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In recent months, ads on social media platforms have been promising viewers a $6,400 subsidy, often targeting consumers who earn less than $50,000. These ads, found on platforms such as TikTok,1 YouTube,2 and Facebook,3 have been flagged by some publications as misleading.4 So what’s the truth? Is the $6,400 subsidy a scam?
Is the government offering a $6,400 subsidy to consumers?
There are, in fact, subsidies available for many people who buy their own individual and family health insurance through the health insurance Marketplace. But if you’re eligible for a subsidy, the government sends the subsidy – actually a tax credit – directly to your health insurance company each month, to cover some or all of the premium that you would otherwise have to pay.5 This is called an advance premium tax credit, or APTC.
The federal government isn’t sending the subsidy money directly to you unless you pay full price for Marketplace health coverage each month and then claim the premium tax credit when you file your tax return at the end of the year. And if a subsidy is paid to your insurance company on your behalf throughout the year, you have to reconcile the amount with the IRS when you file your tax return.
How to spot subsidy scams and misinformation
There are plenty of legitimate ads for health insurance, including ads for Marketplace coverage with premium subsidies. Here are some signs that ads might be scams:
- If an ad is making it seem like you’re just going to get free money to use for gas, groceries or rent, that’s an indication that the ad is misleading or a scam.6
- An ad that promises a specific dollar amount is also misleading, as real health insurance subsidy amounts depend on an applicant’s household income, age and where they live. Although “$6,400 subsidy” is common in these ads, you may also see ads for a $5,200 subsidy7 or various other amounts. But again, real health insurance subsidy amounts are specific to each enrollee, and there are no uniform amounts for health insurance premium subsidies.
- Some of these $6,400 subsidy scam ads are using artificial intelligence (AI) to make it sound like a celebrity or politician is voicing the ad,3 7 so that might also be a sign that the ad you’re watching is misleading.
Learn more about how to avoid scams when shopping for health insurance
The real (Affordable Care Act) Obamacare health insurance premium subsidy
The Affordable Care Act (ACA, or Obamacare) did indeed create a health insurance subsidy in the form of a tax credit for people who buy their own health insurance in the Marketplace (exchange). But unlike most tax credits – which can only be claimed on a person’s tax return,8 – the ACA premium tax credit can be taken in advance, paid directly to your health insurance company on your behalf each month. This is called an advance premium tax credit, or APTC.9
As of early 2024, nearly 21 million people were enrolled in Marketplace health plans nationwide, and 93% of those buyers had APTC paid on their behalf. The average monthly APTC amount was about $536, which works out to a little over $6,400 if the person keeps their Marketplace coverage for the full year.10 This is likely why these ads are using $6,400 as the subsidy amount they reference.
But again, the specifics vary tremendously from one person to another. You can use our subsidy calculator to get an idea of how this works. For example, a 55-year-old in Wyoming (82901 zip code) who earns $30,000 will qualify for a monthly subsidy of $1,395 in 2024 – almost $17,000 if they keep the coverage for the whole year. On the other hand, a 25-year-old in Illinois (60647 zip code) who also earns $30,000 will qualify for a monthly subsidy of $258, or about $3,100 for the whole year.
Another ACA subsidy, known as a cost-sharing reduction (CSR), is automatically built into Silver-level Marketplace plans when an eligible enrollee’s income isn’t more than 250% of the federal poverty level. But just like APTC, this isn’t money that’s sent to the enrollee. If you qualify for CSR and select a Silver Marketplace plan, your out-of-pocket costs for your deductible, copays, and coinsurance will be smaller than they would otherwise be.9 But you won’t receive any money directly.
Some Marketplace health insurers offer rewards programs to encourage their members to do various activities such as taking a certain number of daily steps, creating an online account, or utilizing preventive care benefits like wellness exams and flu shots.111213 Not all insurers offer these programs, and the specifics vary by insurer. Some offer physical prizes, such as a fitness tracker, while others offer cash or gift cards. But these rewards tend to be no more than a few hundred dollars per year in total, and the details of what you have to do to earn them will be clearly spelled out by the plan.
How and when to apply for a legitimate Obamacare health subsidy
If you don’t have access to employer-sponsored health insurance, Medicaid, or Medicare, you likely need to buy your own health insurance. The health insurance Marketplace allows people who buy their own health insurance to compare the options that are available in their area, enroll in coverage, and potentially qualify for income-based subsidies. (Subsidies are not available for plans purchased outside the Marketplace.)
You can start by visiting HealthCare.gov, the Marketplace used in the majority of the states. If your state runs its own Marketplace, HealthCare.gov will direct you there. This ensures that you’re not just picking a website – that may or may not be legitimate – that shows up in an online search.
If you need help enrolling, you can seek help from a trusted health insurance broker or Navigator. You can also apply for subsidies and Marketplace coverage by using an enhanced direct enrollment entity that’s certified by CMS.
But before you provide any information, make sure you trust the website or person assisting you. Your state’s insurance department can be a good resource if you want to confirm that a person or entity is in good standing in the state’s insurance industry.
You can enroll in Marketplace coverage and apply for a health insurance subsidy during the annual open enrollment period (Nov. 1 to Jan. 15 in most states), or during a special enrollment period.
Read our guide to open enrollment to learn more.
You will need to provide personal information, including your Social Security Number, birth date, address, and household income (an ACA-specific calculation). And the Marketplace may ask you to provide documentation to verify details such as your immigration status.14
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.
Footnotes
- “Scam seen across Tiktok promising $6,400 subsidy: How to avoid falling victim” 6 News Knoxville. Feb. 28, 2024 ⤶
- “The YT ad subsidy scam” YouTube. Accessed Oct. 22, 2024 ⤶
- “Fact Check: The government is not giving out $6,400 subsidies, as online posts say” Reuters. Dec. 27, 2023 ⤶ ⤶
- “Fact Check: The government is not giving out $6,400 subsidies, as online posts say” Reuters.com. Dec. 27, 2023 ⤶
- “Saving money on health insurance” HealthCare.gov. Accessed Oct. 24, 2024 ⤶
- “Avoid “free money” from the government scams” USA.gov. Accessed Oct. 24, 2024 ⤶
- “Sorry, no ‘free money’: Biden did not approve a $5,200 subsidy for Americans older than 25” Politifact. Dec. 5, 2023 ⤶ ⤶
- “Credits and deductions for individuals” Internal Revenue Service. Accessed Oct. 24, 2024 ⤶
- “APTC and CSR Basics” Centers for Medicare & Medicaid Services. June 2024 ⤶ ⤶
- ”Effectuated Enrollment: Early 2024 Snapshot and Full Year 2023 Average” CMS.gov, July 2, 2024 ⤶
- “My Health Pays® Rewards Program” Ambetter. Accessed Oct. 24, 2024 ⤶
- “Earn up to a $150 reward with a UnitedHealthcare ACA Marketplace plan” UnitedHealthcare. Accessed Oct. 24, 2024 ⤶
- “Zero in on Rewards” Cigna. Accessed Oct. 24, 2024 ⤶
- “When the Marketplace needs more information” HealthCare.gov. Accessed Oct. 24, 2024 ⤶
See if you are eligible for a legitimate ACA premium subsidy
Most Marketplace enrollees could be eligible for enhanced subsidies through 2025!