December 9, 2013
In order to find out if you qualify for a tax subsidy, you can use this subsidy calculator. In general, it is very accurate, but to get your final subsidy ruling, you must go through the application process at healthcare.gov.
If you definitely do NOT qualify for a subsidy, you probably just want to go directly through a private insurer to get coverage for next year, avoiding the pitfalls and problems reported about the government website. We can provide you with applications, information and advice on all of these plans.
The plans on the Marketplace are the same as the ones offered directly from insurers and will cost the same on or off the Marketplace if you do not qualify for a subsidy.
Applying for a health insurance tax subsidy
If you do qualify for a tax subsidy, you will want to apply for your “Eligibility” at www.healthcare.gov. Once you input all of your income and household information, you will receive a PDF document from the website showing the amount of subsidy you are entitled to each month based on your income. You will then be asked whether you want to use the entire monthly subsidy every month, if you want to use part of it, or if you want to wait until the end of the year and get the entire subsidy as a tax refund. The monthly subsidy is based on your projected 2014 income on your eligibility application.
- If you end up making more than this amount, you will have to pay some of the subsidy back with your 2014 tax return.
- If you make less, you will get a refund.
Some of you may not want to take the entire subsidy each month to have a “cushion” in case you make more than you had anticipated, lowering the amount you would have to pay back. Keep in mind, though, that at any time during the year, you can go back into your healthcare.gov account and change your monthly subsidy amount based on changes in your estimated income for the year.
Signing up for a health insurance plan
Once you have your eligibility results and have chosen how much of that subsidy you want to be applied to your premium each month, you will then be taken to the Enrollment section. Here, you will see your plan options with premiums adjusted for the subsidy amount you chose to use each month. Once you sign up for a health insurance plan, the government will then pay that insurer directly and you will be billed for the lower, subsidized premium. Again, if it ends up that what is taken out of your premium payment ends up being too much or too little based on your final 2014 income, you will pay the adjustment tax or get a refund with your 2015 tax refund. I usually recommend taking all or most of the subsidy upfront and just keep very close tabs on your final income projections throughout the year. If you see the projections heading away from their original amounts, adjust your subsidy through your healthcare.gov account.
As always, Kennon Insurance Consultants can help you through this entire process and make sure you are comfortable with your health insurance plan for 2014.