What are Federal Poverty Levels Used for?
Federal Poverty Levels (which are also called Federal Poverty Guidelines, Federal Poverty Line, or simply FPL) are used to see if you qualify for cost assistance when buying insurance through the State or Federal Health Insurance Marketplace.
Federal Poverty Levels are also used to see if you are eligible for Medicaid (though this depends on rules adopted by your state), to give exemptions from the requirement to purchase insurance, and to help you figure out if you will have to pay some of the Affordable Care Act’s taxes. They are also used for many other non-healthcare related assistance programs (see full list below).
A Quick Look at the Federal Poverty Level Guidelines
The tables below shows simplified versions of the 2013 Federal Poverty Level Guidelines used to file taxes for April 15th, 2015 and the 2014 Federal Poverty Level Guidelines used to determine cost assistance in 2015.
We suggest using the complete 2013 FPL guidelines found further down the page for calculating assistance amounts for the Premium Tax Credit Form 8962 (remember Alaska and Hawaii use different guidelines). Keep reading to find detailed guidelines and to learn how the Federal Poverty Guidelines work with the ACA and other assistance programs.
Simplified 2013 FPL Guidelines you’ll use for 2014 cost assistance and taxes filed April 15, 2015
Poverty Level threshold
NOTE: If your family size was more than 8 people, add $4,020 for each additional person. For example, if your family size is 11, you have 3 additional people. Multiply $4,020 by 3 and add the result of $12,060 to $39,630. Enter the result of $51,690 on Form 8962, line 4.
Simplified 2014 FPL Guidelines you’ll use for 2015 cost assistance and taxes filed April 15, 2016
Poverty Level threshold
Cost Assistance and The Federal Poverty Guidelines
As a rule of thumb, if your family income is between one and four times the published Federal Poverty Guideline (100% – 400% FPL) for your household size and you are not eligible for employer or other public assisted healthcare (such as Medicaid or Medicare), then you will be able to receive premium subsidies to help you Purchase Affordable Insurance through the Marketplace.
The Premium Tax Credit (PTC) is a “tax credit” you can file for on your tax return if you had a Marketplace plan and met the requirements. You can also take this tax credit in advance as an Advanced Premium Tax Credit (Advanced PTC) and have the tax credit paid in-part or in-whole directly to the Insurance Provider You Choose.
The amount paid in advance reduces the monthly premium you have to pay. If, at the end of the year, your income turns out to be more or less than expected, the PTC will be adjusted (or reconciled) up to the repayment limit for your income and the difference will either be added to or taken from any tax refund due.
Other cost assistance offered on the Marketplace includes Cost Sharing Reduction subsidies to help with out-of-pocket costs (100%-250% FPL on Silver plans only) and Medicaid. Medicaid eligibility levels differ by state; in states that expanded Medicaid, any household with income of 138% FPL or less qualifies.
Generally, cost assistance is based on projected income for the upcoming year, although last years income can be used to help estimate your assistance amounts.
Federal Poverty Level Facts
• If you make less than four times (400%) of the FPL, you may qualify for reduced premiums through the marketplace due to Advanced Premium Tax Credits.
• If your income is below two and a half times (250%) the FPL, you qualify for a policy with reduced deductibles, copayments, and lower out-of-pocket maximum costs due to Cost Sharing Reduction subsidies (Silver plans only).
• If you live in a State that has agreed to expand Medicaid and your household income is up to 138% of the relevant FPL, you probably qualify for Medicaid. In States that don’t expand Medicaid, the threshold is typically between 100% – 133% FPL (but can be as low as 50% FPL), though many other restrictions can affect your eligibility as well.
• For the purposes of the ACA, Federal Poverty Levels are based on your projected Modified Adjusted Gross Income (MAGI) for the upcoming year. For example, if you project to make $29,175 in 2015 (taxable income after deductions), you will qualify for both Cost Sharing Reduction subsidies and Advanced Premium Tax Credits (PTC) in the marketplace based on the 2014 guidelines.
NOTE: Not all assistance programs that use the FPL guidelines use MAGI; some use gross income (this changes how you calculate your income, not the numbers on the FPL guidelines).
• If your income is below the minimum threshold for filing a tax return ($10,150 for an individual or $20,300 for a couple for 2015), or if the lowest cost coverage offered to you would cost more than 8% of MAGI for self-only coverage, then you are exempt from the fee for not having coverage. However, you may still qualify for marketplace cost assistance or Medicaid. Visit HealthCare.Gov to obtain an exemption or cost assistance.
