Affordable Care Act: how your income affects your plan options

How does one’s social economic status affect one’s health insurance options in the United States?


Dear Curious,

With health reform (also known as Obamacare, or the Affordable Care Act), a person’s income affects how much he pays for his own health insurance.  The person is still free to choose a plan that suits him, except if he qualifies for Medicaid.  Note: This is true only for people who buy health insurance on the exchange; these people do not have an employer plan offered to them.

The law sets a percentage of income that can be spent on health insurance.  For example, a person earning $17,235 in a single-person household would pay four percent of his income for health insurance.  The government would pay the rest.  As income goes up, the percentage also goes up until you reach 400% of Federal Poverty ($45,960 for a one-person household) and 9.5% of income.

Income also affects “cost sharing” subsidies.  These subsidies help people pay the plan’s deductible and co-pays.  In order to get these, a person has to choose a “Silver” plan.  So, you could say that this affects your options.

Last, if your income is less than 133% of Federal Poverty ($15,282 for a one-person household), and you live in certain states, you would be covered by Medicaid.  You can check to see if your state did the “Medicaid expanion” here:  State Decisions on Health Insurance Marketplaces and the Medicaid Expansion, 2014.  Of course, you might qualify for Medicaid even in the states that didn’t expand Medicaid.  In general, you would need to have children in the household, and meet the income and asset limits.

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.