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.
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.