• To avoid confusion, look at 2013 guidelines for 2014 coverage (when doing taxes in 2015) and 2014 guidelines for cost assistance for the upcoming year 2015 (which you’ll file for in 2016).
Each year, the Obamacare premium subsidies, cost assistance, and some taxes will be based on the Federal Poverty Level Guidelines that are already in place at the start of open enrollment (Nov 15, 2014 for 2015). In 2015, premium subsidies, cost-sharing assistance, and taxes are based on the 2014 Federal Poverty Guidelines. If you are doing your taxes for 2014 coverage in 2015, use the 2013 guidelines for reference.
How Do the Federal Poverty Levels Work?
Federal Poverty Guidelines depend on the total number of persons in a household. For healthcare purposes, the same figures are used in the 48 contiguous states and in the District of Columbia, while higher values (reflecting the higher cost of living) are used for Hawaii and Alaska. The 100% column shows the federal poverty guideline “amount” for each family size, and the percentage columns that follow represent income level thresholds commonly used to determine health care costs and eligibility for health programs like the Affordable Care Act. See the full list below for everything the Federal Poverty Guidelines are used for.
2014 Federal Poverty Guidelines – 48 Contiguous States & DC
Below are the 2014 Federal Poverty Guidelines used to calculate Premium caps, Premium Tax Credits (PTC), Cost Sharing Reduction subsidies (CSR), and Medicaid eligibility for 2015. These are the most recent guidelines and will be used to calculate cost assistance for this year’s open enrollment period, Nov 15, 2014 – Feb 15, 2015. You’ll also use these when you file your taxes in 2016 (see 2013 guidelines below if filing for taxes due April 15, 2015):
Federal Poverty Guidelines 2014 – Continental U.S.
|*Medicaid eligibility is different in states that did not expand Medicaid.
Federal Poverty Guidelines are different in Hawaii and Alaska.
*CSR Cost Sharing Reduction subsidy
*PTC or Premium Tax Credits
NOTE: All FPL numbers and thresholds are based off 100% FPL. For instance, 200% FPL for an individual is $23,340 (11,670 x 2); in other words, it’s twice the 100% FPL of $11,670. See below for other calculation methods to help you figure out your exact % of FPL.
NOTE: Federal Poverty Guidelines themselves are based on Gross Income, not Modified Adjusted Gross Income (MAGI). However, cost assistance in the Marketplace is based on Modified Adjusted Gross Income. As a result, you should use your Modified Adjusted Gross Income when referencing the FPL chart above for the purposes of the ACA. For other assistance programs, you’ll need to check whether you use Gross Income, Adjusted Gross Income, or Modified Adjusted Gross Income.
2014 POVERTY GUIDELINES – ALASKA
|Persons in Household||Poverty Guideline
|For families/households with more than 8 persons, add $5,080 for each additional person.|
2014 POVERTY GUIDELINES – HAWAII
|Persons in Household||Poverty guideline
|For families/households with more than 8 persons, add $4,670 for each additional person.|
2013 Federal Poverty Guidelines – 48 Contiguous States & DC
Below are the 2013 Federal Poverty Guidelines used to calculate Premiums caps, Premium Tax Credits (PTC), Cost Sharing Reduction subsidies (CSR), and Medicaid eligibility for 2014 (that open enrollment season was Oct 1st, 2013 – March 31st, 2014). If you are doing your 2014 taxes for the 2015 tax season, you’ll refer to the 2013 guidelines below:
|For each additional person, add||$4,020||$5,347||$5,548||$6,030||$8,040||$12,060||$16,080|
2013 Federal Poverty Guidelines – Alaska
|For each additional person, add||$5,030||$6,690||$6,941||$7,545||$10,060||$15,090||$20,120|
2013 Federal Poverty Guidelines – Hawaii
|For each additional person, add||$4,620||$6,145||$6,376||$6,930||$9,240||$13,860||$18,480|
What Do They Mean By “Household Size”?
For most families, household size is 1 (for yourself) plus the number of people that you can claim as dependents on your income tax return. This may include children, parents, or other relatives who qualify as dependents on your tax return. Children of divorced parents are counted as the family of the parent who claims them as a dependent (even if the other parent has to pay for the child’s health insurance). Do not include children who earn enough to support themselves – and thus are no longer eligible as dependents – even if they still live at home or are included in your family’s health insurance plan.
