People who don’t have health insurance from an employer plan can buy health insurance from a marketplace under the Affordable Care Act (ACA), also known as Obamacare. The monthly premiums are made affordable by a premium subsidy in the form of a tax credit calculated off of your household income relative to the Federal Poverty Level (FPL), also known as the federal poverty line, federal poverty guidelines, or HHS poverty guidelines.
The premium subsidy goes by a sliding scale. The higher your income relative to the FPL for your household size, the lower your premium subsidy is.
Modified Adjusted Gross Income (MAGI)
The income to compare against the FPL is the Modified Adjusted Gross Income (MAGI) for your household. It doesn’t matter how many family members in your household need coverage from the ACA health insurance.
There are many different definitions of MAGI in the tax code. MAGI for ACA health insurance is basically your Adjusted Gross Income (AGI) plus tax-exempt muni bond interest and untaxed Social Security benefits.
These incomes are included in your AGI, and therefore increase your MAGI for ACA health insurance:
- Wages, salaries, tips, and other employment income
- Business income
- Income from real estate rentals
- Unemployment benefits
- Pension and withdrawals from pre-tax IRAs or annuities
- Social Security benefits
- Interest, dividends, and capital gains
These above-the-line deductions are removed from your AGI and therefore reduce your MAGI for ACA health insurance:
- Pre-tax contributions to workplace retirement plans (pension, 401k, 403b, 457, etc.)
- Deductible contributions to Traditional IRAs
- HSA contributions
- Self-employment health insurance deduction
- One-half of the self-employment tax
- Pre-tax contributions to self-employment retirement plans (solo 401k, SEP-IRA, etc.)
- Student loan interest deduction
- Early withdrawal penalties on CDs
- Educator expenses
In addition, these items aren’t in the AGI but are added back to your MAGI for ACA health insurance:
- Untaxed Social Security benefits (see Calculator: How Much of My Social Security Benefits Is Taxable?)
- Tax-exempt interest from muni bonds
The Maximum Income
Before 2021, you qualified for the premium subsidy only if your MAGI was at 400% of the Federal Poverty Level (FPL) or below. You would lose all the subsidy if your MAGI went above 400% of FPL even by $1. You would have to pay back all the premium subsidy you already received when you file your tax return with the IRS. This was known as the ACA subsidy cliff.
The law changed in 2021, which turned the sharp cliff into a gradual slope. The Inflation Reduction Act extended the change through 2025. You still qualify for a premium subsidy now if your income goes over 400% of FPL. You just qualify for a lower amount as your income goes up. See ACA Health Insurance Premium Subsidy Slope.
This gradual slope only applies through 2025. The ACA subsidy cliff is scheduled to return in 2026.
In order to see how much you qualify for the premium subsidy, you have to know where the FPL is.
The Minimum Income
In addition to the maximum income to receive the premium subsidy, there’s also a minimum income to get accepted by the ACA marketplace. If your estimated income is too low, the ACA marketplace won’t accept you. They’ll send you to Medicaid instead.
The minimum income is 138% of FPL in states that expanded Medicaid, which is the case in most states and the District of Columbia. In states that didn’t expand Medicaid, the minimum income is 100% of FPL. According to a map from KFF, these states haven’t expanded Medicaid:
- Wyoming
- Wisconsin
- Kansas
- Texas
- Tennessee
- South Carolina
- Mississippi
- Alabama
- Georgia
- Flordia
However, unlike the maximum income, the minimum income is only evaluated at the time of open enrollment (or special enrollment), not at the time when you file your tax return with the IRS.
If your estimated income at the time of enrollment is below the minimum, the ACA marketplace won’t accept you, and they will refer you to Medicaid. If your estimated income at the time of enrollment is above the minimum and they accepted you, but your income for the year ended up below the minimum due to unforeseen circumstances, as long as you made the original estimate in good faith, you are not required to pay back the premium subsidy you already received.
The FPL Numbers
Here are the FPL numbers for coverage in 2023, 2024, and 2025. They increase with inflation every year in January. These are applied with a one-year lag. Your eligibility for a premium subsidy for 2024 is based on the FPL numbers announced in 2023. The new numbers announced in 2024 will be used for coverage in 2025.
There are three sets of numbers. FPLs are higher in Alaska and Hawaii than in the lower 48 states and Washington DC.
