ACA Subsidy Calculator
Use this calculator to estimate your potential monthly premium tax credit (subsidy) under the Affordable Care Act (ACA). This subsidy helps reduce the cost of health insurance premiums purchased through the Health Insurance Marketplace.
Understanding ACA Subsidies (Premium Tax Credits)
The Affordable Care Act (ACA) provides financial assistance, known as Premium Tax Credits (PTCs) or subsidies, to eligible individuals and families to help them afford health insurance coverage purchased through the Health Insurance Marketplace (also known as exchanges).
Who is Eligible?
Eligibility for ACA subsidies primarily depends on your household income relative to the Federal Poverty Level (FPL) and your household size. Generally, you must meet the following criteria:
- Your household income must be between 100% and 400% of the FPL. However, due to the American Rescue Plan (ARP) and Inflation Reduction Act (IRA), subsidies are temporarily available to those above 400% FPL, capping their premium contribution at 8.5% of household income.
- You must not be eligible for affordable coverage through an employer or government programs like Medicaid or Medicare.
- You must file taxes jointly if married.
How Subsidies Are Calculated
The amount of your subsidy is determined by several factors:
- Household Income: Your Modified Adjusted Gross Income (MAGI) is compared to the Federal Poverty Level for your household size.
- Household Size: The number of people in your tax household.
- Federal Poverty Level (FPL): The FPL is a set of income thresholds used to determine eligibility for various federal programs. It varies by household size and is updated annually. For 2024, here are approximate FPL values for the contiguous U.S.:
- 1 Person: $14,580
- 2 People: $19,720
- 3 People: $24,860
- 4 People: $30,000
- For each additional person, add approximately $5,140.
- Cost of the Benchmark Silver Plan: This is the second-lowest cost Silver plan available in your specific rating area through the Marketplace. The subsidy is designed to limit the percentage of your income you have to pay for this benchmark plan. If you choose a plan more expensive than the benchmark, you pay the difference. If you choose a cheaper plan, you keep the savings.
The Impact of the American Rescue Plan (ARP) and Inflation Reduction Act (IRA)
These legislative acts significantly enhanced ACA subsidies, making health insurance more affordable for millions. Key changes include:
- Increased Subsidy Amounts: Lowering the percentage of income individuals and families are expected to contribute towards their premiums.
- Elimination of the "Subsidy Cliff": Previously, individuals with incomes above 400% FPL received no subsidies. The ARP and IRA temporarily removed this cliff, capping premium contributions at 8.5% of household income for everyone, regardless of how high their income is above 400% FPL. This provision has been extended through 2025.
The calculator above uses the enhanced subsidy rules to provide a more accurate estimate of your potential monthly premium tax credit.
Example Calculation:
Let's say a family of 3 has an annual household income of $45,000, and the monthly benchmark Silver plan in their area costs $600.
- FPL for 3 people (2024): Approximately $24,860.
- FPL Percentage: ($45,000 / $24,860) * 100 = ~181% FPL.
- Expected Contribution Rate: For 181% FPL, the expected contribution rate is on a sliding scale between 0% (at 150% FPL) and 2% (at 200% FPL). This would be approximately 1.24% of income.
- Expected Monthly Contribution: ($45,000 * 0.0124) / 12 = ~$46.50 per month.
- Estimated Monthly Subsidy: $600 (Benchmark Plan Cost) – $46.50 (Expected Contribution) = $553.50.
This means the family would receive an estimated $553.50 per month in premium tax credits, reducing their monthly premium for the benchmark plan to about $46.50.