Health Insurance Options for Low-Income Families

Health insurance helps cover routine and unexpected medical costs, but for low-income families, it may seem out of reach. Monthly premiums, deductibles, copayments, and coinsurance costs can quickly add up, leaving families uncertain of the best approach to get the care they need without breaking the bank. The average cost of health coverage for families was $22,221 in 2021, representing a 4% increase from the previous year and a 22% increase since 2016.

However, health insurance can be attainable for many income levels. You may be eligible for plans offered on the Health Insurance Marketplace, or government-administered programs like Medicaid and the Children’s Health Insurance Program (CHIP). Learn about health insurance options for low-income families, including care types offered, costs, and criteria. 

Health Insurance Options For Low-income Families

When it comes to health insurance for low-income families, there are three general options: private insurance purchased through the Health Insurance Marketplace, federally-administered Medicaid, and CHIP.

Health Insurance Marketplace

The Health Insurance Marketplace was created under the Affordable Care Act (ACA) in 2010. Also called Obamacare, the ACA aimed to make health insurance available to more people in the United States. To help do this, the ACA expanded Medicaid to cover all adults with income less than 138% of the Federal Poverty Level (FPL) and supported new care delivery methods that help to lower overall costs. The ACA also enacted subsidies, also called premium tax credits, which help lower-income households afford care. These credits apply to households with incomes between 100% and 400% of the FPL. 

The Marketplace was created to facilitate healthcare shopping and enrollment. Filling out a Marketplace application allows families to find out what types of healthcare they may be eligible for, and they can search and compare plans online. Plans can also be purchased by phone and through a trusted insurance agent. Some states — including California, Colorado, Idaho, and Kentucky — manage their own Marketplace plans.

Average Cost

In 2022, the average premium for a healthcare plan in the Marketplace is $452. 

The premium cost of a Marketplace plan differs based on the insurer, the type of coverage offered, and plan details like deductibles and copayments. For example, a plan with a small monthly premium may appeal to low-income families, but it may have a significant deductible, which is the amount you pay out of your own pocket before the insurance company starts covering costs. This may be cost effective for those who rarely need to see a doctor, but may end up costing more in the long run for those with recurring health needs.

Different plan types also have different coinsurance ratios. Coinsurance is the percentage you pay and the percentage your insurer pays on a medical bill. For example, if your coinsurance is 70/30, your plan pays 70% of eligible costs, and you pay the remaining 30% after your deductible is met.

Different Coverage Types

The type of plan you select also impacts your total costs. In the Marketplace, plans are divided into 4 categories, also called metal types: Bronze, Silver, Gold, and Platinum. These types do not reflect quality of care, but rather the cost of the plans.

Bronze

Of the 4 types, Bronze plans have the lowest monthly premium but the highest costs for care. Bronze plan coinsurance is 60/40, meaning the provider pays 60% of costs, and you pay the remaining 40%. Deductibles for Bronze plans can range from several hundred to several thousand dollars per year. The average premium cost of a Bronze plan in 2022 is $329.

Bronze plans may be a good choice to provide coverage for big emergency medical scenarios, but it would come with higher routine care costs. 

Silver

Silver plans offer a balance of moderate premiums and moderate costs when care is needed and are the most popular choice in the Marketplace. Silver plans split insurance costs 70/30, and deductibles are typically lower than Bronze plans. The average premium cost of a Silver plan in 2022 is $428. 

Silver plans also offer cost-sharing reductions, which are extra savings that could reduce your out-of-pocket costs. When you fill out a Marketplace application, you may be notified of your eligibility for cost-sharing reductions, which are only applicable to Silver plans. Plans at this metal level can be a good choice for those seeking a balance of coverage and cost.

Gold 

Gold plans have a higher monthly premium than Bronze or Silver plans, but you pay less out of pocket when you need care. Coinsurance for Gold plans is 80/20, and deductibles are typically low. The average cost of a Gold plan in 2022 is $462.