48 Contiguous States and Washington DC
| Household Size | 2023 coverage | 2024 coverage | 2025 coverage |
|---|---|---|---|
| 1 | $13,590 | $14,580 | $15,060 |
| 2 | $18,310 | $19,720 | $20,440 |
| 3 | $23,030 | $24,860 | $25,820 |
| 4 | $27,750 | $30,000 | $31,200 |
| 5 | $32,470 | $35,140 | $36,580 |
| 6 | $37,190 | $40,280 | $41,960 |
| 7 | $41,910 | $45,420 | $47,340 |
| 8 | $46,630 | $50,560 | $52,720 |
| more | add $4,720 each | add $5,140 each | add $5,380 each |
Alaska
| Household Size | 2023 coverage | 2024 coverage | 2025 coverage |
|---|---|---|---|
| 1 | $16,990 | $18,210 | $18,810 |
| 2 | $22,890 | $24,640 | $25,540 |
| 3 | $28,790 | $31,070 | $32,270 |
| 4 | $34,690 | $37,500 | $39,000 |
| 5 | $40,590 | $43,930 | $45,730 |
| 6 | $46,490 | $50,360 | $52,460 |
| 7 | $52,390 | $56,790 | $59,190 |
| 8 | $58,290 | $63,220 | $65,920 |
| more | add $5,900 each | add $6,430 each | add $6,730 each |
Hawaii
| Household Size | 2023 coverage | 2024 coverage | 2025 coverage |
|---|---|---|---|
| 1 | $15,630 | $16,770 | $17,310 |
| 2 | $21,060 | $22,680 | $23,500 |
| 3 | $26,490 | $28,590 | $29,690 |
| 4 | $31,920 | $34,500 | $35,880 |
| 5 | $37,350 | $40,410 | $42,070 |
| 6 | $42,780 | $46,320 | $48,260 |
| 7 | $48,210 | $52,230 | $54,450 |
| 8 | $53,640 | $58,140 | $60,640 |
| more | add $5,430 each | add $5,910 each | add $6,190 each |
Source:
- U.S. Department of Health and Human Services, Notice 2022-01166
- U.S. Department of Health and Human Services, Notice 2023-00885
- U.S. Department of Health and Human Services, Notice 2024-00796
The Applicable Percentages
The FPL numbers determine one aspect of your eligibility for the premium subsidy. How much you are expected to pay when you qualify for the premium subsidy is also determined by a sliding scale called the Applicable Percentages.
The lower your MAGI is relative to the FPL for your household size, the lower you’re expected to pay as a percentage of your MAGI. This table shows the applicable percentages through 2025:
| Income | 2022 – 2025 |
|---|---|
| < 133% FPL | 0% |
| < 150% FPL | 0% |
| < 200% FPL | 0% – 2% |
| < 250% FPL | 2% – 4% |
| < 300% FPL | 4% – 6% |
| <= 400% FPL | 6% – 8.5% |
| > 400% FPL | 8.5% |
We cover it in more detail in ACA Health Insurance Premium Tax Credit Percentages.
Plan Choice
The ACA marketplace offers many different plan options. They’re categorized into Bronze plans, Silver plans, Gold plans, and Platinum plans. Multiplying your MAGI by the applicable percentage determines your premium contributions toward a benchmark plan — the Second Lowest Cost Silver Plan.
You’ll pay more if you choose a more expensive plan. The annual premium you’ll pay for the plan of your choice will be:
MAGI * applicable percentage + (annual premium for the plan chosen – annual premium for the Second Lowest Cost Silver Plan)
You’ll pay less if you choose a less expensive Bronze plan.
When your MAGI is lower than 250% of FPL, in addition to having a lower applicable percentage, you also qualify for cost-sharing reductions, which lower your co-pays and out-of-pocket maximum. We cover it in more detail in Cost-Sharing Subsidy Under ACA Health Insurance.
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Thomas Horstmann says
Hello,
I’m confused. As Oregon just advised me that I am not eligible for subsidies becomes my income is too high. Seriously, have they tried surviving on an adjusted income of $1600 a month as a single person with a home?
Any suggestions?
Harry Sit says
When I go to Oregon’s website and I click on “Window Shopping” I see they say “If you earn less than $49,960, you are likely to qualify for a lower monthly price.” When I give a random zip code in Portland and $19,000 as my annual income, it says I would get $510/month in subsidies plus “Extra Savings with Silver Cost-Sharing Reductions.” What did you tell them?
Charlie says
Is there a reliable way to figure out (in advance) what 2020 premiums/subsidies would be for a married couple where one person is going on to Medicare middle of 2020? I haven’t come across any resource.
