When you’re shopping for insurance, chances are your first stop is going to be the Health Insurance Marketplace to see your options through the Affordable Care Act (ACA). But are any of these plan types and coverage levels really affordable?
Depending on how much you’re able to spend, they might be — or they might make your budget look like wishful thinking. Luckily, the IRS offers ACA subsidies for individuals and families through what’s called the premium tax credit, which helps lower the cost of premiums. But there’s a catch: You have to qualify first, and while income plays a role, there are more eligibility criteria to watch out for.
How Can I Qualify for ACA Subsidies?
In order to claim a premium tax credit for an ACA plan, you have to meet these basic criteria:
- You don’t have the option to participate in an employer-sponsored plan or government health coverage, like Medicare or Medicaid.
- You’re sure that no one will claim you as a dependent.
- You’re not married, or you’re filing separately (barring a few exceptions, like domestic violence).
- You make at least 100 percent but less than 400 percent of the federal poverty line.
That last one requires some math, but don’t worry — the IRS has already crunched the numbers for you. In 2018, the maximum amount you could make to qualify for a premium tax credit was $48,240 (if you’re single), $64,960 (for a family of two) or $98,400 (for a family of four).
If your household income is less than those amounts, you might be able to get a premium tax credit of varying amounts based on where you live. Check out the government’s interactive tool to figure how much you’re estimated to save.
But what do you do if you make too much to qualify for the tax credit on paper, but you still can’t afford the cost of an ACA plan? Consider enrolling in a short-term insurance plan.
Why Short-Term Insurance?
Short-term insurance is exactly what it sounds like: a policy that temporarily provides interim coverage.
Except these days it’s not so short-term after all. The Department of Health and Human Services now allows these plans to last up to 364 days (up from the previous 90-day limit), with the option to renew it for up to three years thereafter. (Your state may have its own limitations on short-term plans, so make sure to do your homework.)
Compared to ACA plans, short-term policies generally have a cheaper price tag, since they’re not required to comply with the ACA the way standard insurance policies are, for example in covering pre-existing conditions or providing minimum essential coverage. That said, they do require that you pass medical underwriting to determine whether you can get covered (and if so, your premiums and exclusions), as opposed to ACA plans, which have guaranteed acceptance.
But unlike ACA plans that require you to sign up during a special enrollment period (or after qualifying events), you can enroll in a short-term plan at any time of the year. That makes these plans a perfect option for those times when you need some affordable coverage quickly, like when you’re between jobs or if you missed open enrollment.
Obviously, short-term plans don’t last forever. But a short-term plan does give you basic coverage at a basic cost, and it can tide you over until your budget changes and you can afford an ACA-compliant plan.