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 What is the lowest income to qualify for Obamacare?

The Patient Protection and Affordable Care Act (ACA, or “Obamacare”) was signed into law by President Barack Obama in March 2010. The Act aimed to provide quality healthcare to individuals at an affordable price, and to make sure that those who could pay for healthcare had the same access as those who could not.

To that end, the law instituted various reforms, including a mandate that individuals purchase health insurance or pay a fine, and restrictions on insurance company practices (e.g., no denying coverage for preexisting conditions). It also created state-based exchanges, called “marketplaces,” where individuals could find coverage and compare prices.

Although the law was intended to make healthcare more affordable, it didn't take long for employers to find ways around it.

According to the Congressional Budget Office (CBO), by 2024, there will be 24 million people nationwide seeking healthcare coverage due to the new requirements in the law. Between 2016 and 2021, the number of uninsured American adults will fall by 32% (from 28.5 million to 18.7 million). After that, CBO expects the number to rise as more people find ways to avoid the law's mandates.

 

Who Will Benefit From Obamacare?

The healthcare reforms in the ACA will benefit everyone, but it is important to understand who will specifically benefit. The following are just some of the groups that the law was intended to help:

 

The Poor

The ACA was designed to help those currently unable to buy healthcare insurance due to their own financial situations. Specifically, the law establishes a penalty, called a "shared responsibility payment," for those who remain uninsured. This penalty is payable to the federal government and is not taxed. It is assessed on an individual basis and is not based on income or financial status.

Shared responsibility payments will be limited to an income-based ratio of 300% of the federal poverty level. For an individual, this is $122,200 for an individual or $244,400 for a family of four. You can find this income level for an individual in the Federal Poverty Guidelines published by the U.S. Department of Health and Human Services (HHS). The Federal Poverty Level for a family of four is $244,400. Therefore, individuals making less than $244,400 and families making less than $484,000 will not have to pay this penalty.

 

The Middle Class

The ACA also provides tax credits to help individuals purchase insurance coverage, and it expands Medicaid eligibility. These changes will benefit middle-class families by giving them access to healthcare services that they could not previously afford.

 

The Wealthy

Finally, the ACA provides additional subsidies for those who make more than $207,500 annually (if they meet other criteria). People in this income group will be able to purchase insurance plans that cost less than $10,000 per year, and it will reduce their healthcare costs by an estimated $6,400 per year (according to the law's legislation).

Those who make more than $207,500 per year can also apply for a premium tax credit through an IRS form called “Health Insurance Premium Tax Credit.” The amount of the tax credit will be based on the cost of the healthcare insurance premium, as well as on income. For example, a credit of up to $3,000 may be available for those earning $40,000 or less, and a maximum credit of $6,400 for those earning $250,000 or more. In general, the amount of the tax credit will range from 0% to 100% of the cost of the healthcare insurance premium.

 

The Uninsured

The ACA required all Americans to obtain insurance coverage or pay a penalty. However, it did not provide funding for outreach programs that would help individuals understand the new requirements and how to comply with them. As a result, many people will find themselves uninsured because they did not comply with the law's mandate to purchase health insurance or pay the penalty.

According to the CBO, 18.7 million people were uninsured as of December 2022. This is down from 28.5 million in 2016, but it still leaves around 20 million people without coverage. Many of these individuals will likely qualify for help under the ACA (as we have discussed above).

The good news is that the ACA includes a series of waivers and exemptions that will make healthcare available to more individuals. Changes made by the Trump administration in order to fulfill these waivers and exemptions will help ensure that more people can benefit from the law's reforms.

 

How Does Obamacare Work?

Although the ACA provides an overview of how the law will work, it does not explain how existing healthcare financing structures will change as a result of the law. Medicaid and the Children's Health Insurance Program (CHIP) are discussed briefly, as these are the two major state-based healthcare programs that will be expanded under Obamacare. But the policies and procedures involved in these programs are complex and require an understanding of how healthcare insurance works in general.

 

How Does Medicaid Work?

Medicaid is a federal-state program that provides healthcare coverage to qualified low-income individuals. In general, the federal government provides financial support to the states for this program (via a formula, called the “matching funds” provision). As a result, states must adhere to federal guidelines, which limit the amount of funds that they can provide for healthcare.

These financial limitations mean that low-income individuals in states that have not expanded Medicaid eligibility will not be able to access healthcare services. For instance, in 2019, 28% of Alabama's low-income population did not have healthcare coverage (64% covered by Medicaid, and 32% covered by Medicare). The corresponding figures for 2020 were 27% and 28% respectively. Due to the COVID-19 pandemic and other healthcare-related expenses, the need for affordable healthcare has never been greater, and it is clear that individuals who are currently ineligible for Medicaid will continue to remain so unless they can find a way to overcome the program's financial limitations.

 

How Does CHIP Work?

CHIP is another federal-state program that provides healthcare coverage to children of low-income families. Similar to Medicaid, CHIP follows a federal funding formula, where the federal government provides financial support to the states for this program. And, like Medicaid, CHIP requires states to adhere to certain federal guidelines regarding healthcare access (for instance, it must be accessible to all children, and it limits the amount of funding that states can provide for healthcare services).

As of December 2021, 27 states and the District of Columbia had expanded Medicaid coverage to children. In these states, children may qualify for CHIP coverage depending on their family's income. Like adult Medicaid coverage, child Medicaid coverage is open to any child who has not yet reached the age of 19. The majority of children who have gained coverage under CHIP, however, have been covered since the program's inception in 2000. So even though the federal government provides the majority of funds for this program, its coverage has improved dramatically over the years.

 

How Do I Get Enrolled In Medicaid Or CHIP?

To be eligible for Medicaid or CHIP, you must meet certain federal income requirements. To be eligible for adult Medicaid, for example, you must make less than $16,000 per year (or less than $20,000 per year if you are a single parent). To be eligible for CHIP, your income must be less than or equal to the federal poverty level for your family size. This varies by family size and varies by state, but the HHS publication “Insuring the Uninsured: How Medicaid and CHIP Will Change Health Coverage For the Better” has an easy-to-understand guide that walks you through the process of determining your eligibility for these programs.

 

Conclusion

Obamacare is a law that changed the healthcare landscape in America, helping to reduce the number of uninsured individuals and providing health insurance to those who need it. Unfortunately, due to the complexity of the healthcare system and the law's requirements, not everyone will be able to take advantage of the law's many reforms. It is, however, always important to remember that as long as there is poor health, there will be someone who needs healthcare coverage.