Benefits Buzz

Key ACA Statement Explained

Posted on October 30th, 2013

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.

What is the definition of a household? 

The website has been flawed with glitches and problems, but it does provide access to information to help understand some parts of the law. In particular, it details information about the definition of a household. We’ve provided a summary of that information below. 

Included in Your Household

  • Yourself
  • Your spouse
  • Your children who live with you, even if they make enough money to file a tax return themselves
  • Your unmarried partner who needs health coverage
  • Anyone you include on your tax return as a dependent, even if they don’t live with you
  • Anyone else under 21 who you take care of and lives with you

Not included in your Household

  • Your unmarried partner who doesn’t need health coverage and is not your dependent
  • Your unmarried partner’s children, if they are not your dependents
  • Your parents who live with you, but file their own tax return and are not your dependents
  • Other relatives who file their own tax return and are not your dependents

Click here for more details >>

What income will be used to determine subsidy eligibility?

Modified adjusted gross income (MAGI) will be used to determine subsidy eligibility, and for those that qualify, it will be used to determine the maximum amount of the subsidy. For most people, MAGI will be the same as their Adjusted Gross Income (AGI). The University of California (Berkeley) Labor Center put out a document this past summer that gives a really good summary of MAGI. It details the income that should be included and the deductions that should be excluded.

Click here to view the document >>

What is the Federal Poverty Level (FPL)?

The FPL is established by the U.S. Department of Health and Human Services (HHS) each year. HHS has not published any information about the 2014 FPL so the best information we have at this time is details about the 2013 FPL. The FPL is consistent throughout most of the country and only varies in the states of Alaska and Hawaii. 

For all states (other than Alaska and Hawaii) the FPL in 2013 starts at $11,490 for a single household. The FPL increases by $4,020 for each household member thereafter. Families USA publishes an FPL summary chart each year on their website.

Click here to view their 2013 table summary >>

We recognize that most public Exchanges are experiencing technical issues at this time, and many people have been unable to access the system to determine information about the subsidies. President Obama has even acknowledged his frustration with the glitches on the Exchange web site. We will continue to monitor this issue and will provide you with updates on the Exchanges as they become available.

Join our mailing list or click here to stay updated on the latest healthcare reform news with Flexible Benefit Service LLC (Flex).


Note: The materials contained within this communication are provided for informational purposes only and do not constitute legal or tax advice.


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