Health reform – subsidies for low-income families

Is it true that a family of four with an annual income of $32,000 will pay only $85 a month for health insurance, under Obamacare?  I would be able to drop out of my employer’s plan, which costs me $400 a month now.

Counting Chickens 

Dear Counting Chickens,

There are a lot of numbers flying around about health reform, and few of them are firm.  But let’s look at what we do know as of today, knowing that it may change before 2014.

First, you are correct that a family of four earning $32,000 a year would get government help to buy health insurance.   All families earning less than 400 percent of Federal Poverty Limits would get some subsidy, with poorer families getting more.

At $32,000, a family of four lands just under 150% of Federal Poverty.  Therefore, you will not spend more than 4% of your income on health insurance premium or around $1,280 per year.  These numbers are all rough estimates, because “income” has a specific, technical definition.  If $32,000 is your family’s total gross income, your actual income for federal poverty purposes is lower; without a whole lot more hassle, I can’t tell you much more than that.

You will also qualify for help paying your plan’s co-pays and deductibles.  This subsidy is based upon how much your plan covers and how it compares to a “basic benefit plan.”  There will involve a complex calculation, comparing your plan’s “actuarial value” to the benchmark plan.  For today, the only accurate thing that I can say is some families earning less than 400 percent of federal poverty will get help paying deductibles and co-pays.

And all of this rests on whether health reform stays on track.  We are all on the edge of our seats about what will happen.  All of which is to say, you would be wise to leave un-hatched chickens rest.

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Linda Riddell

About Linda Riddell

A published author and health policy analyst with 25 years’ experience, Linda Riddell's goal is to alleviate the widespread ailment of not knowing what your health plan can do for you.