Subsidy Scenarios Under the Microscope Healthshare

Subsidy Scenarios Under the Microscope

subsidyPremium subsidies are about to be reconciled once you file your 2014 tax return. And with tax time not too far away, many Americans are beginning to calculate their final income for 2014 to see if they are going to owe the IRS a refund of any advanced premium subsidies received. Do you fall into this category? Let’s look at a few scenarios:

Q: My husband and I separated and filed for divorce in 2014. He has removed me from his health insurance policy, and I have applied and received a subsidy to help pay for a health plan. When I file my taxes, will my husband’s income be included and potentially cause me to lose my subsidy or have to pay it back?

A: First – because the husband’s employer offers health coverage, including spousal coverage, this individual does not qualify for a premium subsidy – even though the husband removed the wife from the policy.

Even if the wife did qualify, there would be another hurdle. When this couple files their taxes, they would likely file as either “married” or “married filing separately.” If the taxes are filed as “married,” then yes, the husband’s income would be included which would determine how much subsidy the wife qualifies for. Subsidies are NOT available for those who file their taxes with a status of “married filing separately.”


Q: I believe I overestimated my income for 2014, which means my advanced premium tax credit is lower than it should have been. I am aware I will receive the difference in the form of a tax refund once I file my 2014 federal return (less any taxes I owe), but will the government go back and re-calculate any cost-sharing assistance I should have received and also reimburse that?

A: Although the IRS will reimburse you for any additional premium tax credits you are due in the form of a tax refund (less any taxes you might owe), cost-sharing is not a refundable benefit.


Q: I overestimated my income for 2014 and now find that my income will fall below the federal poverty limit to qualify for a premium subsidy. What is going to happen?

A: You will be required to pay back a portion of the advanced premium subsidy you received; however, it will be capped at $300 (for individual) due to your income level.


Q: I believe I have underestimated my income for 2014. Will I have to repay my advanced premium tax credit and how much will I have to pay?

A: Yes, when you file your 2014 tax return, the IRS will reconcile your premium subsidy and determine the appropriate amount you should received. You will have to repay any overpaid premium subsidy, subject to the following repayment limits:

repayment limits

These are just a few common cases we have been faced with. Do you have any subsidy questions you are concerned about? How can HSA for American help you during open enrollment?

Wiley Long is President of HSA for America, and a passionate advocate for consumer-based solutions that will improve price transparency and lower health insurance and medical costs for people purchasing individual and family health insurance plans.
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  • Johnathan Croxton

    Hello Wiley. From reading your Q and A above, I see that the cap for anyone under the %200 of the FPL is 300 per individual, but could it be less than $300.00? How is this number exactly calculated?

    • Johnathan,
      For that income level, the repayment would be $300. It is not reduced on a sliding scale.

      • Johnathan Croxton

        Good afternoon Wiley, I was reviewing the limits of repayment chart you posted above. I am a bit confused. When you say that the limit for the subsidy payback is $300, $750 and $1,250, are those amounts the limits for the entire pay back for underestimating one’s subsidy or are those the limits for the monthly payback?

        • Hi Johnathan,

          Those are total amounts.

  • john robertiello

    Hello Wiley. I have a question. The Healthcare Marketplace is asking me to send proof for my 2015 income estimate of $12,000. I have fixed income investments that will produce $6,000 in interest in 2015. I plan on another $6,000 based on a job that I have not yet obtained. I am currently unemployed but they want me to provide proof by February 1st, 2015. What happens if I can only provide proof of estimate on only $6,000 of the $12,000 estimate? Thank You Very Much

    • Hi John,

      If you cannot provide them with the proof they require, they could do away with your subsidy. I would call the marketplace and explain your situation and see what they recommend.

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