Financial help that makes health coverage more affordable has been in the news a lot recently.
In Maryland this year, roughly 88,000 households are expected to receive $417 million in federal tax credits. About 64,000 of those will receive an additional $97 million in cost-sharing reductions. That $500+ million total will help Maryland households lower their monthly insurance costs and pay less when they need health care.
That equates to more than $404 a month in tax credits on average per eligible household and an additional $130 a month for those households that also qualify for cost-sharing. Here are the average subsidies per household around the state:
And this is how the programs work:
Federal tax credits
Known as premium tax credits, consumers who qualify — generally based on income and household size — can choose to apply this money to lower their monthly health insurance payment (the premium). Most enrollees choose to receive the credits in advance to lower their monthly premium. Consumers also can choose to claim some or all of the credits when they file their federal tax return.
Enrollees must meet several criteria to be eligible to receive a premium tax credit:
- Must not be eligible for other qualifying health coverage, such as affordable employer-sponsored coverage, or a government program such as Medicaid.
- Must be a Maryland resident and a citizen/lawful resident of the United States, and not incarcerated (other than pending final disposition of charges).
- Household income must be between 100% and 400% of the federal poverty level (for an individual, between $12,060 and $47,520; for a family of four, between $24,600 and $97,200, in 2017).
- Must enroll in coverage through Maryland Health Connection.
- Must file taxes to get the tax credit, even if you would not usually file (for example, if your income is lower than the amount in which people are required to file taxes). You can file taxes this year, even if you didn’t file taxes last year. You also can claim tax dependents on your taxes this year that you may not have previously claimed. Anyone in the household who is not claimed as a tax dependent this year must file taxes to receive a tax credit. If you do not need health coverage but your tax dependents do, you can get a tax credit for them if you file taxes.
- If you are married and want to get the tax credit, you must file taxes using the “married filing jointly” tax status for this year, unless you qualify to file taxes as the “Head of Household” or you meet special circumstances, including if you are the victim of domestic violence. If you think you meet special circumstances, you should call Maryland Health Connection at 1-855-642-8572 (Deaf and hard of hearing use Relay service) to proceed with your application.
- You must not have failed to reconcile tax credits you received from a previous year in your annual tax filing.
During the year, it’s important to report changes in your income or household size to Maryland Health Connection as soon as possible. You can adjust your tax credit at any time if necessary so you don’t wind up owing money on your next tax return. If the household or income information in your Maryland Health Connection application isn’t correct, and you receive more tax credit than you’re due, you will have to pay that money back to the IRS when you file your taxes for the year. This is called “reconciling” the advance payments of the premium tax credit based on your actual yearly income.
Cost-sharing reductions are another discount that lowers the amount you have to pay for deductibles, copayments and coinsurance to your insurance company or medical provider. If you qualify, you must enroll in a plan in the Silver category to get these extra savings. If you qualify for CSRs, you also have a lower out-of-pocket maximum — the total amount you’d have to pay for covered medical services per year. When you reach your out-of-pocket maximum, your insurance plan covers 100% of all covered services.
About Maryland Health Connection
Maryland Health Connection is Maryland’s official health insurance marketplace for individuals and families to compare plans and enroll in health and dental coverage. It’s the only place to get financial help with health insurance. See if you qualify for financial help like tax credits or Medicaid/MCHP to make health insurance more affordable.