As its name suggests, the Affordable Care Act seeks to make health insurance more affordable.
It accomplishes this goal through subsidies that can help qualified individuals with their premium and out-of-pocket costs.
Let’s start by talking about how these subsidies can help with premiums.
Individuals that have a projected household income between 100 percent and 400 percent of the federal poverty level can qualify for the advance payment of premium tax credits or APTC. This allows individuals to use tax credits they would have earned based on their health care premiums and apply those to their monthly premiums, reducing the cost.
Make sure your clients are aware that if they’ve applied more premium tax credit than they are due, they’re required to pay back the excess on their federal tax return.
And then the reverse is also true.
If your clients apply less tax credit than they are due, they will receive the difference when they file their taxes.
In addition to assistance with premiums, some people also qualify for cost-sharing reductions to help them reduce their out-of-pocket expenses.
To qualify for a cost-sharing reduction, an individual’s household income must be between 100 percent and 250 percent of the federal poverty level. And as we discussed in the plan structure lesson, cost sharing reductions are only available in the silver plan.
As an agent in the ACA market, you can and should use the marketplace and other tools to help your clients identify their cost-saving opportunities.