For the purposes of qualifying income levels for subsidy in exchange enrollment, is that 9.5% of income calculated on gross wages or net?
In order to qualify for a subsidy in an exchange, an individual must meet the following criteria:
1. the individual must have an income that is less than 4x the federal poverty level and
2. the individual must not have access to minimum affordable coverage through an employer.
In 2012-2013, the federal poverty levels for an individual and a family of four are $11,170 and $23,050, respectively. If household income is less than $44,680 for an individual or $92,200 for a family of four, they could qualify for a subsidy in the exchange if they are not offered minimum affordable coverage in an employer-sponsored plan.
Coverage in an employer-sponsored plan is considered less than minimum value if the actuarial value of the plan is not at least 60 percent, and coverage is deemed “unaffordable” if the plan requires a premium contribution for single coverage that exceeds 9.5 percent of the employee’s household income for the taxable year.
For purposes of this test, the household income is defined as adjusted gross income.
Question submitted by Chip