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 your State Health Insurance Marketplace.
They are also used to see if you are eligible for Medicaid (though this depends on rules adopted by your State), give exemptions from the requirement to purchase insurance, or to help you understand if you will have to pay some of the Affordable Care Act’s taxes. See below for other assistance programs beyond the ACA that use Federal Poverty Guidelines.
As a rule of thumb if your family income is less than four times the published Federal Poverty Guideline (400% of FPL) for your household size, and you are not eligible for employer or other public assisted healthcare (such as Medicaid or Medicare), you will be able to receive premium subsidies to help you Purchase Affordable Insurance through your State’s Health Insurance Marketplace. Although technically a “tax credit” which you will receive when you file your tax return, a tax credit advance will be paid directly to the Insurance Provider You Choose, reducing 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 tax credit will be adjusted and added to or taken from any tax refund or payment due.
• 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 maximum out-of-pocket 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 State’s that don’t expand Medicaid the threshold is typically between 100%-133%, although many more restrictions apply to eligibility aside from income.
• For the purposes of the ACA Federal Poverty Levels are based your projected Modified Adjusted Gross Income (MAGI) for the upcoming year. For example, if you project to make $29,175 in 2015 (in taxable income after deductions) you will qualify for both Cost Sharing Reduction subsidies, and Tax credits on the marketplace based on the 2014 guidelines. NOTE: Not all assistance programs that use the FPL guidelines use MAGI, other’s use gross income.
• 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 the lowest cost coverage offered to you would cost less than 8% of MAGI for self only coverage, you are exempt from the fee for not having coverage, but may still qualify for marketplace cost assistance or Medicaid. Visit HealthCare.Gov to obtain an exemption or cost assistance.
Each year Obamacare premium subsidies, cost assistance, and some taxes will be based on the Federal Poverty Level Guidelines at the start of open enrollment (Nov 15 2014 for 2015). So premium subsidies, cost-sharing assistance, and taxes for 2015 are based on the 2014 Federal Poverty Guidelines. If you are doing your taxes for 2014, look at the 2013 guidelines for reference.
How Do the Federal Poverty Levels Work?
Federal Poverty Guidelines depend on the total number of persons in the household. For healthcare purposes the same figures are used in the 48 contiguous states and in the District of Columbia, while higher values (reflecting higher living expenses) apply to Hawaii and Alaska. The 100% column shows the federal poverty guideline for each family size, and the percentage columns that follow represent income levels that are commonly used to determine health care costs for health programs like the Affordable Care Act. See a full list below for everything the Federal Poverty Guidelines are used for.
2014 Federal Poverty Guidelines for 48 Contiguous States and DC
Federal Poverty Guidelines used to calculate Premiums caps, Premium Tax Credits, Cost Sharing Reduction subsidies, and Medicaid eligibility in 2014 – 2015. These are the most recent guidelines and will be used to calculate cost assistance for this years open enrollment period Nov 15, 2014 – Feb 15, 2015:
|Federal Poverty Guidelines 2014 – for Continental U.S.|
|Persons in Household||2014 Federal Poverty Level (100% FPL)||Medicaid Eligibility* (138% of FPL)||Cost Sharing Reduction and Premium cap guideline (150% FPL)||Cost Sharing Reduction subsidy threshold (250%
|Premium subsidy threshold (400% of FPL)|
|*Medicaid eligibility is different in states that did not expand Medicaid. Federal Poverty Guidelines are different in Hawaii and Alaska.|
NOTE: All FPL numbers and thresholds are based off the 100% FPL. So for instance, 200% FPL for an individual is $23,340 (11,670 x 2) , in other words 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. However, cost assistance in the Marketplace is based on Modified Adjusted Gross Income. Therefore you should use Modified Adjusted Gross Income, often called MAGI,when using the FPL guidelines chart above for the purposes of the ACA. For other assistance programs you’ll need to check if you use Gross Income, Adjusted Gross Income, or Modified Adjusted Gross Income.
|Persons in family/household||Poverty guideline|
|For families/households with more than 8 persons, add $5,080 for each additional person.|
|Persons in family/household||Poverty guideline|
|For families/households with more than 8 persons, add $4,670 for each additional person.|
2013 Federal Poverty Guidelines for 48 Contiguous States and DC
Federal Poverty Guidelines Used to Calculate Premiums, Cost-Assistance and Taxes in 2013 – 2014:
|For each additional person, add||$4,020||$5,347||$5,548||$6,030||$8,040||$12,060||$16,080|
2013 Federal Poverty Guidelines for Alaska
|For each additional person, add||$5,030||$6,690||$6,941||$7,545||$10,060||$15,090||$20,120|
2013 Federal Poverty Guidelines for 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 it is yourself plus the number of people that you 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 so are no longer eligible as dependents, even if they still live at home.
What Does Income Include?
Expected 2014 gross income (before taxes) including wages, tips, net profit from self-employment, interest, rental income, and 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 in 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 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 based on the “Federal Poverty Threshold” data for the previous year. The FPL guidelines will be 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 multiply the outcome by 100. NOTE: if you don’t expect your income to change much, simply base your MAGI on last years tax returns.
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 automatically calculated 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 (31 percent of eligibles in Fiscal Year 2004)
- 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 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 a simplification of the poverty thresholds for use 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?