Open Enrollment November 1 - December 15, 2019

Can I Get Subsidies Outside of the ACA Exchanges?

With all the changes to Obamacare and the marketplace in 2019, you may be confused about the many different options available that help you save money on your health insurance. One word that is commonly used when discussing the Affordable Care Act healthcare marketplace is “subsidies,” which are designed to lower the cost of health insurance premiums for people who qualify based on income. In order to understand whether you can get cost assistance outside of the exchange, you need to know how subsidies work.

What are ACA Subsidies?

Subsides are officially known as advance premium tax credits. Available to people earning between 100 and 400 percent of the federal poverty limit (FPL), these tax credits allow you to purchase health insurance on (and off) Obamacare exchanges for less than the face value of the plan. In other words, they lower the premium price.

You can choose to have the credits paid in advance to the insurance company toward the cost of your premiums, or you can wait to get the credits back when you file your taxes at the end of the year. Just make sure you report your income as accurately as possible. If you earn more than you reported when you applied for a plan, then you may owe the difference in tax credits back to the government when you file taxes. The reverse is true as well. If you earn less than you reported, you may get the difference back in a refund since you would have qualified for a greater subsidy.

Along with subsidies, you might qualify for cost-sharing reductions. These are available for people who earn between 100 and 250 percent of the FPL, and they reduce out-of-pocket costs like copays and deductibles. Cost-sharing reductions essentially increase the actuarial value of your health plan without charging you more – so you get better coverage for less money. You must buy a silver-level health plan to get a cost-sharing reduction.

Subsidies Outside the Exchange

One of the biggest selling points of the federal and individual state health insurance exchange sites is that they alone let you use subsidies to buy health insurance. Well, that’s not entirely true.

It is true that to get a subsidy, you must buy a marketplace plan. But you don’t have to buy that plan from HealthCare.gov. Customers have been able to get subsidized insurance via the Obamacare exchanges by going through an independent web broker for years, but it was a complicated process known as a “double redirect.” Changes made by the Health and Human Services Department last year addressed the flaws in this system, making it easier for agents and brokers to allow customers to buy subsidized plans straight from their websites instead. It’s a win-win for you as a health insurance shopper.  

This only applies generally to customers without access to a state health insurance exchange. State-based exchanges may limit how people get subsidies since some set tighter restrictions on access to premium tax credits. But if you live in one of the 39 states that use the federal marketplace at HealthCare.gov, then you can buy a subsidized plan off marketplace by using a broker or independent market site.

Haven’t Subsidies Been Eliminated?

You might have heard about cost-sharing reductions in the news, or you might not understand which cost assistance options still exist on the ACA marketplace in 2019. The short answer is that both advance premium tax credits and cost-sharing reductions still exist for consumers who qualify. The longer answer involves some legislative hullabaloo that resulted in the Trump administration cutting off cost-sharing reduction payments to insurers. These payments helped carriers offset the losses they faced when offering cost-sharing reductions in the first place. Absent the federal reimbursement for these payments, insurers had to raise rates even further than they might have anyway. The ACA requires insurers to offer cost-sharing reductions, so it’s not something that carriers can stop doing for marketplace plans.

The thing to remember is that if you qualify for some form of cost assistance to help reduce your premiums or limit out-of-pocket expenses, you can get it on or off the exchange as long as you’re working with a legitimate seller – be that an individual agent, a broker site or an independent marketplace like this one. Don’t let doubts about cost assistance keep you from shopping. You’ve got options for affordable coverage.

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