Obamacare premium subsidies are a part of Obamacare, also known as the Affordable Care Act (ACA). The ACA is an act that provided health insurance coverage through the Health Insurance Exchange during President Obama’s tenure.
The ACA has continued into 2022, with subsidies provided to almost nine out of ten participants that purchased health insurance through the exchange. These subsidies come in the form of tax credits. Let’s dive in:
- How do the subsidies work?
- How much is the Obamacare premium subsidy in 2022?
- Who is eligible for a subsidy?
- How to apply for Obamacare subsidies in 2022
How do the Obamacare subsidies work?
The Obamacare subsidies come in two forms. One of them is an advance on a tax credit called the Advanced Premium Credit. This is super similar to what President Biden did with the Child Tax Credit advance.
The Advanced Premium Credit can be paid to your health insurer each month (or whenever premiums are due) to help offset the cost of your health insurance premium. Alternatively, you can pay your premium to your health insurer each month and receive the credit as a part of your normal tax return.
I am always a huge fan of having cash in my pocket, so if it were me, I would elect for the credit to be applied each month and have the extra money to pay for bills.
Subsidy number two is called a cost-sharing reduction subsidy, which basically works to reduce other medical expenses outside of premiums. These are expenses like coinsurance, deductibles, and copays that are incurred when you actually get sick.
I would NOT use this approach because it is asking you to guess whether or not you will get sick or incur these expenses.
Potential pitfalls
One potential pitfall in the monthly option is the need to estimate monthly income. If you overshoot, you will not receive as much monthly subsidy money. If you underestimate, you may owe money at the end of the year.
How much is the Obamacare premium subsidy in 2022?
Well, it depends. The Obamcare premium subsidies are based on a sliding scale, which depends on your income, household size, and plan type.
There is currently a limit on how much you will have to pay, which is 8.5% of your income. This means you can expect to pay 0 to 8.5% of your income on health insurance premiums, depending on how much money you make.
Nationwide surveys have shown that on average, subsidies end up covering 85% of premium costs, which is a tremendous number. Due to the extremely expensive nature of health insurance, it makes sense how this number could be so drastically reduced by the Obamacare premium subsidies.
So, am I eligible for an Obamacare premium subsidy in 2022?
Eligibility is defined by the number of people in a household and the federal poverty line. You are eligible for the Obamacare premium subsidy in 2022 if you have between 100-400% of the federal poverty level income, but to a sliding scale degree. You also must have purchased health insurance through the health insurance exchange.
That means that folks making 399% of the federal poverty level are going to receive less of a subsidy than those making 100% of the federal poverty level (FPL).
Check out our table below
| Household size | 100% FPL | 400% FPL |
| 1 | $13,950 | $55,800 |
| 2 | $18,310 | $73,240 |
| 3 | $23,030 | $92,120 |
| 4 | $27,750 | $111,000 |
| 5 | $32,470 | $129,880 |
| 6 | $37,190 | $148,760 |
How do I apply for Obamacare subsidy in 2022?
You can apply for the Obamacare subsidy in 2022 by visiting the exchange directly. A great place to start is the HealthCare.gov website which you can access by following this link.