Each year, the federal government releases an updated federal poverty guidelines chart. This helps you understand if your household income qualifies you for several types of federal aid.
This article will answer common questions about federal poverty guidelines, including what the 2023 guidelines are, how they’re calculated, and how they are used.
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What are federal poverty guidelines?
The federal poverty guidelines, also known as the federal poverty level (FPL), measure a household's poverty status based on its annual income. The FPL doesn’t look at just the income you take home—instead, your FPL is based on your modified adjusted gross income (MAGI).
Where you fall on the FPL will change yearly because the guidelines are adjusted annually for inflation. The United States Department of Health and Human Services (HHS) releases the poverty guidelines at the beginning of each year.
How do you calculate the federal poverty level?
The Department of Health and Human Services calculates the federal poverty guidelines based on the United States Census Bureau's poverty thresholds released in the previous year.
A poverty threshold is determined based on a family's total income. If total household income is less than the federally set family income threshold, it's considered to be in poverty. It's calculated using income before taxes and is updated for inflation using the Consumer Price Index.
Once the Census Bureau releases its numbers for the previous year, the Department of Health and Human Services uses this information to calculate the federal poverty level based on family size.
How does the IRS use the federal poverty guidelines?
The IRS uses federal poverty guidelines to determine your eligibility for several federal programs, including Medicaid, premium tax credits, and others. Let's go over each in more detail.
Medicaid
To qualify for Medicaid, your income must be no more than 138% of the FPL. Depending on where you live and how many people you have in your household, that number will look slightly different for everyone.
For example, a single adult living in California must make less than $20,130 a year to qualify1 for Medicaid. However, an individual living in Hawaii must earn less than $23,143 to qualify.
You can check the 2023 FPL guidelines chart below to see if you're eligible for Medicaid based on your home state and household size if your state has expanded Medicaid available.
If you reside in Puerto Rico, Medicaid uses a local poverty level instead of the FPL to determine eligibility. Additionally, the federal matching assistance percentage (FMAP) rate is applied until it reaches the Medicaid ceiling or the Affordable Care Act (ACA) funds granted to Puerto Rico run out.
Premium tax credits
Another important use of the FPL is determining whether health insurance purchased through the federal or state-run markets is affordable and whether or not you're eligible for premium tax credits.
Premium tax credits were created by the Affordable Care Act to help individuals pay for their marketplace health insurance premiums, either as an advance credit each month or on their tax returns.
Before Congress passed the American Rescue Plan in 2021, the government only considered an insurance policy affordable if the annual cost was between 2% and 9% of your income, depending on where you fell on the FPL. You could receive a premium tax credit to lower your health insurance cost only if your income fell between 100% and 400% of the FPL.
In 2022 Congress passed the Inflation Reduction Act. This extends the American Rescue Plan’s subsidies through 2025.
The American Rescue Plan and the Inflation Reduction Act mandate that all Americans pay at most 8.5% of their income for health insurance. This increased the number of Americans eligible for premium tax credits and how much they could receive.
For example, people who earn between 100% and 150% of the FPL are now eligible for zero-premium coverage. Before, this group had to pay 2% or more of their income toward premiums.
Other programs
While determining eligibility for Medicaid and premium tax credits are the main two reasons the IRS will use federal poverty guidelines, several other programs are available to low-income families that fall below a certain point on the FPL.
Here are just a few programs you may qualify for depending on your income:
- Supplemental Nutrition Assistance Program2 (SNAP)
- More commonly known as food stamps, SNAP provides eligible people with a benefits card to buy groceries
- You may qualify for SNAP benefits if your gross monthly income is at or below 130% of the FPL your net income is at or below the poverty line, and your assets fall below certain limits3
- Children’s Health Insurance Program4 (CHIP)
- CHIP offers free or low-cost medical and dental care to uninsured children up to age 19 whose family income falls below a specific limit
- Low-Income Home Energy Assistance Program5 (LIHEAP)
- LIHEAP provides energy assistance and weatherization programs
- Temporary Assistance for Needy Families6 (TANF)
- TANF programs provide cash assistance for a limited time to low-income families working toward self-sufficiency
- Head Start7
- Head Start offers early childhood education, health nutrition, and parent involvement services for free or at a reduced cost
- National School Lunch Program8
- Helps provide free or reduced-cost lunches to children in need—reduced price meals are calculated using 185% of FPL and free lunches using 130% FPL
What are the current poverty guidelines for 2023?
You can find the current federal income guidelines in the tables below, which have been split between the lower 48 states and the District of Columbia, Alaska, and Hawaii.
