It was both a joyous and stressful moment because once she graduated, Sophia, 39, was dropped from the college-sponsored health insurance. And as a part-time recruiter for Aflac, the Milford resident makes only $31,000 a year now and is not eligible for company insurance.
She was surprised to learn that under the Affordable Care Act the U.S. Supreme Court upheld last week, she could become eligible for a government tax credit starting in 2014 to help pay her health insurance costs. Sophia, who asked that her last name be withheld to protect her financial privacy, is eligible for the credit if her income remains between 100 percent and 400 percent of the federal poverty level. For Sophia, who lives alone, that maximum annual income would be $44,680.
It’s no surprise, though, she hadn’t heard about the government subsidy because it’s one of the least talked about parts of the law. Most media outlets have focused on the most political aspect of the law — the individual mandate, which requires that all Americans get health insurance or pay a penalty.
But in fact, the law not only requires people to have health insurance, but also opens the doors to new ways for individuals with low and moderate incomes to be able to afford it.
One of these ways is by creating the tax credit. A family of four whose income is between $23,050 and $92,200 a year would qualify for the credit. Those seeking a credit would also have to prove that they do not have affordable insurance coverage available through an employer. The government has a formula for determining what “affordable” means.
The person would also have to buy the insurance from an Affordable Insurance Exchange that will be created in each state by 2014, when the individual mandate goes into effect.
Nearly every week, I meet someone like Sophia, who is not poor, but has very little “disposable” income because everything from child care to housing is so expensive in this state. Too often I hear people say, “I make too much to qualify for government assistance, but I really can’t afford anything.” These tax credits will surely help some of those people.
The new law also expands the Medicaid program to cover more low-income individuals. In fact, the new law allows states to open up eligibility to anyone under the age of 65 who makes up to 133 percent of the federal poverty level. This means a childless adult, who is now not eligible for Medicaid, could become eligible if he or she is living alone and makes roughly $14,000 a year or $9.50 an hour at a part-time job.
For those wondering who the heck has a household income that low, the U.S. Census Bureau estimated that in 2010, there were more than 138,000 households in Connecticut with incomes below $15,000.