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Category: What To Know

My income is less than 400% of the FPL and I smoke. Will the tobacco surcharge to the premium be covered by my premium tax credit?

Written by Hummingbird Insurance on . Posted in Frequently Asked Questions.

No. A tobacco surcharge is not covered by the health insurance premium tax credits. The premium tax credit will reduce what you have to pay for the regular health insurance premium, but you will have to pay the entire additional tobacco surcharge. For example, if the regular premium for a policy is $200 per month and you qualify for a premium tax credit of $75 but you also use tobacco and so would be subject to a 50% tobacco use surcharge, you would have to pay $225 for that policy ($200 for the regular premium minus $75 for your premium tax credit plus $100 for the tobacco surcharge.)

What does it mean to “use tobacco?” I’m pretty sure my teenager has smoked at least a couple of times. Do I have to pay a higher rate because of her?

Written by Hummingbird Insurance on . Posted in Frequently Asked Questions.

“Tobacco use” means a person has used a tobacco product an average or four or more times per week for the past six months. A state can increase the number of times per week or reduce the “look-back” period to less than six months. Check with your state Marketplace to learn more about tobacco surcharges and how they work.

The surcharge on tobacco users can only be applied to an individual who can legally purchase a tobacco product in the state. Thus, the surcharge does not generally apply to a person under age 18.

Can I be charged higher premiums in the Marketplace if I smoke?

Written by Hummingbird Insurance on . Posted in Frequently Asked Questions.

In most states, yes. Generally, an insurer can charge as much as 50% more for a person who uses tobacco products. For example, if the premium for somebody your age (before any tax credits are applied) would otherwise be $200 per month, if you are a tobacco user your premium could be increased to $300 per month. States can prohibit insurers from applying a tobacco surcharge or further limit the tobacco penalty and some have done so. (For example, California, Massachusetts, Rhode Island, Vermont and the District of Columbia prohibit tobacco rating for their Marketplace plans.] Also, some insurers who do charge more for tobacco users are charging the less than maximum amount they can under the law. Check with your state Marketplace to learn more about tobacco surcharges and how they work.

If you qualify for premium tax credits to reduce the cost of Marketplace coverage, this tax credit amount will be based on the premium before the tobacco surcharge is applied, which means that a smoker must pay the full cost of the surcharge.

I enrolled in a Marketplace policy with premium tax credits in 2018, even though my employer offers health benefits, because the employer coverage was unaffordable (more than 9.56% of my income in 2018). Then mid-year I started a second part-time job. As a result my annual income will be higher than I originally estimated, and, at this higher income, the cost of enrolling in my job-based plan would be less than 9.56% of my income. Unfortunately, I can’t sign up for my employer plan until the next open season. What should I do? When I file my taxes will I be required to pay back my premium tax credits because I had access to affordable job-based coverage after all?

Written by Hummingbird Insurance on . Posted in Frequently Asked Questions.

First, you should report your income change to the Marketplace. The Marketplace will determine your new eligibility for premium tax credits, based on your higher income, and adjust the level of subsidy going forward. If you make this adjustment promptly, it’s likely you won’t receive any more advanced premium tax credit during the entire year than you’re eligible for based on your annual income.

As for the new “affordability” of your job-based coverage option, that won’t be taken into account when you file your taxes. As long as the Marketplace determined you were not eligible for affordable job-based coverage when you initially applied for Marketplace coverage and subsidies, that determination will hold for the remainder of the year. The IRS refers to this as a “safe harbor,” and won’t require you to go back and re-compute the affordability of your job-based coverage at year end when you file your taxes.

How often during the year can I adjust my premium tax credit amount? What documentation is required to make an adjustment? How long after I request the adjustment will it take effect?

Written by Hummingbird Insurance on . Posted in Frequently Asked Questions.

There is no limit to the number of times a person may report income, family or insurance-eligibility changes to the Marketplace. Changes that are reported by enrollees will be verified by the Marketplace. Then the Marketplace will send you a notice (called a redetermination notice) showing your revised eligibility for premium tax credits and cost-sharing reductions. In addition, people can always ask the Marketplace to provide them with a monthly advance premium credit below the amount the Marketplace determines based on the household’s income if they want to minimize the chance of needing to owe money at the end of the year.

The adjustment will take effect by the first day of the month following the date of the redetermination notice. For example, if an enrollee reports a change in income on June 25 and the Marketplace verifies the change and sends a redetermination notice to the enrollee on July 3, the change will be implemented on August 1.

I live in a state that has chosen not to expand Medicaid. When I applied for Marketplace coverage, my income was just above the poverty level, so I applied for and received an advance premium tax credit. What happens if I lose my job toward the end of the year so my annual income will be just under the poverty level? Will I have to pay back the advanced subsidies I’ve received?

Written by Hummingbird Insurance on . Posted in Frequently Asked Questions.

No.  If you were determined eligible for subsidies when you signed up, and your income turns out to be lower, you will not have to repay the subsidies you received.

If I request an adjustment in my Marketplace premium subsidy, how long before that takes effect?

Written by Hummingbird Insurance on . Posted in Frequently Asked Questions.

The adjustment will take effect by the first day of the month following the date of the redetermination notice. For example, if an enrollee reports a change in income on June 25 and the Marketplace verifies the change and sends a redetermination notice to the enrollee on July 3, the change will be implemented on August 1.

Can I adjust the level of subsidy I collect in advance during the year when my income goes up or down? How often during the year can I make adjustments?

Written by Hummingbird Insurance on . Posted in Frequently Asked Questions.

Yes, you can make adjustments during the year whenever you need to. There is no limit to the number of times a person may report income, family or insurance-eligibility changes to the Marketplace. Changes that are reported by enrollees will be verified by the Marketplace. Then the Marketplace will send you a notice (called a redetermination notice) showing your revised eligibility for premium tax credits and cost-sharing reductions. In addition, people can always ask the Marketplace to provide them with a monthly advance premium credit below the amount the Marketplace determines based on the household’s income if they want to minimize the chance of owing money at the end of the year.

My income is uneven during the year. Some months I don’t earn anything, other months are better. I’m pretty sure my income for the coming year will be less than 400% of the FPL so I’d like to apply for premium subsidies. But what if I’m wrong and my income ends up being more than 400% FPL?

Written by Hummingbird Insurance on . Posted in Frequently Asked Questions.

It’s common for income to fluctuate, particularly if you are self-employed, perform seasonal work or have multiple jobs. To achieve the most accurate premium tax credit amount, you should report income changes to the health insurance Marketplace during the year, as they happen. Otherwise, if you claim a premium tax credit during the year and your actual income for the entire year edges over 400% FPL, you will need to pay back the full credit amount. To avoid this result, if you estimate your annual income will be close to 400% FPL, you could also consider waiting until you file your taxes to take all or a portion of the premium tax credit on your tax return instead of receiving advance payments.