Whether you are looking to enroll in health insurance for the first time, or are trying to renew your current plan, it is important to understand how the income level Poverty Guidelines affect the coverage you receive. Having a clear understanding of what you can and can’t afford will help you make the best choice.
Several state and local government programs, such as Medicaid, use poverty guidelines to measure household income. These guidelines are set by legislation and regulations. They define how much a family must earn to be below the poverty level.
The United States Department of Health and Human Services (HHS) updates the guidelines at least annually. The guidelines are based on the Consumer Price Index for All Urban Consumers. The Consumer Price Index is also known as the CPI-U. The federal government uses the Consumer Price Index to determine the federal poverty level. This level determines the eligibility for certain welfare benefits and state assistance programs.
Number of children
Using income level poverty guidelines, 14.7 percent of children are classified as poor or at risk. Among families with at least two adults, this percentage is lower for children than for adults.
Children under the age of 18 are considered to be in poverty or at risk if their family’s income is 150 percent of the federal poverty measure. The guidelines differ from state to state, as do the number of adult members of the family. The amount of money that the household earns and the cost of basic needs are factors that are used to determine the threshold. The guidelines are updated annually.
Age of members
Using the age of the recipients to measure how old they are is a clumsy, if not outright fraudulent, exercise. Similarly, not all states have a monopoly on federally funded social programs. The Federal government has a plethora of programs designed to meet the needs of the poor and the middle class. As of this writing, there are more than a dozen federally funded TANF (Temporary Assistance to Needy Families) programs at the disposal of state and local government officials. The Federal government uses a standardized set of guidelines, but local jurisdictions are free to implement their own. Hence, the competition for federal funding is intense.
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Applicability to Medicaid
Several programs use federal poverty level guidelines to determine eligibility for a variety of services, including Medicaid. The Department of Health and Human Services (HHS) publishes updated federal poverty level numbers every year. The federal poverty level also affects eligibility for premium tax credits, Community Service Block Grants, and CHIP.
Some states have adopted the federal poverty level as a criterion for Medicaid eligibility, while others use a combination of the poverty level and other criteria. The Children’s Health Insurance Program (CHIP) uses the federal poverty level to determine eligibility, and CHIP and Medicaid eligibility limits are typically higher for children than adults.
Applicability to premium tax credits on health insurance marketplace plans
Depending on your income level, you may qualify for premium tax credits on health insurance marketplace plans. These tax credits are federally issued, and help to offset the cost of premiums. They can be used to purchase any plan available on the Marketplace.
You can apply for premium tax credits by filling out an application online or in person. You must provide information about your income, citizenship, and household members to qualify. The amount of credit you receive will depend on your income level and your household’s size.
Depending on your income level, you may also qualify for subsidies. These subsidies are tax credits designed to reduce out-of-pocket costs for covered health care services. These are also known as “cost sharing subsidies.” Generally, you must keep your total costs to 8.5% of your ACA-specific MAGI. If you don’t meet this requirement, you are not eligible for premium subsidies.