits

To qualify for premium tax credits under the ACA, you must meet the following criteria:

Your income is between 100% and 400% of the Federal Poverty Level (FPL).
You are not eligible for other government-sponsored health insurance programs, such as Medicare or Medicaid.
You are a U.S. citizen or legal resident.

Calculating FPL Percentage

The FPL is used to determine your eligibility for subsidies. You can calculate your FPL percentage using the following formula:

For individuals: Annual income / $12,140 (100% FPL) 100
For families of 2: Annual income / $16,460 (100% FPL) 100

Premium Tax Credit Amounts

The amount of premium tax credit you receive depends on your FPL percentage and family size. The following table provides the general guidelines:

FPL Percentage Premium Tax Credit Cap
133% or less 2% of income
133% – 150% 3%-4% of income
150% – 200% 4%-6.3% of income
200% – 250% 6.3%-8.05% of income
250% – 300% 8.05%-9.5% of income
300% – 400% 9.5% of income

Applying for Premium Tax Credits

You can apply for premium tax credits when you enroll in a health insurance plan through the Health Insurance Marketplace (healthcare.gov). When applying, you will provide information about your income and family size. The Marketplace will automatically determine your eligibility and calculate the amount of tax credit you are entitled to receive.

Note: Premium tax credits are applied directly to your health insurance premiums. You will not receive a check in the mail for the credit amount.

Medicaid Eligibility

If you have a low income, you may also qualify for Medicaid, a government-funded health insurance program for low-income individuals and families. In most states, Medicaid is available to individuals with incomes below 138% of the FPL. However, some states have expanded Medicaid eligibility to include individuals with incomes up to 400% of the FPL.


Health care subsidies under the ACA make health insurance more affordable for individuals and families with low to moderate incomes. By understanding the eligibility requirements, premium tax credit amounts, and application process, you can take advantage of this valuable financial assistance and ensure you have access to the health care you need.

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