Health Insurance

What to Know About Low Income Health Insurance

What to Know About Low Income Health Insurance

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Low income health insurance provides coverage for adults, children and families within certain income levels. Income-based health insurance includes federal programs like Medicaid, the Children's Health Insurance Program (CHIP) and the Basic Health Program (BHP), which is available through the Affordable Care Act (ACA). However, eligibility for these types of coverage is most often determined by income and can vary by state.

Medicaid

When deciding where to find low cost health insurance, we recommend low income families start by reviewing Medicaid eligibility. Medicaid has a wider eligibility range and more benefits than similar national programs. If you do not qualify, then take a look into other options for how to get free health insurance or low cost health coverage.

You can apply for Medicaid with your state of residence; however, we suggest applying through the marketplace. This way, you’ll also learn if you qualify for an individual marketplace plan based on your income.

In 37 states that have expanded Medicaid, low income households will qualify for low cost or free medical insurance through Medicaid based solely on income. The threshold is 133%-138% of the federal poverty level (FPL) in these states with expanded Medicaid. For example, for a family of four living in the lower 48 states, the FPL is $26,500 in annual income.

Below is the full FPL list for the 2021 policy year:

Persons in family or household
Poverty guideline
1$12,880
2$17,420
3$21,960
4$26,500
5$31,040
6$35,580
7$40,120
8$44,660

If you live in a state that has expanded Medicaid but you do not qualify based on the FPL, you still might be eligible according to your income along with other factors such as age, disability or medical condition. For example, all states and the District of Columbia provide full Medicaid coverage for women needing care for cervical or breast cancer — the program is available to women with incomes up to 250% of the FPL.

In the 13 states listed below, you cannot qualify using your income alone. You must be eligible based on income combined with other considerations like those mentioned above — age, disability or medical condition.

  • Alabama
  • Florida
  • Georgia
  • Iowa
  • Mississippi
  • Missouri (expansion approved but not yet enacted)
  • North Carolina
  • South Carolina
  • South Dakota
  • Tennessee
  • Texas
  • Wisconsin
  • Wyoming

If you qualify for Medicaid, your state must provide at least these 15 basic benefits. Additional coverage may be offered and varies by state.

  • Inpatient hospital services
  • Outpatient hospital services
  • Early and Periodic Screening, Diagnostic and Treatment Services (EPSDT)
  • Nursing facility services
  • Home health services
  • Physician services
  • Rural health clinic services
  • Federally qualified health center services
  • Laboratory and X-ray services
  • Family planning services
  • Nurse midwife services
  • Certified pediatric and family nurse practitioner services
  • Freestanding birth center services (when licensed or otherwise recognized by the state)
  • Transportation to medical care
  • Tobacco cessation counseling for pregnant women

Medicaid document requirements

In order to prove qualification for Medicaid, you must provide information on your income and status. Depending on the type of program, your state Medicaid office may require documents to verify items such as:

  • Income
  • Citizenship/immigration status
  • Identification such as Social Security number or proof of application
  • Medicare enrollment (as applicable)
  • Termination of other insurance (as applicable)

Most often, your Medicaid office can confirm your data electronically. If it cannot locate the information, you may be asked to provide paperwork. For example, to verify loss of other insurance, you may need to show a notice of termination received from your employer. Documentation needs can vary by state.

Children’s Health Insurance Program (CHIP)

CHIP offers low cost health coverage for children — and pregnant women in some states — whose family incomes are too high to qualify for Medicaid. Household income limits for CHIP vary by state. CHIP offers coverage for many of the same services as Medicaid, which often include:

  • Routine checkups
  • Immunizations
  • Doctor visits
  • Prescriptions
  • Dental and vision care
  • Inpatient and outpatient hospital care
  • Laboratory and X-ray services
  • Emergency services

You can apply for CHIP through the Health Insurance Marketplace or through your local Medicaid office. The marketplace will also determine if you qualify for an individual ACA insurance plan based on your income, so you won't need to apply separately.

If you apply for Medicaid through your state, you’ll also find out if your children qualify for CHIP. If they qualify, you won't have to buy an insurance plan to cover them.

