Every January, the United States Department of Health and Human Services publishes its annual update to the U.S. poverty guidelines for income (also commonly referred to as the “Federal Poverty Level” or “FPL”). The annual adjustments reflect changes to the Consumer Price Index (CPI), a common measure of inflation (and usually go up). These updates have been published for 2021.
If you’re making good money, this may seem irrelevant to you. However, there is a good chance that at some point in your life that may change. And even if it’s never relevant to you, there is a good chance that it may be relevant to someone in your life. Everyone should have at least a vague familiarity with the U.S. Federal Poverty Level (FPL) guidelines, as no less than 31 federal programs use them (or a multiple of) to determine eligibility requirements and assistance. Additionally, many state and local programs use them as well.
Some of these programs, including the Affordable Care Act (aka “Obamacare”), have subsidy or assistance cliffs, meaning that once you earn more than a specified amount, your Premium Tax Credit or other assistance can drop dramatically or disappear altogether. Not knowing these cliff thresholds could literally cost you or your loved ones thousands of dollars.
Aside from the ACA, a small sample of widely used federal programs that use the Federal Poverty Level guidelines (or some multiple of) include:
- Head Start: pre-K education and care
- Medicare: Prescription Drug Coverage
- Children’s Health Insurance Program (CHIP)
- Community Service Block Grant
- Low-Income Home Energy Assistance Program (LIHEAP)
- Supplemental Nutrition Assistance Program (SNAP), aka “food stamps”
- National School Lunch Program: for free and reduced-price meals
- School Breakfast Program: for free and reduced-price meals
2021 Federal Poverty Level (FPL) Guidelines
The 2021 Federal Poverty Level (FPL) guidelines are dependent on the number of people in your household and where you live (Alaska and Hawaii differ from the other 48 states + DC). The guidelines are as follows:
|Family Size:||48 Contiguous States & D.C.:||Alaska:||Hawaii:|
|each additional person, add:||$4,540||$5,680||$5,220|
It’s important to note, as the Federal Register states,
This notice does not provide definitions of such terms as “income” or “family” as there is considerable variation of these terms among programs that use the poverty guidelines. The legislation or regulations governing each program define these terms and determine how the program applies the poverty guidelines. In cases where legislation or regulations do not establish these definitions, the entity that administers or funds the program is responsible to define such terms as “income” and “family.” Therefore questions such as net or gross income, counted or excluded income, or household size should be directed to the entity that administers or funds the program.
In other words, there isn’t a uniform Adjusted Gross Income (AGI) or Modified Adjusted Gross Income (MAGI) definition across each federal program, because nothing is ever easy.
Federal Poverty Level & the Affordable Care Act
The Affordable Care Act (aka “Obamacare”) demands its own section, since many parts of the program (including Medicaid Expansion and CHIP) are so closely tied to multiples of the Federal Poverty Level. Those multiples are significant, particularly when determining the ACA Premium Tax Credit amounts on Health Insurance Marketplace plans at healthcare.gov and affiliated state plans.
- 138% = maximum income eligibility for Medicaid and CHIP in states that expanded Medicaid as part of the Affordable Care Act implementation (some states may vary)
- 100% – 250% = eligibility range for cost sharing reduction subsidies on “Silver” plans bought on the Health Insurance Marketplace
- 100% – 400% = eligibility range for the ACA Premium Tax Credits on Health Insurance Marketplace plans
In order to calculate the amounts, multiply the FPL income amounts by these multiples (i.e. 138% = 1.38X).
For the ACA, note that these amounts are based on the Modified Adjusted Gross Income (MAGI) in your household (you + spouse, if applicable). For more info on the ACA Premium Tax Credit, check out the instructions to IRS Form 8962 for more info. You’ll need to complete Form 8962 in order to claim the ACA premium tax credit. And for more info on the ACA, check out my ACA open enrollment article and my breakdown of health insurance options for newly uninsured individuals.