Health Insurance Subsidy: Financial Aid for Health Care

What is a health insurance subsidy?

Getting federal financial assistance, also known as federal aid or a health insurance subsidy, depends on your household size and income. If you qualify, you may be able to get a health plan at a lower cost. These are qualified health plans that come with financial help from the federal government. Here are some key things to know about federal aid and subsidies.

What are the types of federal health insurance subsidies?

There are two ways you may be able to help save money on your health care plan costs. One way is by getting a premium tax credit. The other is by getting a cost-sharing reduction (or CSR). Premium tax credits and cost-sharing reductions are types of federal financial assistance given to people who qualify in order to help make health insurance more affordable.

Premium Tax Credits Lower Your Health Care Premiums

Premium tax credits lower the amount you pay monthly for your health care plan. If you qualify, you have two choices for the way you use this aid:

1. After you sign up for your qualified health plan, you can have the federal government pay the tax credit right to the insurance carrier each month, also known as the advanced payment of the premium tax credit (APTC). This lowers the amount of the monthly premium you pay. 
2. Your other choice is to get a tax credit when you file your federal income taxes. This means you pay the full amount of your insurance premium each month. Then, you get the total credit after you file your taxes. You can use the premium tax credit toward any qualified health plan on the Health Insurance Marketplace^®.

Cost-Sharing Reductions Lower Your Other Costs

Cost-sharing reductions lower the amount you have to pay out of pocket when you get care. This includes costs like deductibles, copayments, and coinsurance.

To take advantage of these savings, you must qualify and enroll in a Marketplace Silver-qualified health plan. There is no option to get cost-sharing reductions by filing a year-end tax return. If you qualify for this type of aid, you pay less out of pocket for things like deductibles, copayments, and coinsurance when you get care.

What is the Affordable Care Act (ACA)?

The ACA is the health care reform law that was enacted in 2010. This makes it easier for people in the United States to get health insurance coverage. Qualified individuals can purchase health plans on the Health Insurance Marketplace.

There are four types of plans on the Marketplace: Bronze, Silver, Gold, and Platinum. To qualify for ACA subsidies (including premium tax credits and cost-sharing reductions) you must meet certain requirements.

Am I eligible for health insurance subsidy?

Depending on your household size and income, you may qualify for a health insurance subsidy.

• People aged 18 and older, even students, who file their own federal taxes, may be able to get both types of aid.
• People who don’t have a job and don't have COBRA coverage may also be able to get one or both types of aid.
• Native Americans and Alaskan natives may also be able to get help with their Marketplace or Tribal health plan.

What is the difference between premium tax credits and cost-sharing reductions?

Do I qualify for a health insurance subsidy?

You may qualify for both a premium tax credit and a cost-sharing reduction. During the Open Enrollment Period, you can find out what you’re eligible for when you apply online through Cigna Healthcare or on the Marketplace on Healthcare.gov and get your results. You may also be able to purchase a health plan year-round if you have certain life events.