Harry Sit says
Go to the exchange, enter your joint income and ages, and get separate quotes for needing insurance for two and needing insurance for one. You annual net premium after subsidies will be the blend of the two quotes, for example the price for two times 3 months plus the price for one times 9 months. Depending on the plan you choose, you may find the price for one is higher, the same, or lower than the price for two.
Charlie says
Best idea yet, thanks.
In our case, it may be better for me applying for Medicare up to three months after my birthday in order to maximize time with two-person subsidy. As I am not collecting SS, I would not be automatically enrolled in Medicare.
Agent initially said I can’t keep Marketplace plan that long. When pressed she said I could keep Plan, but my part of subsidy would cease in my birthday month. Marketplace rep said I could keep plan and subsidies until my Medicare effective date, even if that was 3-4 months after my birthday. I am trying to get this in writing from them. Any thoughts?
Alan S. Drake says
Medicare Part A is retroactive for 6 months before you are enrolled up to and including your birth month when you turn 65. Just Medicare Part A (Hospitalization) qualifies as health insurance and ends your ACA subsidy. De facto, I ended my ACA coverage a day before the end of my age 65 birth month and the government gave me an ACA subsidy for 30 of the 31 days of July (my birth month). This may be just slack built in to accommodate people.
I was able to delay Medicare Part B (Doctor Visits etc) and D (Prescriptions) for five months after my age 65 birth month without a lifetime penalty. But I am quite healthy with a large balance in my HSA. If anything developed medically in those five months, I would have immediately signed up (note delay before Medicare Part B starts, 3 months after I did sign up).
I think I could have delayed six months but I chose to start Parts B & D on January 1, 2019. My medical costs during those five uninsured months, a flu shot (FluBlok is the most effective one) and a $3/ month prescription, I paid out of pocket (& kept receipts for my HSA).
Mister K says
Once you’re eligible for Part A, you can still keep the Marketplace plan, BUT you will NOT be eligible for a APTC (tax credit) or other cost savings reductions (CSR). In other words, you’ll have to pay full price.
Charlie says
Thank you, after reading more, I agree with comments from Mister K and Alan. I didn’t realize Part A would be retroactive. I will not be delaying enrollment.
Interestingly our net premium for 2019 is only $120/mo. By comparison in 2020, we are looking at the following (using the same estimated income both years, same ACA plan which is a Bronze HSA plan and one year older)…
Both of Us (until I switch to Medicare) $229
Wife by herself under ACA $334
My Medicare Part B $145
My Medicare Part D $35 (est)
My Medicare Supp (high ded) $85 (est)
So once I’m on Medicare our monthly premiums will be $599 versus $120 this year! Wife is 6 years younger, so this will continue for a long time.
For anyone else transitioning to Medicare, you may want to run your numbers and see how you’ll fare. Those who received larger subsidies may also see large increases.
Howard.H says
My retirement will be $2000/mo.
My Medicare Part B about $145.
My Medicare Part D about $35.
Would I receive a check $1820(2000-145-35)/mo from the government?
What is my income [2000/1820]?
Thank you
lynn says
i read that as long as your income reported when you sign up is in good faith you will not be required to pay it back if you fall below. i usually just break the minimum threshold. i have just discovered i have a heart condition and will not be able to work until they figure out what is causing it and try to fix it. i live in a state without expanded medicaid and right now have not been proven to be officially disabled. i did report my expected income correctly and it would be above the min if i only end up missing a month or so. my question is i thought if you end up starting to have income discrepancies you were required to update your income information. what if i dont and make thousands less? if i need surgery i need this insurance because if i loose it i will end up possibly dead or living in a box over a steam vent.
Gia cooper says
Im y household is 3 and when I qualified for The market place the minimum the application would take for me to qualify was 24k butt the income of the 3 of us is only 20k this year. I see the minimum is 20800 per the table above. Should I report the 4K more since I told them I would make more or should I leave it as 20k?
Thomas H says
Hello, I am confused. As I keep receiving notifications from Heath Insurance Marketplace indicating I am missing things from my 2020 subsidy coverage. From what I see, I’m in fine shape as my 2018 adjusted gross income was a meager $16,164.
From what I can tell, the minimum income for a 1 person household in 2020 is $12,490. Nor can I see $16,164 being too high. So what is happening, and how do I deal with this situation? As I need coverage.
Thanks,
Tom
Mister K says
The Marketplace may be looking for other documents; for example, verification of income, proof of citizenship, or other requirements. It should have been explained in your Eligibility Notice. Call 800-318-2596, and ask the representative to tell you exactly what they need.
