How are subsidies calculated?
The amount of premium help you can qualify for is determined by a sliding scale that depends on:
- Age and geographic region
- Household income and size, and
- The cost of affordable healthcare coverage in your geographic region
Age and geographic region
Premiums are calculated based on age and geographic region. For example, someone age 55 or older will pay a higher premium than someone under the age of 40. Additionally, someone age 55 may pay a lower premium in Northern California than they would in Southern California. Financial help may be available for consumers whose monthly premiums for coverage are more costly.
Income, household size and affordable coverage
Under the Affordable Care Act, eligibility for subsidized health insurance is calculated using a household’s Modified Adjusted Gross Income (MAGI). You are expected to pay a premium contribution limit (a percentage of your annual income) for healthcare coverage. Each income level has a set premium contribution limit per number of household members as noted in the last row of the FPL table below.
Effective March 2023
| ANNUAL INCOME | ||||
|---|---|---|---|---|
| HOUSEHOLD SIZE1 | 400% OF FPL AND ABOVE | 300% OF FPL | 200% OF FPL | UP TO 150% OF FPL |
| Individual | $54,360 | $40,770 | $27,180 | $0 - $20,385 |
| Couple/2 people | $73,240 | $54,930 | $36,620 | $0 - $27,465 |
| Family of 4 | $111,000 | $83,250 | $55,500 | $0 - $41,625 |
| Premium contribution level3 | Up to 8.5% of income | Up to 6% of income | Up to 2% of income | $1/month |
Source: Program Eligibility by Federal Poverty Level for 2023 (PDF, 263 KB)
1 Based on number of people reported on your tax return
2 Based on Modified Adjusted Gross Income (MAGI)
3 How much you’re expected to contribute toward premium cost should not exceed this limit.
To calculate subsidy eligibility and amount, Covered California uses the second-lowest cost Silver (SLS) plan in your region, across all carriers, as the benchmark plan for “affordable coverage”. If the premium for the SLS benchmark plan exceeds your premium contribution limit for your income level, you may qualify for premium help because the benchmark plan is considered “not affordable”. This does not mean you are required to purchase the second-lowest cost Silver plan in your region. It’s just used as a benchmark for determining affordable coverage and available subsidy amount. You can use your subsidy to purchase any metal tier plan that fits your needs.
Looking at the examples below, taking household size, income, and cost of affordable coverage into consideration, you can see a difference in subsidy eligibility comparing the Affordable Care Act (ACA) baseline to the expanded federally funded subsidies.
Here are a couple of examples:
Example A: Erin and Francis
Ages: 62
Region: Live in a higher-cost region
Annual Income: $77,817
FPL: 425%
Expected contribution toward premium cost: 8.5% of income
| AFFORDABLE CARE ACT BASELINE | EXPANDED FEDERALLY FUNDED SUBSIDIES | |
|---|---|---|
| Monthly Premium (SLS benchmark) | $2,414 | $2,414 |
| Federal Premium Subsidy (Advanced Premium Tax Credit) | $0 not eligible because above 400% FPL | $1,863 |
| Net Premium | $2,414 | $551 |
| Net Premium Income Share | 37.2% | 8.5% |
Example B: Jones Family
Ages: 40, 45, 12, and 18
Region: Live in a lower-cost region
Annual Income: $166,500
FPL: 600%
Expected contribution toward premium cost: 8.5% of income
| AFFORDABLE CARE ACT BASELINE | EXPANDED FEDERALLY FUNDED SUBSIDIES |
|
|---|---|---|
| Monthly Premium (SLS benchmark) | $1,316 | $1,316 |
| Federal Premium Subsidy (Advanced Premium Tax Credit) | $0 not eligible because above 400% FPL | $137 |
| Net Premium | $1,316 | $1,179 |
| Net Premium Income Share | 9.49% | 8.5% |
Source: Program Eligibility by Federal Poverty Level for 2023 (PDF, 263 KB)
1 Based on number of people reported on your tax return
