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Financial Aid Subsidies May Help Families Cut Large Cost Of Health Care

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While the Affordable Care Act will require the uninsured to purchase health insurance, those who still find the price of care more than they can afford may qualify for some financial assistance under the Advance Premium Tax Credit. NY1's Tara Lynn Wagner filed the following report.

Starting October 1, uninsured Americans will begin purchasing health insurance through the exchanges set up under the Affordable Care Act.

Prices will vary state by state, though for those who are in a state that doesn't set up an exchange, prices will be set by the federal government.

But what happens if what the state or federal government deems affordable is still more than a person can afford?

That's where the Advance Premium Tax Credit comes in.

"The government is providing some support for folks recognizing that this is a large cost," says Cynthia Nuara from the LGBT Community Center.

How much financial assistance a person can get depends on how much they make and the size of their family.

Roughly speaking, a single person earning under $46,000 a year would qualify for aid.

For a family of four, the cutoff is around $94,000.

The congressional budget office estimates 57 percent of people purchasing insurance will qualify for some assistance, and the less people make, the more aid they'll receive.

Coverage will be free for those who qualify for Medicaid.

Now, not all marketplaces have released their numbers, but to get a sense how these subsidies work, it is helpful to consider the scenario of a family of four buying a silver tier plan in New York state.

"Say you're talking about a family of $50,000 with four people in it, your out-of-pocket monthly premium after all your financial assistance would be $285 a month. The full price would be $700 per month," says James Knickman from the New York State Health Foundation.

Marketplaces will offer calculators to determine what a person's subsidy will be.

Once that number is obtained, how a person applies it is up to them.

"You can apply that financial assistance, the maximum amount per month, to your premium every month, so your premiums are lower every month," says Elisabeth Benjamin from the Community Services Society of New York.

The other option would be to pay the premium in full, or pay more of it than is required and receive the subsidy as a tax credit.

"And then at the end of the year at tax time, I will be eligible for a big refund," Benjamin says. "We anticipate that most people will want to apply their tax credits or their financial assistance on a monthly basis and reduce their premiums on a monthly basis."

Until the marketplaces open, the Kaiser Family Foundation has a calculator that will help people estimate what their premium may be and how much of a subsidy they may qualify for.

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