Sarah says
I’m a 25 year old college student that just got my own health insurance plan. I was wondering any idea if there will be an exception for 2020 minimum income requirements due to Covid-19? My insurance agent said that good faith excuse would only work once or twice. I would hate for my first strike to be wasted on the pandemic. I’ve been working but not the 4-days a week I calculated I would need to be at the proverity line.
Joanna says
If you were honest when you applied and something happened so you don’t make the minimum you should be okay. That is how it worked even before the pandemic.
Carolyn says
I would also urge everyone to contact their elected representatives about the lower threshhold for the subsidy. In states that did not expand Medicare, the effect has been to deny the subsidy to many people who need it the most.
charles edward King says
my total income for 2 is 32000. last year was the same, last year my tax credit for obamacare was 1635.00. this year 1612, next year 1204.00. can you tell me why?
Harry Sit says
The premium tax credit is calculated by the difference between the full premium of the second lowest-cost Silver plan in your area and a percentage of your income. If the number of people you’re covering isn’t changing and your premium tax credit is lower substantially in 2021, it sounds like the full premium of the second lowest-cost Silver plan in your area is lower.
Kevin Albertina says
I live in Illinois and have been on Obamacare for over 3 years. I estimated that my income for 2021 would be roughly the same as in 2020 (around $28000/yr). After I went through the application, it showed my subsidy (tax credit) for this year to be $737/mo, while it around $1000/mo in 2020, meaning the same plan this year is going to cost me over $430/mo, while it only cost about $180/mo last year. My premium per month will more than double for the same plan this year based on the same income. Does that sound right? How does that happen? I seriously don’t think I will be able to afford the same plan if this is correct.
Harry Sit says
First you want to double-check and make sure you entered everything correctly. The subsidy (tax credit) is calculated as the difference between the full price of the Second-Lowest Cost Silver Plan (SLCSP) and a percentage of your income. When a new insurance company enters your area with a lower cost plan, it can bring down your tax credit. If you don’t choose a lower cost plan from this new company, your net cost will increase.
Zan Rose says
Kevin, a new insurance carrier did enter the market in Illinois– Bright Health. They are the SLCSP now– they are the three lowest premium silver plans
Dee Lively says
I live in WV. My 2021 income estimate is $17,700. I thought a persons expected contribution for health care was a little over 3% or around $550 in my case. That would be less than $50/month for my share. The second lowest silver plan here is $1441/month and Healthcare.gov shows me paying $319/month and they kick in $1122/month.
If I pay $319 x 12 months = $3828 or nearly 22% of my income. Can you explain please?
Harry Sit says
What’s your zip code? The second lowest cost Silver plan you saw must not be the true Second Lowest Cost Silver Plan used in calculating the subsidy. When the premium also covers other benefits such as dental and vision, only the portion for medical benefits is considered.
Harry Sit says
Dee – Tobacco users pay a higher premium than non-users. The extra charge is not included in calculating the subsidy. For a single non-tobacco user with $17,700 income, a Silver plan without dental or vision coverage does indeed cost about $50/month in WV.
Jeff N says
I have a family of four. I make $669 per week on unemployment, my wife has no income, our 19 year old daughter is a full-time student and makes $324 working 24 hours per week, and our 13 year old daughter has no income. I signed up for Obamacare but no plan was offered, instead I was referred to the State of Illinois for Medicaid. Illinois let me know today that my daughters were eligible but my wife and I were not because we had too much income. I’m confused how that can be because Obamacare only submits those who are below 138% of FPL to state Medicaid. How can I be both above and below 138% of FPL? What do I do next?
Harry Sit says
Reapply for ACA/Obamacare and only request insurance for you and your wife? If you expect $669 unemployment for at least 30 weeks and your daughter working 50 weeks, your household income will be above 138% of FPL for a household of four.
Zan Rose says
1. When you go back to the application you will see a question asking, for each person, if that person has recently been turned down for Medicaid. When you answer that should let you move forward.
2. I think there was some kind of bug or problem with the application in that they first asked how much income each person had for this month and then moved on to next year. If those numbers were very different there were some problems. Example: My daughter, 25 and not my dependent, just started a new job (with no employer insurance). Her expected income this month was only half of what it will be (because she started mid-month). Based on that number the application sent her to our state’s Medicaid program even though her full monthly number will be about 2.3 FPL. Not wanting to go through a futile process she tried to delete her app and start over. Marketplace doesn’t let you do that this year, and told her to just immediately report a life change. So she said checked off the change in income box and restated her December income in conformity with what her monthly income will be in the future.
