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Tag: subsidies

Apparently my family isn’t eligible for subsidies in the Marketplace because I am eligible for self-only coverage at work that is considered affordable and my family is also offered coverage but the cost of family coverage is not affordable. But we can’t afford to buy Marketplace coverage on our own. Will I have to pay a penalty because my family members are uninsured?

No. Starting in 2019, there is no tax penalty for not having health insurance.

I entered the U.S. lawfully and I’m over 65, but I don’t qualify for Medicare. Can I apply for coverage and subsidies in the Marketplace? I hear premiums can be higher based on age. How much higher can my premium be if I’m over age 65?

Yes, you can purchase Marketplace coverage and qualify for subsidies based on your income. Premiums for Marketplace plans can vary by age unless States decide otherwise. In most states, your premium (before taking into account tax credits) could be up to three times that charged for somebody in their early 20s. Several states prohibit age adjustments to premiums or require lower age adjustments.

My parents are self-employed and buy coverage through the Marketplace. They earn too much to qualify for subsidies. I’m 24 and only earn $30,000 a year (about 255% of FPL.) My parents don’t claim me as a tax dependent, I file my own return. Can I be covered as a dependent under their Marketplace policy? If so, can I qualify for a premium tax credit and apply that to their premium?

Yes, you can be covered as a dependent up to age 26 on your parent’s Marketplace policy. If your parents don’t claim you as a tax dependent (and you file independently), then your eligibility for premium tax credits will be based on your income alone. With your income at roughly 250% FPL, you will qualify for a premium tax credit. Once you know the amount, you can decide to sign up for a Marketplace policy on your own, or be covered as a dependent on your parent’s policy until you are 26. If you enroll in your parents’ plan, you can elect to have your premium tax credit paid directly to your parents’ insurer each month, or you can claim it on your tax return later when you file.

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

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?

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.

How much are the cost-sharing subsidies?

That depends on your income and where you live. To give a general idea, a typical Silver plan might have an annual deductible of $4,000, for example, and an annual out of pocket limit on all cost sharing of $7,900. But if your income is between 100% and 150% of the federal poverty level, the cost-sharing reductions will modify a Silver plan so that the annual deductible might be closer to $250 and the annual out-of-pocket limit on all cost sharing would be no more than $2,600.

If your income is between 150% and 200% of the federal poverty level, the cost-sharing reductions will modify the Silver plan so that the annual deductible might be around $800 and the annual out-of-pocket limit would be no more than $2,600.

If your income is between 200% and 250% of the federal poverty level, the cost-sharing reductions will be more modest. At this income level, your annual out-of-pocket limit will be reduced to no more than $6,300.

Check the Marketplace website for more information about cost sharing reductions in Silver plans in your area based on your level of income.

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?

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.

I’m divorced and I pay alimony to my ex-spouse. Should I deduct that from my income in determining my eligibility for subsidies?

For divorces after December 31, 2018, alimony payments are no longer deductible for the paying spouse and alimony is not included as income for the recipient spouse.

For pre-2019 divorces, old tax rules apply.  The paying spouse can deduct alimony payments from income and the recipient spouse must report alimony payments as income on the federal tax return.  However, divorced couples have the option of modifying their pre-2019 divorce agreement to adopt the new tax rules.

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