Marketplace Exchanges provide subsidies or premium tax credits to eligible individuals and families to help afford health insurance.
Eligibility hinges on your income and household size. You may qualify if your income is between 100% and 400% of the Federal Poverty Level (FPL). As of 2020, this was roughly $12,760-$51,040 for an individual, and $26,200-$104,800 for a family of four.
Subsidy amount is based on the cost of the benchmark plan (second-lowest cost Silver plan in your area) and your income. The aim is to ensure you don’t spend more than a certain percentage of your income (2%-9.83% in 2021) on the benchmark plan premium. If the cost exceeds this, you receive a subsidy.
You can apply the subsidy in advance, reducing your monthly premiums, or claim it later at tax time. If your income changes, report it to avoid paying back the difference later.