The 48 contiguous states and D.C.
|
Number of people in your household |
2022 income numbers |
2023 income numbers |
Medicaid eligibility (138% of the FPL) |
|
1 |
$13,590 |
$14,580 |
$20,130 |
|
2 |
$18,310 |
$19,720 |
$27,214 |
|
3 |
$23,030 |
$24,860 |
$34,307 |
|
4 |
$27,750 |
$30,000 |
$41,400 |
|
5 |
$32,470 |
$35,140 |
$48,493 |
|
6 |
$37,190 |
$40,280 |
$55,586 |
|
7 |
$41,910 |
$45,420 |
$62,680 |
|
8 |
$46,630 |
$50,560 |
$69,773 |
|
9+ |
Add $4,720 per additional member |
Add $5,140 for each additional person |
- |
Alaska
|
People in your household |
2022 income numbers |
2023 income levels |
Medicaid eligibility (138% of the FPL) |
|
1 |
$16,990 |
$18,210 |
$25,130 |
|
2 |
$22,890 |
$24,640 |
$34,003 |
|
3 |
$28,790 |
$31,070 |
$42,877 |
|
4 |
$34,690 |
$37,500 |
$51,750 |
|
5 |
$40,590 |
$43,930 |
$60,623 |
|
6 |
$46,490 |
$50,360 |
$69,497 |
|
7 |
$52,390 |
$56,790 |
$78,370 |
|
8 |
$58,290 |
$63,220 |
$87,244 |
|
9+ |
Add $5,900 per additional person |
Add $6,430 for each additional person |
- |
Hawaii
|
People in your household |
2022 income numbers |
2023 income numbers |
Medicaid eligibility (138% of the FPL) |
|
1 |
$15,630 |
$16,770 |
$23,143 |
|
2 |
$21,060 |
$22,680 |
$31,298 |
|
3 |
$26,490 |
$28,590 |
$39,454 |
|
4 |
$31,920 |
$34,500 |
$47,610 |
|
5 |
$37,350 |
$40,410 |
$55,766 |
|
6 |
$42,780 |
$46,320 |
$63,922 |
|
7 |
$48,210 |
$52,230 |
$72,077 |
|
8 |
$53,640 |
$58,140 |
$80,233 |
|
9+ |
Add $5,430 per additional person |
Add $5,910 per additional person |
- |
Table source: Poverty Guidelines, Office of the ASPE9
Are there other ways to save on health insurance?
While these adjustments to the federal poverty guidelines have made it easier to get premium tax credits and other discounts, they don't work for everyone. Your employer may offer a benefit if you don't qualify for advance premium tax credits or Medicaid.
Employers often offer traditional group health insurance policies, but organizations have other benefit options. Health reimbursement arrangements (HRAs) and health stipends are smart ways to save on health coverage.
Through an HRA, you can get the cost of your individual health insurance premium and other qualifying medical expenses reimbursed 100% tax-free through your employer.
A health stipend is another option for organizations of all sizes. Employers reimburse their employees for healthcare expenses much like an HRA, except the reimbursements are taxable. This allows you to coordinate a health stipend with advance premium tax credits to ensure you receive the best benefit possible.
If you’re covered by a high deductible health plan (HDHP), you can also open a health savings account (HSA) to save money for medical expenses. This is funded through employer and employee contributions, whereas an HRA or stipend is funded only by employers.
Conclusion
Understanding federal poverty guidelines and how the IRS uses them is an important step in getting more affordable health insurance, housing, education, and more. Depending on your family size and federal poverty level, you could be eligible for benefits such as premium tax credits and Medicaid.
With the changes made possible by the American Rescue Plan and the Inflation Reduction Act, more Americans have access to the care they deserve at a price they can afford.
This blog article was originally published on March 17, 2021. It was last updated on January 24, 2023.
1. https://www.dhcs.ca.gov/services/medi-cal/Pages/DoYouQualifyForMedi-Cal.aspx
2. https://www.fns.usda.gov/snap/supplemental-nutrition-assistance-program
3. https://www.fns.usda.gov/snap/broad-based-categorical-eligibility
4. https://www.healthcare.gov/medicaid-chip/childrens-health-insurance-program/
5. https://www.acf.hhs.gov/ocs/low-income-home-energy-assistance-program-liheap
6. https://www.acf.hhs.gov/ofa/programs/temporary-assistance-needy-families-tanf
7. https://eclkc.ohs.acf.hhs.gov/
8. https://www.fns.usda.gov/nslp
9. https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines
