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Category: What To Know

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 estimate my income next year will be 140% of the federal poverty level, so I need a premium tax credit and I need to have it all paid in advance. If, by the end of the year, it turns out my annual income was even lower – 130% of the federal poverty level – so I could have enrolled in Medicaid, will I have to pay back the premium subsidy?

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

No, your final premium credit amount will be determined based on your income for the year as reported on your tax return. The fact that it ended up being 130% of the poverty line does not mean you have to pay back the premium tax credit you received. In fact, your final credit amount will likely be larger than the amount you received in advance.

What’s the most I would have to repay the IRS?

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

That depends on what your actual annual income turns out to be. If your income goes over 400% FPL you will have to repay the full advance premium tax credit amount you received. If your actual annual modified adjusted gross income is higher than what you projected but less than 400% FPL, there are repayment limits based on income. On your tax return, you will compare the actual amount of advance premium tax credit you received during the year to the amount you should have received based on your modified adjusted gross income, and then pay back the excess up to the repayment limit.

My income is uneven during the year. Some months I earn very little, other months are much better. I think my annual income will be low enough to qualify for subsidies next year, but I’m not sure. What if I’m wrong?

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 based on estimated income and your actual income for the 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.

What if I don’t know what my income will be next year?

Written by HummingbirdinsAdmin on . Posted in Frequently Asked Questions.

When you apply for the premium tax credit, you will be asked to estimate your expected income for the upcoming year. Often a good place to start is to consider what your income is this year, or what income you reported on your tax return last year. However, if your circumstances have changed since then, for example, if you recently lost your job, you should make your best estimate of what your income will be next year. The health insurance Marketplace will compare your income estimates against records at the Internal Revenue Service, Social Security Administration and other sources. If your estimate and official records don’t match, or aren’t sufficiently close, but you meet all other eligibility requirements, you might be asked to provide documentation to support your income projections.

In general, if the income amount shown on that official record is more than 25% or $6,000 (whichever is greater) higher than the amount you put on your application, you might receive a data match inconsistency notice from the Marketplace and you’ll need to provide more documentation.

If you don’t have that documentation handy, the Marketplace will provide subsidies for up to 90 days while you gather and submit your documentation for verification. It is very important that you provide any documentation requested by the Marketplace in a timely manner; if you don’t your subsidies might be reduced or terminated.

Keep in mind that if you estimate your income incorrectly and end up claiming more help than you are eligible for, you may have to pay back some or all of the premium tax credit you received. If you over-estimate your income and end up claiming less help than you are entitled to, the difference will be refunded to you when you file your income taxes the following year.

I’m raising my grandchild and claim her as a dependent. If I apply for Marketplace subsidies, will we be considered a household of two?

Written by HummingbirdinsAdmin on . Posted in Frequently Asked Questions.

Yes, you will be considered as a household of two for both Medicaid and premium tax credits. However, your grandchild will be considered as her own household for Medicaid and CHIP and your income will not count in determining her eligibility for these programs. Assuming she does not have her own income she will likely be eligible for Medicaid or CHIP and not eligible for premium tax credits for coverage in the Marketplace. You could of course purchase coverage for her in the Marketplace but you would not be eligible for a premium tax credit to help pay for her plan.  Whether you could include her on your policy would depend on what insurers offer in your Marketplace.

I understand eligibility for premium tax credits is based on our household income. Who counts as being in my household?

Written by HummingbirdinsAdmin on . Posted in Frequently Asked Questions.

A household, for purposes of determining eligibility for premium tax credits, includes any individuals whom you list on the federal tax form. That includes yourself, your spouse, and dependents. Dependents include children who meet certain requirements:

  • U.S. citizen or resident of the U.S, Mexico or Canada
  • Live with you for more than half the year
  • Under age 19 at the end of the year (or under age 24 if a full-time student); a child is considered to live with the taxpayer while he or she is temporarily away from home due to education, illness, business, vacation or military service.
  • Doesn’t provide more than 50% of his or her own support

Other adults who can count as dependents include relatives, in-laws or full-time members of your household who:

  • Are a U.S. citizen or resident of the U.S, Mexico or Canada
  • Receive more than 50% of their support from you
  • Are related to you or live in your home all year
  • Make less than $4,150 (in 2018), generally excluding Social Security

A household can include individuals even if they are ineligible for tax credits (for example, individuals who are not lawfully present). Your household size can change during a year due to family changes, including the birth or adoption of a child, a child moving out of the house, and divorce or legal separation. When such changes take place you should report them to the Marketplace as they may affect your eligibility for subsidies. Family changes also can trigger a special enrollment opportunity when you can change health plans, even outside of the regular Open Enrollment period.

Note that the definition of household for determining eligibility for premium tax credits sometimes differs from the definition of household for determining Medicaid eligibility. Ask your Marketplace for more information about who should be counted in your household.

My spouse and I have a teenage daughter who has a part-time job. Do we count her income as part of our household income when we apply for Marketplace subsidies?

Written by HummingbirdinsAdmin on . Posted in Frequently Asked Questions.

The answer depends on whether she earned enough income to be required to file a federal income tax return on her own. Generally, kids who qualify as tax dependents aren’t required to file a federal income tax return or pay taxes on their income if they earned less than a threshold amount ($12,000 in 2018.) If your daughter earned less than that, you would not count her income as part of your household income.