What Does Income Include?
Expected 2014 gross income (before taxes) includes wages, tips, net profit from self-employment, interest, rental income, other investment income, most pensions, social security payments, and alimony. This will be the amount called “Modified Adjusted Gross Income” (MAGI) shown on your tax return: line 4 of Form 1040EZ, line 21 of 1040A, or line 37 of form 1040. If your only income is from a job, it is the number shown in box 1 of your W2 form. Include income of all dependents (for example, a child’s summer earnings or a dependent’s social security) even if they filed a separate tax return.
Federal Poverty Guideline Facts
Obamacare used the 2013 Federal Poverty Guideline values, published in January 2013, for the whole of 2014. For 2015, you’ll use the 2014 Federal Poverty Guideline values.
The official Federal Poverty Level Guidelines are released each January and are based on the “Federal Poverty Threshold” data for the previous year. The FPL guidelines are updated yearly.
How are Federal Poverty Levels Calculated?
For the purposes of understanding what subsidies you’ll get, a simple way to calculate where you stand on the Federal Poverty Guidelines is to divide your families expected MAGI (Modified Adjusted Gross Income) by the 100% federal poverty level dollar amount for your household size, and then to multiply the outcome by 100.
NOTE: if you don’t expect your income to change much, simply base your MAGI on last year’s tax returns. If you are trying to figure your FPL percentage for another assistance type unrelated to the Affordable Care Act, use AGI or GI when appropriate.
EXAMPLE: In 2015, for a family of 4 making $95,400, using the 2014 base 100% FPL level $23,850:
$95,400 ÷ $23,850 = 4
4 x 100 = 400
which is 400% FPL
We strongly suggest simply using the charts above. Your cost assistance will be calculated automatically when you apply for the Health Insurance Marketplace. You can also use this Federal Poverty Level Calculator from safetyweb.org.
What Else are Federal Poverty Levels Used For?
According to HHS, Federal Poverty Guidelines are also used for:
- Department of Health and Human Services:
- Community Services Block Grant
- Head Start
- Low-Income Home Energy Assistance Program (LIHEAP)
- PARTS of Medicaid
- Hill-Burton Uncompensated Services Program
- AIDS Drug Assistance Program
- Children’s Health Insurance Program
- Medicare – Prescription Drug Coverage (subsidized portion only)
- Community Health Centers
- Migrant Health Centers
- Family Planning Services
- Health Professions Student Loans — Loans for Disadvantaged Students
- Health Careers Opportunity Program
- Scholarships for Health Professions Students from Disadvantaged Backgrounds
- Job Opportunities for Low-Income Individuals
- Assets for Independence Demonstration Program
- Department of Agriculture:
- Supplemental Nutrition Assistance Program (SNAP) (formerly Food Stamp Program)
- Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)
- National School Lunch Program (for free and reduced-price meals only)
- School Breakfast Program (for free and reduced-price meals only)
- Child and Adult Care Food Program (for free and reduced-price meals only)
- Expanded Food and Nutrition Education Program
- Department of Energy:
- Weatherization Assistance for Low-Income Persons
- Department of Labor:
- Job Corps
- National Farmworker Jobs Program
- Senior Community Service Employment Program
- Workforce Investment Act Youth Activities
- Department of the Treasury:
- Low-Income Taxpayer Clinics
- Corporation for National and Community Service:
- Foster Grandparent Program
- Senior Companion Program
- Legal Services Corporation:
- Legal Services for the Poor
NOTE: Not all assistance programs use Modified AGI (MAGI) to determine assistance. See each program for income and other eligibility requirements.
What are Federal Poverty Thresholds?
The poverty thresholds are the original version of the federal poverty measure. They are updated each year by the Census Bureau. The thresholds are used mainly for statistical purposes — for instance, preparing estimates of the number of Americans in poverty each year. In other words, all official poverty population statistics are calculated using the poverty thresholds — not the guidelines.
You will use the Federal Poverty Level Guidelines to calculate your cost assistance on the Health Insurance Marketplace.
What are Federal Poverty Guidelines?
The Federal Poverty Guidelines are a simplification of the poverty thresholds used for administrative purposes — for instance, determining financial eligibility for certain federal programs. They are issued in January of each year in the Federal Register by the Department of Health and Human Services (HHS).
What Is the Federal Poverty Level for 2014 – 2015?