SusanB says
“Alan Drake says
JANUARY 31, 2019 AT 7:56 AM
Note also, that as self employed, your health care premiums and ACA penalty (see $1,300 above) are deducted from your income.”
Dear Alan, if you paid the ACA penalty – in my case $1,000 – what year do you deduct it from your income? I paid $1,000 penalty in the last two years as I made more than I had estimated but I did not deduct it from my income, as I did not know if this was allowed and where it would go on the tax return form. If I am able to revise my tax return from 2019 by adding this deduction, I may be to again qualify for a lower premium via the ACA. I do my own taxes. Thank you.
Eric Gold says
My son is leaving his job in March. He was notified by the company that they no longer wish to employ him, but I don’t think he is “fired.” He agreed to a mutual parting of ways to protect his reputation.
Once he is unemployed, how will his income collected in the first 3 months of the year be considered for ACA or Medicaid ? Does it become his annual income if none further comes in ? Or does he fit into the group that has no income from March until his circumstances change ?
Harry Sit says
ACA uses the annual income. Income earned in the first three months becomes part of it. Medicaid in general uses the current/prospective monthly income. It doesn’t consider income earned in the past. Medicaid rules vary by state. Look up information from the state Medicaid agency for specifics.
Bill says
News reports indicate the relief bill in Congress may suspend the 4FPL limit for the premium tax credit for 2021-2022. Looking forward to your insights on this if the bill becomes law.
James Joseph says
Thank you for this article. Most publications are vague on the changes of the March 2021 act, minimum FPL, MAGI, and ACA eligibility. It’s not clear if waiving taxes on $10,200 on unemployment makes you ineligible for ACA while the same time it means one’s MAGI is such that you’re not eligible for Medicaid. At the end of the day, it sounds you’re forgiven because you thought your income was to be $10,200 more in 2020. Only, folks don’t know until mid-March 2021.
James Joseph says
Glad for so many who were paid unemployment in 2020 that $10,200 of unemployment is tax exempt, but it appears to create a problem or at least confusion with 2020 ACA while doing 2020 taxes. I had significant income from unemployment in 2020. Prior to passage of the American Rescue Plan in March 2021, I was at 166% of the FPL. With passage of the American rescue plan, $10,200 of my unemployment pay in 2020 is taken off my AGI and now I’m at 88% FPL. Of course, you had to have a Modified Adjusted Gross Income (MAGI) between 100% -400% FPL to be eligible for ACA. I couldn’t have possibly known I was going to be at 88% FPL in 2020 until March 2021! Had I known, I would’ve gotten off ACA and moved over to Medicaid – except that Medicaid Would not consider me because they would consider the $10,200 of unemployment as part of my MAGI. Will ACA and/or the IRS/treasury forgive me for being under 100% FPL? Or will I be fined heavily?
Harry Sit says
Please read the paragraphs under the heading “The Minimum Income.” If your income dropped below 100% of FPL, whether it’s due to the unemployment benefits being untaxed or because you simply didn’t make as much as your thought, as long as the exchange accepted you into an ACA plan and it paid a subsidy to the insurance company for at least one month, you’ll be forgiven for missing the estimate. You’ll use your lower income to calculate your subsidy and maybe you’ll qualify for more subsidy than the exchange originally estimated.
James Joseph says
Thank you, Mr. Sit.
Alan S. Drake says
Federal tax law does not require you to take all credits or deductions that you are legally entitled to. Unusual, but there is no penalty for not taking a tax break you are entitled to.
I would take just enough of the $10,200 so that your FPL is 101% AND include a seperate page explaining why you did so.
Hopefully, the IRS will process as filed. If not, you have a solid & sympathetic position for taking only part of the available credit.
James Joseph says
Thank you for your comment and perspective. I appreciate it.
lynn says
i am only able to work part time due to illness and have always made a little more than the minimum to keep my aca insurance. its to the point where i need heart surgery soon. if i get surgery i will fall well below the minimum. even calling healthcare.gov gave me no answers on what happens if i fall below the minimum. most of the published info is about what happens if income goes over. this article made me feel a bit better. i reported my income correctly when i applied so i shouldnt be worried if i must have heart surgery this year. if i can wait till the beginning of next year it would be even better since after i heal i should be able to work more and make up for the 2 months healing time. the last thing i need is worrying about if i will have to pay back a lot of money!
