In 2021, employers paid 73% of the $22,221 average annual health insurance premium for a family of four, but that still left $5,969 to pay for the employee. The costs for the self-insured can be even more daunting.
No wonder so many Americans rely on some form of financial assistance to meet their health care needs. As of June 2022, 82.3 million people were enrolled in Medicaid. And, according to the Kaiser Family Foundation, nearly 9.1 million people received financial assistance for Marketplace health plans in 2020.
Health insurance is expensive, but also essential, which is why it’s important to know what types of financial aid exist to help pay premiums and reduce out-of-pocket expenses.
Key points to remember
- The ACA health insurance market maintains a research tool to help people identify available premium savings programs, based on their state and income level.
- Medicaid and the Children’s Health Insurance Program reduce health care costs for millions of low-income Americans each year.
- People who purchase their own private health insurance may qualify for a premium tax credit or cost-sharing reductions.
- There are special medical coverage protections for Alaska Natives and American Indians.
- Typically, cities, states, and even some government-run hospitals have their own financial aid app to help residents access all available local, state, and federal programs for which they are eligible.
What kind of financial aid is available
The Affordable Care Act (ACA) makes insurance more affordable than ever, especially for people with pre-existing conditions. Medicare, Medicaid, Children’s Health Insurance Program (CHIP), tax credits and cost-sharing tools combine to create a network of support for individuals and families wishing to reduce the cost of Health Insurance. Eligibility for these programs is based on location, age, income and family size.
Medicare is a federal health insurance program that covers people age 65 and older, as well as certain younger people with disabilities and people with end-stage kidney disease or ALS (Lou Gehrig’s disease). Medicare has 4 parts:
- Part A (hospitalization insurance) covers stays in hospitals and retirement homes as well as home care for people confined to their homes. Part A is free for anyone who has accumulated 40 social security credits, or about 99% of beneficiaries. Even so, it comes with a $1,600 deductible for the first hospital admission during each new benefit period and significant co-payments for stays longer than 60 days.
- Part B is optional medical insurance with a standard monthly premium of $164.90 and an annual deductible of $226 in 2023. The monthly premium is higher for people with incomes over $97,000 and couples whose income exceeds $194,000.
- Part C, or Medicare Advantage, is Medicare Parts A and B coverage provided by private insurers. Premiums, deductibles and copayments vary with each plan.
- Part D covers prescription drugs. Monthly premiums vary by plan and beneficiary income, but deductibles are capped at $505 for 2023.
Finally, Medicare Supplemental Insurance (Medigap) helps cover the costs of some Part A and Part B services and may include additional benefits, such as international coverage, although it has its own premiums which vary by plan and personal circumstances.
There is no annual limit on the amount an original Medicare beneficiary pays out of pocket unless they enroll in a Medigap K or L plan.
Although Medicare coverage can be expensive, several assistance programs exist to help you. Medicare Savings Programs are income- and resource-limited programs that help pay Part A and Part B premiums, as well as deductibles, copayments, and coinsurance in some cases. These programs are administered by state medical assistance (Medicaid) offices, but they are not the same program as Medicaid. To apply, contact your state medical assistance office.
Assistance programs also exist for people with specific medical needs. For example, the All-Inclusive Care for the Elderly (PACE) program helps people 55 and older get care outside of a nursing home, and special needs health insurance plans reduce costs for people who need long-term care (at home or in a facility) or if you have a chronic condition such as dementia, cancer or diabetes.
Some people automatically qualify for Additional helpa program to help people with limited resources afford Medicare Part D coverage and costs. Those who do not automatically qualify can still apply. And some pharmaceutical companies offer additional assistance to help people with Part D prescription drugs.
Medicaid is a state program, administered according to federal requirements, that helps low-income people of all ages pay for medical expenses. Since Medicaid is administered by the states, eligibility and costs vary widely, but federal rules mandate coverage for children and pregnant women in low-income families, the elderly and disabled who receive social insurance, and some very low-income caregivers and adults. Nonetheless, the majority of states have passed the Affordable Care Act’s expanded eligibility to all adults whose income can reach 138% of the federal poverty level.