CHIP document requirements

When applying for CHIP coverage, there are some documents you may need to provide, which include:

  • Income
  • Citizenship/immigration status
  • Identification such as Social Security number or proof of application
  • Medicare enrollment (as applicable)
  • Termination of other insurance (as applicable)

Most often, your Medicaid office can confirm your data electronically. If it cannot locate the information, you may be asked to provide paperwork. For example, to verify loss of other insurance that covered your child, you may need to show a notice of termination received from your employer. Documentation needs can vary by state.

Basic Health Program (BHP)

The Basic Health Program (BHP) is available through the Affordable Care Act (ACA). It provides low income insurance for people who do not qualify for Medicaid, CHIP or other minimum essential coverage. Currently, only two states offer a BHP: Minnesota (MinnesotaCare) and New York (The Essential Plan).

You may be eligible for a BHP if you are a citizen or lawfully present noncitizen and do not qualify for Medicaid, CHIP or other minimum coverage programs. Your income must be between 133% and 200% of the FPL. If you are a lawfully present noncitizen and are not eligible for Medicaid due to status, you may qualify for a BHP. In this case, your income must be below 133% of the FPL.

A BHP covers at least the 10 essential health benefits provided by the ACA.

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Pregnancy, maternity and newborn care (both before and after birth)
  • Mental health and substance use disorder services, including behavioral health treatment
  • Prescription drugs
  • Rehabilitative and habilitative services and devices
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision care
While enrolled in a BHP, your monthly premium and cost sharing will never exceed the amount charged for a Qualified Health Plan (QHP) through the Health Insurance Marketplace.

Premium tax credits

A premium tax credit, also known as a premium subsidy, is another way to access inexpensive health insurance. When you purchase a Qualified Health Plan (QHP) through the Health Insurance Marketplace, you also may qualify for a premium tax credit based on your income and household size. You can use this credit to lower your monthly insurance bill. The credit may even cover your entire monthly premium.

Premium subsidies are based on the cost of the Silver plan in your state. The subsidies can be used to offset premiums for any metal-level plan in the exchange. You can buy a QHP outside of the Health Insurance Marketplace, but you must apply through the marketplace to be eligible for premium tax credits.

To qualify for the subsidy, your household must have an income of at least 100% of the FPL (138% of the FPL in states that have expanded Medicaid). If you or your family qualify for Medicaid or CHIP, you are not eligible to apply for a premium subsidy. With a premium subsidy, your expected monthly cost is determined by where you fall in relation to the FPL. Use this chart to determine your expected contribution.

The 2021 American Rescue Plan (ARP) temporarily adjusted these premium subsidy requirements:

  • Lowered the expected contribution rates
  • Lifted the 400% FPL cap
  • Expanded eligibility to people receiving unemployment
If you earn
Your expected monthly contribution is
Up to 150% of FPL0% of your income (i.e., the benchmark plan will have no premium)
150%-200% of FPL0%-2% of your income
200%-250% of FPL2%-4% of your income
250%-300% of FPL4%-6% of your income
300%-350% of FPL6%-8.5% of your income
400% of FPL or higher8.5% of your income

Cost-sharing subsidies

A cost-sharing subsidy, also known as a cost-sharing reduction, is another way to get low cost health insurance. The subsidies lower your out-of-pocket maximum and increase the percentage of health care costs paid by your health plan. To qualify for cost-sharing subsidies, you must apply through the marketplace.

You may be eligible for a cost-sharing subsidy if your income is between 100% and 250% of the FPL. If you qualify for Medicaid, you cannot receive cost-sharing subsidies.

Cost sharing is built into ACA Silver plans. If you enroll in a Silver plan and are eligible for cost sharing, you automatically get the lower out-of-pocket maximum and higher health plan contribution.

Other income-based health insurance options

For those struggling financially who do not qualify for programs like Medicaid or CHIP, there are other community-based or government options for health insurance for poor individuals, such as the Vaccines for Children (VFC) program and community health centers.

The Vaccines for Children (VFC) program

The VFC program is available in all states. It helps provide vaccines for children who are under age 19 and are one of the following:

  • Medicaid-eligible
  • Uninsured
  • Underinsured
  • American Indian or Alaska Native

Community health centers

The health care law expanded funding to community health centers, which provide cheap health care services based on income. These centers deliver care to medically underserved areas and populations, which might include agricultural workers, people without housing or veterans. Primary care services include:

  • Prenatal care
  • Baby shots
  • General primary care
  • Referrals to specialized care

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.