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how the health insurance subsidy works

Figure out how your income compares to FPL.
Find your expected contribution rate in the table below.
Calculate the dollar amount you’re expected to contribute.
Find your subsidy amount by subtracting your expected contribution from the cost of the benchmark plan.

Tom is single with an income of $23,000 per year. FPL for 2016 (used for 2017 coverage) is $11,880 for single people.

To figure out how Tom’s income compares to FPL, use:
income ÷ FPL x 100.
$23,000 ÷ $11,670 x 100 = 194.
Tom’s income is 194 percent of FPL.
Using the table below, Tom is expected to contribute between 4.08 to 6.43 percent of his income. We have to determine what percentage of the way along that spectrum he is with an income of 194 percent of FPL. We do that by taking 194-150 = 44, and then dividing that by 50 (the total difference between 150 and 200 percent of FPL. 44/50 = 0.88, or 88 percent.
Next, we determine what number is 88 percent of the way between 4.08 and 6.43. We use 6.43-4.08 = 2.35, and take 88 percent of that. 2.35 multiplied by 0.88 = 2.07. So we start with 4.08 and add 2.07, and that gets us 88 percent of the way along that range. 4.08+2.07 = 6.15

Tom is expected to pay 6.15 percent of his income for the benchmark silver plan.
To calculate how much Tom is expected to contribute, use this equation:
6.15 ÷ 100 x income= Tom’s expected contribution.
6.15 ÷ 100 x $23,000 = $1,414.50.
Tom is expected to contribute $1,414.50 for the year, or $117.88 per month, toward the cost of his health insurance. The premium tax credit subsidy pays the rest of the cost of the benchmark health plan.
The benchmark health plan at Tom’s health insurance exchange costs $3,900 per year or $325 per month. Use this equation to figure out the subsidy amount:
Cost of the benchmark plan – expected contribution = amount of the subsidy.
$3,900 - $1,414.50 = $2,485.50.
Tom’s premium tax credit subsidy will be $2,485.50 per year or $207.13 per month.
If Tom chooses the benchmark plan, or another $325 per month plan, he’ll pay $117.88 per month for his health insurance. If he chooses a plan costing $425 per month, he’ll pay $217.88 monthly for his health insurance. If he chooses a plan costing $225 per month, he’ll only pay $17.88 per month for his health insurance.