Healthcare Open Enrollment should be simple and easy. Understanding the relationship between Income, Health Insurance Premiums, and ACA subsidies is important in navigating the insurance marketplace and making wise and beneficial choices. This calculator is a helpful start.
Throughout the country, for every household with income less than 400% of the Federal Poverty Level (FPL), the maximum health insurance premium will be the same (Alaska and Hawaii with minor differences.) A 3 person household in San Francisco making $50,000/year will pay the same maximum amount for premiums as a downtown Detroit household or a family in rural Kansas. Age, zip code, and pre-existing conditions are not a factor.
Health Insurance Premium Calculator
Inputs:Coverage Year: Which year is the coverage active? e.g. 2021 => Jan 1, 2021 - Dec 31, 2021
State: In which State do you live, Alaska, Hawaii, or the lower 48 / DC?
Household size: Household size = taxpayer + spouse (if applicable) + tax dependents (max: 10)
MAGI: What is your estimated MAGI (Modified Adjusted Gross Income) for the coverage year?
MAGI is often the same as your Adjusted Gross Income (AGI, Line 7 on the 1040) but could be different if you have tax-exempt interest, Social Security income, or excluded foreign earned income. See this excellent primer for more.
Outputs:Household FPL: FPL level for the input household size and income
For a detailed understanding of FPL for your household size, see Federal Poverty Levels for ACA / Obamacare.
Max Contribution percentage: the maximum percentage of MAGI that a household will need to pay for the Second-Lowest Cost Silver Plan (SLCSP.) e.g. in 2020, for 300%-400% FPL the maximum contribution is 9.78%.
The actual subsidy value is equal to the full cost of the SLSCP minus the expected household contribution. If you select a more expensive Silver Plan or Gold Plan, actual premiums may be higher. If you select a lower cost Silver Plan or Bronze Plan, actual premiums may be lower, but the subsidy amount can be applied to any marketplace plan.
If this isn't clear, please review Obamacare Optimization in Early Retirement.Annual Premium: Max contribution percentage * MAGI
Monthly Premium: Annual Premium / 12
Households with income below 138% FPL (or 100% FPL in non-Medicare expansion states) will not qualify for ACA subsidies and will instead enroll in Medicaid.
Households with income greater than 400% FPL are not eligible for subsidies and will pay full/unsubsidized premiums.
For a deeper level of understanding for the complex tradeoffs between income, taxes, and ACA subsidies, please review:
- Obamacare Optimization in Early Retirement
- Obamacare Optimization vs Tax Minimization
- Obamacare Advanced Premium Tax Credit Repayment Limitation