What kind of financial help is available when buying health insurance?

Got questions about the Affordable Care Act? In a regular feature, the WHYY/NewsWorks Health and Science Desk is providing “The Short Answer.”

Today’s question

We’re all supposed buy health insurance — I hear that some people will get discounts. What kind of financial help is available?

The short answer

Depending on family size and income, the health law offers shoppers two kinds of subsidies:

1) A way to lower the cost of monthly health insurance. The health law sets a ceiling on the amount families pay toward health insurance.

The experts call that a premium tax credit.

2) A discount on out-of-pocket costs such as co-payments and deductibles.

The catch: Both kinds of financial help are only for people buying health insurance, on their own, through the online marketplaces in each state.

Shoppers are generally not eligible for Obamacare subsidies if their employer has offered them what the government considers “affordable” coverage.

What is affordable health insurance?

The health law rules are supposed to make insurance inexpensive enough to buy without breaking the household budget.

What marketplace shoppers are expected to pay — or what the government considers affordable — depends on family size and income.

Individuals making about $11,000 may be expected to pay up to 2 percent their yearly income. That expectation is higher for people who make more money. For a family of four making about $94,000, the rules say paying up to 9.5 percent of family income toward health insurance is affordable.

Get the exact numbers here. 

A second tier of help –- for some

Maura Collinsgru, health policy advocate with New Jersey Citizen Action, leads “ACA Ambassador” training in the Garden State. It’s an effort to educate more people about health law changes, eligibility and enrollment.

“There’s another layer of financial assistance for those with the lowest incomes,” Collinsgru says.

People with incomes below 250 percent of the federal poverty limit will pay lower out-of-pocket costs.

“A single person making less than approximately $28,000 will be eligible,” Collinsgru said. “The same for a family of four making just over $58,000.”

“Not only will they have lower monthly premiums, they will get help with out-of-pocket expenses throughout the coverage year,” she said.

That means less to shell out in co-payments when you pick up a prescription at the drug store — or a lower price to pay for a doctor’s office visit.

Find out more about health law limits on out-of-pocket expenses. 

What will the health plans cost?

“Those plans are currently under review,” Collinsgru said. “We are being told possibly in July we will know what plans are being offered on the exchange and what they will cost.”

In the meantime, the Kaiser Family Foundation has a useful online calculator to estimate what shoppers will pay and what subsidies they might get. 

Discount double-check

When shoppers fill out a marketplace application they’ll learn how much they can save. But, there’s a warning from the website healthcare.gov.

“When you apply for coverage in the Marketplace, it’s important to double-check the information you put on your application. If the amount of your expected 2014 income you report isn’t accurate, you may not get the right amount of savings,” it says. “If you wind up making more money than you predicted on your application, you could have to pay back some or all of the savings you’ve received. You would do this on your next tax return.”

A new debate over subsidies

The Washington Post broke the news that in 2014 the government will — in part — use the honor system rtaher than verifying each applicant’s income or that they can’t get affordable insurance through work.

The revelation prompted a fresh round of criticism for Obamacare. Here’s one from Forbes.

This honor system will apply ony in states that are running their own marketplaces — not Pennsylvania, New Jersey nor Delaware.

The 2010 health law goes into effect Jan. 1. How will it affect you, your wallet and your health? Email your questions to healthandscience@whyy.org or tweet us @NewsWorksWHYY