Affordable Care Act Expected Contribution Table for 2014

By Kirk Andonian
Affordable Insurance Staff Writer

 

A central feature of the Affordable Care Act, also called Obamacare, is the premium tax credit available to an individual who purchases a health plan from a state exchange. There has been a great deal of confusion regarding how these credits will be set up and how they will work.

When an individual visits the website for their state’s health insurance marketplace, the website will ask the individual to input their household income and the number of their dependents. Once this information is entered, the website will calculate where the individual’s income places them in relation to the federal poverty level in 2013 (see Table 1).

Table 1: FPL for Household Sizes
    Household Size         2013 Federal Poverty Level    
1 $11,490
2 $15,510
3 $19,530
4 $23,550
5 $27,570
6 $31,590

Once this is determined, the Affordable Care Act defines an annual amount that the individual and their family should pay toward the purchase of their health insurance (see Table 2).

The amount that one is expected to pay is based on a formula that can be found on the IRS website. However, the IRS website does not, to our knowledge, have a quick table to illustrate these percentages, so we thought we would post one here.

An Example

John Doe and his spouse have an annual income of $55,000. They have two children, ages 4 and 8. Using Table 1, we can calculate that their income is 234 percent of the federal poverty level ($55,000 divided by $23,550 equals 2.335, or 234 percent of the federal poverty level). Once the percentage of the FPL is known, we can look at Table 2 and see that the expected contribution for households at 234 percent of the FPL is 7.49 percent. From there it is simple multiplication (.0749 X $55,000) to figure out that John’s family will be expected to pay $4,119.50 towards their health insurance annually.

Because John could buy different levels of coverage that would cost different amounts, the Affordable Care Act decided to apply this exact amount to the silver plan established by the new law, which is supposed to cover roughly 70 percent of average health care costs.

For anyone who went to college and completed the FAFSA, they will be familiar with the concept of “expected family contribution.” This is the notion that the amount one should pay for a service (i.e. college or health insurance) should be tied to their ability to pay and not tied to the cost of the service.

The following table has been built from the IRS formula for the percentage of income that should be paid at each step on the FPL.

Table 2: Expected Contribution Toward Health Insurance
    2013 FPL Percentage         Expected 2104 Contribution    
Under 100 0
100-132 0.0200
133 0.0300
134 0.0306
135 0.0312
136 0.0318
137 0.0324
138 0.0329
139 0.0335
140 0.0341
141 0.0347
142 0.0353
143 0.0359
144 0.0365
145 0.0371
146 0.0376
147 0.0382
148 0.0388
149 0.0394
150 0.0400
151 0.0405
152 0.0409
153 0.0414
154 0.0418
155 0.0423
156 0.0428
157 0.0432
158 0.0437
159 0.0441
160 0.0446
161 0.0451
162 0.0455
163 0.0460
164 0.0464
165 0.0469
166 0.0474
167 0.0478
168 0.0483
169 0.0487
170 0.0492
171 0.0497
172 0.0501
173 0.0506
174 0.0510
175 0.0515
176 0.0520
177 0.0524
178 0.0529
179 0.0432
180 0.0538
181 0.0543
182 0.0547
183 0.0552
184 0.0556
185 0.0561
186 0.0566
187 0.0570
188 0.0575
189 0.0579
190 0.0584
191 0.0589
192 0.0593
193 0.0598
194 0.0602
195 0.0607
196 0.0612
197 0.0616
198 0.0621
199 0.0625
200 0.0630
201 0.0634
202 0.0637
203 0.0641
204 0.0644
205 0.0648
206 0.0651
207 0.0655
208 0.0658
209 0.0662
210 0.0665
211 0.0669
212 0.0672
213 0.0676
214 0.0679
215 0.0683
    2013 FPL Percentage         Expected 2104 Contribution    
216 0.0686
217 0.0690
218 0.0693
219 0.0697
220 0.0700
221 0.0704
222 0.0707
223 0.0711
224 0.0714
225 0.0718
226 0.0721
227 0.0353
228 0.0728
229 0.0732
230 0.0735
231 0.0739
232 0.0742
233 0.0746
234 0.0749
235 0.0753
236 0.0756
237 0.0760
238 0.0763
239 0.0767
240 0.0770
241 0.0774
242 0.0777
243 0.0781
244 0.0784
245 0.0788
246 0.0791
247 0.0795
248 0.0798
249 0.0802
250 0.0805
251 0.0808
252 0.0811
253 0.0814
254 0.0817
255 0.0820
256 0.0822
257 0.0825
258 0.0828
259 0.0831
260 0.0834
261 0.0837
262 0.0840
263 0.0843
264 0.0846
265 0.0849
266 0.0851
267 0.0854
268 0.0857
269 0.0860
270 0.0863
271 0.0866
272 0.0869
273 0.0872
274 0.0875
275 0.0878
276 0.0880
277 0.0883
278 0.0886
279 0.0889
280 0.0892
281 0.0895
282 0.0898
283 0.0901
284 0.0904
285 0.0907
286 0.0909
287 0.0912
288 0.0915
289 0.0918
290 0.0921
291 0.0924
292 0.0927
293 0.0930
294 0.0933
295 0.0936
296 0.0938
297 0.0941
298 0.0944
299 0.0947
300-400 0.0950

Households making more than 400 percent of the federal poverty level do not receive a subsidy and are required to pay the full premiums for their health coverage.

Posted September 30, 2013. Find more health care act insurance information or details about health care tax credits.

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