Individuals may qualify for financial help with premiums and out-of-pocket costs for coverage purchased through a health insurance marketplace. Financial help is available in two forms: a premium tax credit and cost-sharing reductions.
To be eligible for the premium tax credit, the individual must meet all of the following criteria:
- Enrolled in a plan sold through the health insurance marketplace,
- Not eligible for minimum essential coverage, other than coverage offered in the individual market (see below for definitions of minimum essential coverage), and
- Household income between 100 percent and 400 percent of the federal poverty level.
In general, minimum essential coverage includes the following:
- Employer-sponsored coverage, including COBRA continuation coverage and retiree coverage
- Coverage purchased in the individual market, including a plan purchased in a health insurance marketplace
- Medicare Part A coverage and Medicare Advantage plans
- Most Medicaid coverage
- Most Children’s Health Insurance Program coverage
- Veterans health coverage administered by the Veterans Administration
- Most types of TRICARE (coverage for members of the military)
- Certain self-funded student health coverage and other coverage may be recognized as minimum essential coverage, see this list of approved plans is available here
- Coverage for Peace Corps volunteers
- Refugee Medical Assistance from the federal Administration for Children and Families
- Department of Defense health benefit program for civilian employees known as “Nonappropriated Fund” personnel
There may be other types of coverage that qualify as minimum essential coverage.
There are exceptions to the list of minimum essential coverage, in which having or being eligible for some forms of minimum essential coverage does not disqualify an individual for the premium tax credit because of special circumstances. Those exceptions include the following:
- Employer-sponsored coverage: if the coverage is either “unaffordable” or does not meet minimum value standards (“inadequate”), then the individual may still qualify for the premium tax credit.
- Unaffordable means the cost of self-only coverage in the lowest cost plan is more than 9.83 percent of the individual's household income in 2021 (9.79 percent in 2020).
- To provide minimum value, the plan must have an actuarial value of at least 60 percent and include coverage for hospitalization and physician services.
- COBRA Continuation Coverage:
- If you lose your job and are offered COBRA continuation coverage, you lose eligibility for PTCs only if you actually enroll in the COBRA coverage offered by your employer.
- If you become eligible for COBRA coverage because you have lost eligibility for employer-sponsored insurance (for example, due to lost work hours), then the same affordability and minimum value standards described above apply to the COBRA continuation coverage
- Children’s Health Insurance Program (CHIP) and Medicaid coverage:
- An individual subject to a waiting period before he or she can enroll in their state’s Children’s Health Insurance Program is not considered eligible for minimum essential coverage and may therefore be eligible for the premium tax credit during the waiting period. NOTE: Not all states have a waiting period for their Children’s Health Insurance Program.
- An individual who is not enrolled in the Children’s Health Insurance Program because he or she hasn’t paid premiums is considered eligible for minimum essential coverage and therefore not eligible for premium tax credit. Similarly, an individual who is not enrolled in Medicaid because he or she hasn’t paid premiums is considered eligible for minimum essential coverage and therefore not eligible for premium tax credits.
- Coverage tied to a certain condition: individuals who may be eligible for Medicare or Medicaid based on disability, blindness or illness are considered eligible for minimum essential coverage only when the agency responsible for eligibility determinations determines the individual eligible for Medicare or Medicaid. Until that time, the individual is eligible for premium tax credit.
- Other coverage, including coverage that may have a substantial premium. In these circumstances, only those who are enrolled in the following coverage are ineligible for the premium tax credits:
- Self-funded student health plan recognized as minimum essential coverage by HHS, see list of approved plans available here
- Medicare Part A coverage requiring payment of premiums
- Certain TRICARE programs: Young Adult, Retired Reserve, Reserve Select, and the Continued Health Care Benefit Program
There may be other exceptions.