This document is the proprietary work product of Health Insurance Advisors and intended for the sole use of our clients.
ACA – Affordable Care Act Marketplace Plans
Government Tax Credits / Subsidies to help pay for the monthly cost of Health Insurance
The terms Tax Credits and Subsidy can be used interchangeably in this context.
2024 Key Tax Credit / Subsidy Information
Subsidies are available to over 85% of individuals and families.
The approved subsidy amount will provide a direct and immediate offset, reducing the monthly cost of health insurance for the eligible individual. For coverage in 2024 the subsidy amount is based on:
- 2024 estimated household income i.e., estimated modified adjusted gross income (MAGI)
- 2024 expected tax filing status i.e., single, or joint and # of dependents claimed, refer to 2023 tax return as a guide
If your estimate turns out to be different than the actual income, you will be required to “square up” with the IRS when filing your 2024 tax return in the spring of 2025.
If the actual 2024 income turns out to be lower than the estimated income on the subsidy application, you will receive an additional credit when you file your tax return.
Conversely, If the 2023 income turns out to higher than the estimated income on the subsidy application causing a higher subsidy to have been paid by the government – you will owe the difference back to the IRS.
Note: 2024 estimated household income must be above the 100% Minimum Income Amount Shown on the chart below to be eligible for a subsidy. If the 2024 estimated household income is less than the 100% minimum income – there is no subsidy available.
2023 Subsidies are based on the 2022 Federal Poverty Level Guidelines
|Tax Filing Status
# exemptions claimed on 1040
- If an individual’s 2024 estimated income is between 100% – 250% they may be eligible for additional government benefit called cost sharing. It means benefit improvements.
- Cost Sharing means the government makes payments (in addition to the premium subsidy) to the insurance company that reduces the member’s deductibles, copays and out of pocket maximums. This is an additional benefit enhancement.
- Individuals must enroll in a Silver level plan in order to be eligible for the additional Cost Sharing benefits.
Cost Sharing Strategy Tip: The IRS will not “square up or recapture” the cost sharing benefit if an individual’s actual 2024 income ends up higher than the estimated amount submitted. Therefore, if consumers are unsure of their income, it may be beneficial to estimate income on the lower end, rather than the higher end. Because at the lower estimated income a person may fall in the cost-sharing category.
The IRS will always square-up on the monthly subsidy amount, so you will need to budget accordingly.