IRS Asks for Documentation
If you signed up for insurance coverage as a Healthcare.gov subscriber and received a subsidy, the IRS may come knocking on your door asking more questions about your income eligibility for those subsidies. I know I have worked with many clients who had major changes in income in 2014 in comparison for 2013 but did not necessarily have the documentation to prove the accuracy of their 2014 income estimate. In the upcoming months, the IRS may be looking for some documentation to prove that those estimates are reasonable.
Read this great summary from the New York Times regarding the questioning: Thousands to be Questioned on Eligibility for Health Insurance Subsidies
If you do get any written or verbal questions from the IRS and need help in figuring out how to handle the inquiries, please contact me. I honestly do not know how widespread this questioning will be so I would not worry too much at this point.
Income Change Updates
DO REMEMBER that you need to update your income at Healthcare.gov if your 2014 income looks like it will be significantly higher or lower than what you estimated. This is particularly important if it looks like your income will be higher that what you estimated originally. Without adjusting subsidies now, you could get hit with a tax bill at the end of the year for repayment of subsidies paid out based on that lower estimate. On the website, you would want to click on your current plan and “report a life change”. This will let you go back through your old application and update the income information.
As always, Kennon Insurance is here for any questions!