What form do ACA (Obamacare) health insurance subsidies take?

[Linden_Arden]

Are they tax credits?

Direct payments to the insurer? Or maybe to the individual?

Something else?

Thanks.

[jasg]

Tax Credits. At least that is what the various info sites say.

[Jas09]

Yup, tax credit.

[lazybratsche]

For some reason I thought that the subsidies for plans purchased through health care exchanges would be paid directly to the insurer.

Googling…

Aha, here we go. Straight from the horse’s mouth:

In the Health Insurance Marketplace you may be able to lower the costs of your health insurance coverage by paying lower monthly premiums. You’ll see the amount of savings you’re eligible for when you fill out your Marketplace application after October 1, 2013. Prices shown for insurance plans will reflect the lower costs.

These lower costs are handled with a tax credit called the Advance Premium Tax Credit. But these tax credits can be applied directly to your monthly premiums, so you get the lower costs immediately.

[Jas09]

Ah, good find! Thanks for the correction.

[dracoi]

Basically, all of the answers are correct.

If you apply to the exchanges and calculate your advance premium (using estimates of income), then the government pays it directly to the insurance company. When you do your tax return, the credits are recalculated using actual income. If there’s a difference, you’ll pay it back or receive an additional refund.

For someone who never received the advance premium credit, they only see a tax credit when they complete their return and that will be refunded directly to them. Nothing is paid directly to the insurer in that case.

[gnoitall]

@lazybratsche

For some reason I thought that the subsidies for plans purchased through health care exchanges would be paid directly to the insurer.

Googling…

Aha, here we go. Straight from the horse’s mouth:

That’s good to know.

I couldn’t believe the “tax credits” answer. There are almost certainly millions who live paycheck to paycheck and wouldn’t be able to afford full-priced premiums, even if they’d get a lot reimbursed next year. Frankly, I’ve been there. I’d be in the hole for months, and then the tax refund would be a windfall, but I’d still be behind, and getting behinder, every month.