Zee Ganat says
In May 2022 we sold a rental property and had a Capital Gain of approx. $100,000 on it. I called and reported this change to MP and now my premium goes up to 1,075/month and subsidy to $192/month and out of pocket cost and deductible up also to $8,600@, if I keep this coverage! This is a high premium and deductible for me to stay on this plan, so I have cancelled my coverage from 5/4/2022.
If I stay on the plan will I have to pay the IRS back for Jan.-April the amount of $1,075/month?
Harry Sit says
You will have to pay back some for January through April. The tax software will calculate the exact amount when you file your taxes.
roger says
Looks like your numbers are off by a year?
Harry Sit says
See comment #94.
Jonathan says
I have been on ACA coverage with full subsidies, but I recently became eligible for Medicare (not premium-free though as I don’t have the work credits). Can I choose ACA coverage over Medicare?
Harry Sit says
You can but you won’t be eligible for any subsidy. Medicare may also charge you a late enrollment penalty when you join in the future.
Robert Holloway says
I am currently under ACA coverage in NJ but my income may fall below 138% (or even 100% FPL) this year. However, I will not be eligible for Mediciaid because of the asset limit. Will I be out of coverage?
Robert Holloway says
I am currently under ACA coverage in NJ but my income may fall below 138% (or even 100% FPL) this year. However, I will not be eligible for Mediciaid because of the asset limit. Will I be out of coverage?
Rosel says
The asset limit does not apply. There is an asset limit for long-term care (nursing home) Medicaid, not for Medicaid for health insurance under the ACA.
Robert Holloway says
Sorry, I meant to clarify. Since I am 65+, the asset limit is required for me to get Medicaid.
calwatch says
That’s because most 65+ are on Medicare. The Medicaid acts as a supplement to reduce co-pays and/or provide premium support.
Kevin says
Harry, in your first table, “48 Contiguous States and Washington DC”, I think the FPL amount for 1 Person for 2023 coverage should be $13,590 (not $13,880).
Reference:
https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines/prior-hhs-poverty-guidelines-federal-register-references
Harry Sit says
Thank you for the catch. Fixed.
Kevin says
In your fourth table from the top, did you mean 138% (rather than 133%)?
Harry Sit says
The first row and the second row in that table are both 0% through 2025. So it doesn’t matter right now whether it’s 133% or 138% but it will matter again starting in 2026 unless the current law is extended. 138% qualifies someone at the time of enrollment but if the actual income falls on either side of 133%, it follows different applicable percentages in the law after 2025.
Andrew says
Hi Harry,
Family of 4 made 29,000 last year 2023 below 100% poverty level. Income 2024 will be about the same as last year until end of 2024 I plan on taking a large withdrawal 150,000 from my pretax IRA in Dec. 2024 (no penalty I’m 61).
Question, Is there a claw back on MassHealth taxes or penalty for not going on our Health connector (ACA) at the end of 2024?
I plan on getting Bronze HSA plan for 2025 and will sign up at the end of 2024 as my income will be pulled from IRA only going forward. Just thinking of pulling monies out in late 2024 as retirement money is my only source of income.
I heard there is no clawback on MassHealth, but there is on (ACA) Healthconnector.
Harry Sit says
MassHealth is the Medicaid program in Massachusetts. Medicaid runs by the month. If you’re no longer eligible, you just come out of it. There’s no claw back for the previous months. ACA plans run by the calendar year. If your income for the full year makes you eligible for less premium tax credit, you pay back when you do your taxes (subject to a repayment cap, see Cap on Paying Back ACA Health Insurance Subsidy).
Andrew says
Hi Harry,
Trying to understand.
I can take a large pretax withdrawal of 150,000 in mid Dec. of 2024? Before I sign up for an ACA plan in 2025, without being penalized when I do taxes in 2024, because I would be on medicaid right before my withdrawal in mid December of 2024. No penalty because I’m not on an ACA plan till 2025, right?
Harry Sit says
That’s correct. You don’t need to pay back anything when you do taxes for 2024 if you’re not on an ACA plan in 2024.
Rosel says
2025 ACA plan will be based on 2025 numbers
Paxton says
Great Article! I have one question that keeps bothering me. In your table it states that 2023 family of 3 the poverty level is $23,030 but when i reference your links or even search myself for the federal 2023 poverty level it is stated as $24,860. I did see where you state “These are applied with a one-year lag. Your eligibility for a premium subsidy for 2024 is based on the FPL numbers announced in 2023.” It is just confusing why they do this and just making sure if we have an income for 2023 that is just slightly over $23,030 but under $24,860 we would be covered? Thanks so much for any clarification.