Federal Poverty Level
The original version of this article was published on January 15, 2016. It has been updated annualy to account for inflationary changes.
The U.S. Department of Health and Human Services (HHS) published the 2014 Federal Poverty Levels (FPL) last week. The 2014 FPL guidelines have been raised 1.5% in comparison to the 2013 FPL. The FPL is a measure of income used to determine eligibility for various government programs including healthcare, housing and food stamps. The FPL is also used as part of the Affordable Care Act (ACA) to determine eligibility for subsidies available through the Health Insurance Marketplace, also known as the Exchange.
Individuals are required to project their income for 2014 to determine the maximum subsidy that may be available to them through a public exchange to help reduce their insurance premiums.
If it turns out that an individual projected their income incorrectly, and the premium subsidy they received was too much, then the individual will have to pay back a portion or the entire subsidy amount when they file their federal income tax return.
By this time most of us are starting to become familiar with the subsidies that are available to eligible individuals that enroll in coverage through the Health Insurance Marketplace, also known as the Exchange. Many of us have also heard the phrase:
“If your household income is within 400% of the Federal Poverty Level you may qualify for a subsidy in the Exchange.”
This seems simple to understand on the surface, but this statement is packed with terms that require further definition. We’ve put together a summary to help you understand some of the key pieces of information within this statement.
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