These plans are a good choice if you regularly use healthcare services and can afford to pay a higher premium each month for lower costs over time. 

Platinum

Platinum plans have higher monthly premiums than all other tiers but also have the lowest deductibles. Coinsurance for Platinum plans is 90/10. A Platinum plan may work for you if you use a substantial amount of regular healthcare services and may use more urgent services each year.

Overall, Silver plans are likely the best choice for low-income families. Though Bronze plans offer the lowest premium, they also come with high deductibles, which can be difficult to shoulder if you need routine or emergency care. Silver plans have slightly higher premiums, but if you are eligible for cost-sharing reductions, these plans can be a cost-effective choice.

10 Essential Health Benefit Requirements

While different plan types in the Marketplace may offer different care options or additions, the ACA set the 10 essential health benefits that must be offered by all Marketplace plans.

1. Ambulatory patient services: These services include care you receive without being admitted to a hospital. Common examples are diagnostic tests, healthcare consultations, and rehabilitation visits. 
2. Emergency services: Emergency services are services provided by the closest hospital in the case of a medical emergency, even if this hospital is out of your healthcare network.
3. Hospitalization: Hospitalization services include surgery and overnight stays, along with any tests or evaluations conducted while in the hospital.
4. Pregnancy, maternity, and newborn care: Services under this health benefit include pre- and post-birth care, such as prenatal checkups, tests, and consultations, along with post-natal care, such as well-baby checkups and vaccinations. 
5. Mental health and substance use disorder services: Plans also cover mental health and substance use services such as behavioral health treatments such as counseling or psychotherapy.
6. Prescription drugs: Plans offered on the Marketplace must provide at least some coverage for prescription drugs (also called Part D under Medicare). The type and amount covered varies by plan level and provider.
7. Rehabilitative and habilitative services: You are also covered for services and devices that help with injuries or chronic conditions. These might include wheelchairs or other mobility devices along with short-term supports such as braces or visits to a physiotherapist.
8. Laboratory services: Laboratory services include X-rays, blood tests, and other types of assessments to identify health issues. 
9. Preventative and wellness services: For all adults, preventative services include blood pressure screenings, depression screenings, diet consulting, HIV screenings, and immunizations.
10. Pediatric services: Children covered under Marketplace plans receive pediatric care, including oral and vision care, along with doctor visits and vaccines. 

Eligibility

You must live in the United States to enroll in a Marketplace plan. This means citizens living abroad are not eligible for enrollment. You must be also be a U.S. citizen, national, or lawfully present in the country. Eligible immigration statuses include lawful permanent residents (LPRs), refugees, lawful temporary residents, and those with temporary protected status and employment authorization. 

If you are incarcerated or you already have Medicare coverage, you are not able to purchase a plan through the Marketplace. If you are not sure about your eligibility, it is worth filling out an application form on the Marketplace. You will be notified if you are eligible for enrollment in plans as well as if you can receive any subsidies or cost-sharing reductions. 

Subsidies

Subsidies help reduce the out-of-pocket costs of Marketplace plans. Tax credits may reduce the amount you pay each month in premium costs, while other subsidy types can help offset the amount you pay out of pocket in copayments and coinsurance. Popular subsidy types include cost-sharing reductions and advanced premium tax credits.

Medicaid

Medicaid is a healthcare assistance program that helps provide coverage for low-income families. Each state manages its own Medicaid program. Many states also offer Expanded Medicaid, which lets applicants enroll based on their household income alone: if your income is 138% or less of the FPL, your household is eligible for Expanded Medicaid. 

However, these 13 states do not offer Expanded Medicaid: 

• Alabama
• Florida
• Georgia
• Iowa
• Mississippi
• Missouri
• North Carolina
• South Carolina
• South Dakota
• Tennessee
• Texas
• Wyoming
• Wisconsin

In these states, factors such as age, existing disabilities, or persistent medical conditions play a role in eligibility. 

