How Do Student Loans Affect Health Insurance Under the ACA?
Recently college graduate student with student loans, continuing education part time, no job yet but enrolled already, still looking for work, but with student loans to pay back and try to get affordable healthcare coverage without exorbitant out of pocket expenses, looking to be an impossibility. What can this affordable care act offer me, because I have really hardly any money left after 4 years of college.
Answer
Student loan debt isn't tax deductible, health insurance cost assistance is based on total household income and isn't affected by loan debt. More specifically health insurance cost assistance is based on Modified Adjusted Gross Income (MAGI). Fortunately or unfortunately, depending on where you stand, paying off debt isn't deductible from MAGI. That means that if you make anywhere between 100% - 400% of the Federal Poverty Level you can get cost assistance to get lower premiums (even if you end up having less at the end of the year after paying down debts). Conversely, overwhelming debt won't price you out of qualifying for cost assistance which is a plus. The same is true for Medicaid which is expanded under the Affordable Care Act. In many states if you make less than 133% of the poverty level you can get free or low cost coverage through Medicaid. Both assistance types can be a lifesaver when dealing with debt.
It's important to realize that if you make move than 100% of the poverty level you'll also, in most cases, owe the fee for not having coverage. Given this it is typically a smart move to make sure you are obtaining and maintaining health insurance first and foremost. A good solution may be finding employment that offers both health insurance and a wage that can help pay off your student debt. Another good solution would be figuring out what income will qualify you for the best assistance and making sure to stay at that income level for a calendar year until you have the right job opportunity.
Here are a few extra pointers:
- You can use an HSA to lower taxable income on high deductible plans.
- Low premium high deductible plans can mean more out-of-pocket expenses... but those can be limited by choosing a Silver plan with cost sharing reduction subsidies. If you make between 100% - 250% of the poverty level and don't have major medical needs you may find the best value in a plan that actually has high out-of-pocket costs.
- Deferring student loans means pushing off debt, and that means more interest... however, student loans are supposed to be given with an expectation that the receiver of the loan will have the income to pay the debt back based off employment obtained as a result of education. If you aren't in a place to effectively pay off your loans and your education hasn't yielded you a job, some would argue that it is OK to focus on your health, housing, and the job search until you have the extra income to pay back your loans. It's a personal choice of course, but deferring loans is an option.
There needs to be some kind of act for people paying student loans. I pay about $500 in student loans which is the miminmum and I try to pay $200 extra a month when I can, rent $835 for small ass apartment. Plus phone bill, car insurance, and credit card debt obtained while in school. This coming year I’ll start paying for my health care (was under my parents ) quote obtained shows i’ll be paying $250 for health care I use but once a year and that’s the cheapest. Now tell me how that’s affordable Health? I don’t mind a $100 but $250 for is not affordable. I’d rather put that towards student loans. The more you make, the more you pay… Way to keep graduates struggling..
Make sure to look into Medicaid and Marketplace options. Costs are based on MAGI. That means it can be a struggle after expenses, but do make sure you are getting assistance. $250 sounds like darn near full price.
the whole things a huge joke…im not payin 300 dollars a month to have to than pay more money to see a doctor…fuck the penalty..i pay 400 or so in student loans and every other bill…i make 48000 and 22percent goes to taxes…how the hell you expect me to live confortable on 600 a month expendable income..no returement…thanks america…take the penalty instead
I am in the same exact boat. Plus about 40% of my gross pay is garnished in wages. My health plan shot up in 2016 from $135 a month to $285 a month, oh and since I was on autopay Blue Cross Blue Shield of GA didn’t bother to confirm the change with me verbally. I called them and they said they sent out a letter and it came back to them. I went by the bank and put a stop payment on them as soon as I found out. I don’t know why it’s called the affordable care act. I am looking at short term health plans now.
We were paying $360 in health care insurance premiums, up to $783 in 2016, now in 2017 going up to $1100 for 2 healthy adults and 1 healthy baby. While already paying $600 in student loan debt each month. I don’t understand why student loan debt is not favored into your income when determining insurance premiums. Hopefully this will be improved under the new presidency. This is NOT “affordable” health care.
What the democrat government is saying is that they are doing a blatant money grab from students and graduates. Who need to sacrifice their financial stability present and future to make health insurance companies happy and flush with cash
There is only one government in America.
Seriously? My employer offered me healthcare at what is considered by the government a reasonable price (less than 8.05% of my household income). I refused, because I pay over $600 per month in student loans and am therefore struggling to make ends meet despite having a decent job. Oh, and the health insurance offered by my employer at that “reasonable price”? About $7,000 in deductible. How does this help me? I’m healthy, young, active; I have never spent more than $1,000 in medical expenses in a year. I’m all for universal healthcare, but that is not what we have. We have a system where healthy people are forced to pad the profit margins of the despicable insurance industry.
I hear you, when you look at debt everything stops making sense. You can’t write off debt from your MAGI, but costs are based on MAGI. This for me is one of the big sticking points of the ACA.
I think it is fair that healthy people pay into the system, insurance has been around forever and makes sense, I don’t however think the essentially should be resulting in wild profits while everyone suffers. Lots of work to be done for sure.
I am a full-time doctoral student living off of new Federal student loans that I get each semester. After my tuition is paid, my university direct deposits into my checking account a total of $16,000 year, and this is what I pay my bills with. However, if I understand correctly, Obamacare does not count my student loan money as taxable income, and therefore I do not qualify for any obamacare Premium Tax Credits. Therefore, is my only option to try to apply for medicaid? (I can get health insurance through my university, but the premiums are almost $300 a month, which I cannot afford.)
We were paying $360 in health care insurance premiums, up to $783 in 2016, now in 2017 going up to $1100 for 2 healthy adults and 1 healthy baby. While already paying $600 in student loan debt each month. I don’t understand why student loan debt is not favored into your income when determining insurance premiums. Hopefully this will be improved under the new presidency. This is NOT “affordable” health care.