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Beginning in 2014, the Affordable Care Act (ACA) established exchanges where individuals without employer-based insurance coverage can purchase health insurance. Within the exchanges, the ACA established income-based subsidies to partially cover premium costs for many enrollees. Subsidies are based on premiums for the second lowest-cost “silver” plan (called the “benchmark plan”). Enrollees receive subsidies equal to a fixed share of income and pegged to the benchmark plan, with the fixed share of income rising with income.
Between 2014 and 2020 – and starting again in 2026 under current law – subsidies are paid on a sliding-scale basis to those with incomes between 100% and 400% of the federal poverty level (FPL), which is a function of income and household size. Most of those with income below 100% of FPL are eligible for Medicaid in most states. Under current law, the 2026 subsidies will limit the premium enrollees pay for a benchmark plan to 2% of household income for those making 100% of FPL, rising to 6.60% of income by 200% of FPL and 9.96% of income for those between 300% and 400% of FPL.