Eligibility

Each state sets it own criteria for Medicaid. To determine if your family is eligible for Medicaid, contact your state’s Medicaid agency directly or apply for a private plan on the Marketplace. If your application indicates that anyone in your household may be eligible for Medicaid, your information will be shared with your state’s Medicaid agency, and they may contact you about enrolling.

Generally, a basic requirement is for income levels to be at or below 133% of the Federal Poverty Line. If you are eligible for Medicaid, mandatory benefits include inpatient and outpatient hospital services, routine doctor visits, laboratory and X-ray services, and home health services. 

Required Documents

To apply for Medicaid, you must provide the following:

• Proof of identification: This includes your driver’s license or passport.
• Proof of citizenship: This includes your birth certificate or green card. 
• Proof of residence: This includes bank statements or pay stubs. 
• Proof of income: This includes rent receipts or copies of the deed to your home.

You may also be asked to provide details about any other health insurance you currently have.

Children’s Health Insurance Program (CHIP)

CHIP is a state-run program that offers healthcare coverage for children in low-income families whose income level is too high for Medicaid but unable to afford a Marketplace plan. In some states, pregnant people also qualify for CHIP. Families can apply for CHIP coverage at any time of the year. 

Eligibility

Children must be under 19 years old, ineligible for Medicaid, living in the state, and meet citizenship or residency requirements to apply for CHIP coverage. To determine if your children are eligible for CHIP, you can contact your state’s Department of Insurance for more information. 

Services covered under CHIP include routine checkups, immunizations, doctor visits, prescriptions, dental and vision care, inpatient and outpatient hospital care, laboratory and X-ray services, and emergency services.

Required Documents

To apply for CHIP,  you may need documents that show your household’s income before tax, any private health insurance information, along with the Social Security Numbers and birthdates of all applicants. 

Cost-sharing Subsidies

Cost-sharing reductions, also called cost-sharing subsidies, reduce plan deductibles, copayments, and coinsurance so that you pay less out of pocket overall. To be eligible for cost-sharing subsidies, you must be able to receive the premium tax credit and have a household income between 100% and 250% of the FPL. These cost-sharing subsidies are only available for Silver Marketplace Plans.

Basic Health Program (BHP)

States have the option to create Basic Health Programs (BHPs), though only New York and Minnesota currently offer them. These programs provide coverage for families who might be eligible for Marketplace plans but whose income may fluctuate above and below the levels of eligibility for Medicaid or CHIP. To be eligible for a BHP, family incomes must be between 133% and 200% of the FPL. In addition, applicants must be U.S. citizens or lawfully present non-citizens who are not be eligible for other assistance programs, such as CHIP or Medicaid.

Premium Tax Credits

Premium tax credits reduce the monthly premiums for health insurance coverage. To receive a premium tax credit, families must have a household income at least equal to FPL, not have access to employer-sponsored health insurance, and not be eligible for other forms of low-cost healthcare, such as Medicare, Medicaid, or CHIP.

Income-based Alternative Options

In addition to Marketplace plans, Medicaid, CHIP, and BHPs, there are also other limited-scope options for healthcare.

For example, the Vaccines for Children (VFC) program provides vaccines for children whose families cannot afford them. The Center for Disease Control and Prevention (CDC) purchases vaccines at a discount and ships them to state and local agencies, who then distribute them among local health centers and doctor’s offices that are registered VFC providers. To be eligible for VFC, children must be younger than 19 years old, and must also be either Medicaid-eligible, uninsured, underinsured, or an American Indian or Alaska Native. Children in the program receive vaccines at no cost.

Depending on your income, you may also be able to access care at a community health center. These centers often provide prenatal care, baby vaccines, general primary care, and referrals for specialized care for families who do not qualify for Medicaid or CHIP but cannot afford a Marketplace plan.