Although states may charge some Medicaid beneficiaries out-of-pocket premiums and fees, the savings to the beneficiary can be significant. For some people, these benefits can reduce the cost of medication to just $8.00 and a doctor’s visit to just $4.00.
Children’s Health Insurance Program (CHIP)
The Children’s Health Insurance Program (CHIP) provides health coverage for children in families who earn too much to qualify for Medicaid. CHIP, like Medicaid, is administered by states according to federal guidelines; some states run separate CHIP programs while others include it as part of Medicaid. Eligibility varies by state, but CHIP offers free or low-cost dental and medical insurance for children and teens. EnsureKidsNow.com is a key resource for determining eligibility and finding local suppliers.
Children are eligible for CHIP coverage up to age 19.
Premium tax credits
The premium tax credit (PTC) is a refundable credit that helps cover health insurance premiums purchased in the state or federal health insurance markets. Prior to 2021, households with income above 400% of the federal poverty level were not eligible for the premium tax credit, but this rule has been suspended until 2025.
When you request coverage through the Marketplace, it calculates a tax credit estimate on your behalf. You have the option of claiming the credit in full when you file your taxes or having monthly payments sent directly to your insurer as an advance credit. If you choose the latter, you must reconcile your estimated and actual credit on Form 8962 when you file your taxes in April. That’s why it’s important to let Marketplace know of life changes, like those to income, family size, or your eligibility for non-ACA coverage, that could affect your credit amount and result in a higher tax bill. important than expected.
Reductions in cost sharing
Cost-sharing reductions, also known as “additional savings”, reduced deductibles, coinsurance and co-payments on private health insurance purchased through the Marketplace. Like the premium tax credit, eligibility for cost-sharing discounts is automatically calculated by the Marketplace upon your request. To claim discounts, however, you must enroll in a Silver Health Plan.
Members of a federally recognized Native American tribe or shareholders of an Alaska Native Claims Settlement Act (ANCSA) corporation may be eligible for additional cost-sharing discounts.
How to qualify for financial aid
Eligibility requirements for Medicaid, some Medicare programs, and other public assistance programs vary from state to state. To consult your state Medicaid office to learn more. For additional help or questions about Medicare, you can contact a live person 24 hours a day, 7 days a week via live chat or phone.
If you’re considering declining or canceling employment-based insurance to sign up for a Marketplace plan, think twice. If an employment-based plan is “affordable” and meets the minimum value standard, you will not qualify for Marketplace Savings even if your income would otherwise qualify you.
Financial assistance programs for each hospital or clinic can be found on their websites. Many have apps available in Spanish, Arabic, Mandarin, and other commonly spoken languages.
How to apply for health insurance financial assistance
Applying for most health insurance financial aid begins with the marketplace. Although some states operate their own marketplaces, the federal website will direct users to those marketplaces where appropriate. Medicare beneficiaries requiring assistance should contact their state Medicaid office.
To apply for assistance, you may need to provide documentation supporting your claimsincluding confirmation of immigration status, citizenship, social security number, household income, and American Indian or Alaska Native status.
If you are at risk of incurring medical debt even with insurance, some hospitals have financial assistance or charitable care programs to cover surprisingly high bills. Many hospitals use charity care apps to determine if a patient qualifies for one or more of the above government programs, and others, like Ohio Health, offer interest-free loans to patients who don’t qualify for charity. other discounts.
The rising cost of health care in America is keeping many people awake at night. However, federal and state programs like Medicare, Medicaid, and CHIP provide millions of Americans with low-cost insurance, and the Affordable Care Act ushered in several insurance subsidies and cost-cutting measures, like the Credit premium tax. And for people who are stuck with a larger-than-expected medical bill, charitable care programs can help both uninsured patients and those whose insurance doesn’t cover the full cost of care.