Slash Your 2025 Health Insurance Premiums to $10 or Less By Doing This Now

With open enrollment underway, millions of people can purchase health insurance through the Affordable Care Act (ACA) Marketplace for $10 per month or less, according to the Centers for Medicare & Medicaid Services.

Your premiums could be this low thanks to subsidies in the form of premium tax credits. While 92% of shoppers qualified for a tax credit in 2024, whether you’re eligible and how big your tax credit could be depends on your household income. Other types of subsidies could lower your costs when you receive care.

Let’s look at what the premium tax credit is, how to apply for it when you’re shopping for an Obamacare health insurance plan, and how much you can expect to receive.

Apply for Premium Tax Credits to Save Monthly

When you’re shopping for a health insurance plan, the premiums you see aren’t necessarily what you’ll end up paying. With premiums increasing by 4% for 2025, it’s important to understand how premium tax credits can dramatically lower your costs.

What Is the Premium Tax Credit?

The premium tax credit reduces your tax obligation by a certain amount, calculated based on how much of your household income will be used to pay your monthly premiums. It’s also refundable, meaning that if the credit amount exceeds what you owe in taxes, you can still receive the excess as part of your tax refund.

You’ll have the option to pay your health insurance premiums out of pocket and claim the premium tax credit when you file your tax return in the future, or to receive an advance premium tax credit (APTC) that lowers your insurance premiums throughout the year.

The amount of the premium tax credit you’re eligible for is determined by the degree to which your household income falls within the federal poverty level guidelines. Prior to 2021, only household incomes that exceeded 100% of the poverty line but were lower than 400% of the poverty line were eligible.

That changed with the signing of the American Rescue Plan in March 2021, which removed income limits and capped health insurance marketplace premiums at 8.50% of income.

According to the Centers for Medicare and Medicaid Services (CMS), in plan year 2024, almost 75% of enrollees who selected the lowest-cost plan in their chosen metal level paid $10 or less after receiving the APTC. CMS expects roughly the same number of enrollees to pay that amount in plan year 2025.

These enhanced subsidies were extended through 2025 by the Inflation Reduction Act. However, the expanded benefits could expire in 2026 if Congress doesn’t extend them again. 

What Information Do You Need to Apply?

You can apply for health insurance coverage on Healthcare.gov or, if your state runs its own marketplace, on your state’s site. To determine your eligibility for the premium tax credit, you’ll need to enter your household size and income information during the application process.  

You’ll likely have to verify a lot of information, too, such as your Social Security number, sources of income, and current health insurance coverage for each family member. In some cases, you may need to submit documents such as prior tax returns.

You should get an estimate of how much you qualify for before you complete the application process. If you select the APTC, it will be applied to the premiums of the health care plan you choose as you’re scrolling through your options.

What Happens After You Apply?

Once you apply, your application will be pending until it can be reviewed by the department that runs the exchange you applied through, whether it’s state or federal. After approval, you’ll need to pay your first premium. If the insurer you selected allows you to pay online, you can do so by going through your federal or state marketplace account, which may redirect you to the insurer’s own payment portal.

Keep in mind that any changes in your income during the year could affect how much of the APTC you can claim, so when you file your tax return, you may need to reconcile the amount you received in subsidies against what you should have received based on the income you actually earned. If your income was more than you estimated for the plan year, you may need to pay back some of the credit; but if your income fell, you might be eligible to file for additional premium tax credits, which you’ll receive as part of your tax refund.

Check Your Eligibility for the 2025 Premium Tax Credit

To check your eligibility for the 2025 premium tax credit, the IRS offers this handy tool. You’ll need to enter your household size, adjusted gross income for yourself and any dependents, and each family member’s health insurance status.

Choose a Silver Plan for More Possible Subsidies

Although you can use your tax credit on any kind of plan you want, if you choose a silver marketplace plan, you may be eligible for a cost-sharing reduction, which can help lower your out-of-pocket costs.

That means you could pay a lower deductible, copay, or coinsurance when you receive care. Some plans also offer lower out-of-pocket maximums. These savings are applied when you use your health insurance to pay for a covered medical service, such as paying for a procedure or visiting the doctor.

Note that cost-sharing reductions only apply to households with income between 100% and 250% of the federal poverty line.

Federal Poverty Guidelines for 2025

The federal poverty guidelines determine how much your family is eligible for in health insurance premium subsidies. The guidelines are adjusted each year to account for inflation.

The table shows how various levels of modified adjusted gross income (MAGI) correspond to the federal poverty guidelines based on the number of people in the household. So, for instance, if your MAGI is $15,060 and you live alone, you’re at 100% of the federal poverty level (FPL). If your MAGI is $60,240, you earn four times the FPL.