Define "premium subsidy."

A premium subsidy refers to financial assistance that is provided to help lower-income individuals or families afford health insurance premiums. This support is often specified in various healthcare programs, including those established under the Affordable Care Act (ACA). The purpose of a premium subsidy is to reduce the overall cost that individuals must pay for their insurance coverage, thereby making it more accessible and affordable for those who might otherwise find it financially burdensome.

In the context of health insurance, premium subsidies can significantly ease the financial strain on eligible individuals, allowing them to secure coverage that meets their healthcare needs. The determining factors for receiving premium subsidies typically include income level and household size, which are evaluated against the federal poverty level.

The other choices do not reflect the meaning of a premium subsidy. A penalty for late premium payments pertains to charges incurred due to delayed payments rather than financial aid. A type of health insurance plan that provides reduced rates for young adults describes a specific policy structure rather than a financial subsidy. Discounts for members of organizations are price reductions based on group membership instead of income-based assistance. Thus, the correct definition of a premium subsidy is accurately captured by indicating it as financial assistance for lower-income individuals to help cover health insurance premiums.