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It may feel as though 2015 Obamacare open enrollment just ended, but you should probably take a few minutes to think about your premium tax credit. No, not the subsidy you’ll qualify for in 2016, the one you are receiving this year.
Did you know that your premium tax credit eligibility can change during your health insurance coverage period—perhaps, even multiple times? Did you know that you could be penalized at tax time if you receive the wrong subsidy amount?
If you enrolled in a health insurance plan through a state-based or federally facilitated exchange, qualified for a premium tax credit, and elected to receive it as a deduction from your monthly health insurance premium, you are responsible for ensuring information related to your income and family are up to date.
You need to contact your state-based exchange or the federal marketplace, whichever you used to enroll in your health insurance plan, to update your subsidy if you experience any of these changes in circumstances throughout the year1:
If you fail to notify your health insurance exchange of changes that could impact the amount of premium tax credit you qualify for, one of the following situations will occur when you file your taxes:
According to the IRS, as of May 1, 2015, repayments of excess premium assistance may be limited to an amount between $300 and $2,500, depending on your income and filing status.2 Furthermore, if it turns out you earned enough money that you would not have been eligible for the premium tax credit, you will have to repay all advance premium tax credit payments made on your behalf, without limitation.3
Sometimes it is difficult to know what you will earn in a year. For example, seasonal workers, freelancers and others whose income varies may find accurately predicting this amount difficult and/or find it burdensome to make frequent updates.
Remember, you have two options when it comes to taking the premium tax credit:4:
Keep these options in mind when you enroll in 2016 health insurance coverage.
Are you currently without Obamacare health insurance but eligible for a special enrollment period?
Do you need short term health insurance or ancillary benefits to supplement your Obamacare plan? Visit healthedeals.com to explore your options.
1Internal Revenue Service. “IRS: Now is the Time for a Mid-Year Premium Tax Credit Checkup.” Last reviewed or updated May 1, 2015. http://www.irs.gov/Affordable-Care-Act/IRS-Now-is-the-Time-for-a-Mid-Year-Premium-Tax-Credit-Checkup
4Internal Revenue Service. “Questions and Answers on the Premium Tax Credit.” Last reviewed March 27, 2015. http://www.irs.gov/uac/Newsroom/Questions-and-Answers-on-the-Premium-Tax-Credit
Legal or Tax Disclaimer:
This document is for general informational purposes only. While we have attempted to provide current and accurate information, this information is provided "as is" and we makes no representations or warranties regarding its accuracy or completeness. The information provided should not be construed as legal or tax advice or as a recommendation of any kind. External users should seek professional advice from their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.
About IHC Specialty Benefits, Inc.
IHC Specialty Benefits, doing business as Health eDeals Insurance Solutions is a full-service marketing and distribution company that focuses on small employer, individual and consumer products. Health eDeals markets products through general agents online, telebrokerage, advisor centers, private label and directly to consumers. For more information about Health eDeals visit http://www.HealtheDeals.com
About The IHC Group
The IHC Group is an organization of insurance carriers and marketing and administrative affiliates that has been providing life, health, disability, medical stop-loss and specialty insurance solutions to groups and individuals for over 30 years. Members of The IHC Group include Independence Holding Company (NYSE:IHC), American Independence Corp. (NASDAQ: AMIC), Standard Security Life Insurance Company of New York, Madison National Life Insurance Company, Inc. and Independence American Insurance Company. Each insurance carrier in The IHC Group has a financial strength rating of A- (Excellent) from A.M. Best Company, Inc., a widely recognized rating agency that rates insurance companies on their relative financial strength and ability to meet policyholder obligations. (An A++ rating from A.M. Best is its highest rating.) Collectively, the companies in The IHC Group provide insurance coverage to more than one million individuals and groups. For more information about The IHC Group, visit www.ihcgroup.com.
SHORT-TERM MEDICAL EXPENSE (STM)
THIS IS A SHORT TERM HEALTH BENEFIT PLAN THAT IS NOT INTENDED TO QUALIFY AS THE MINIMUM ESSENTIAL COVERAGE REQUIRED BY THE AFFORDABLE CARE ACT (ACA). UNLESS YOU PURCHASE A PLAN THAT PROVIDES MINIMUM ESSENTIAL COVERAGE IN ACCORDANCE WITH THE ACA, YOU MAY BE SUBJECT TO A FEDERAL TAX PENALTY. ALSO, THE TERMINATION OR LOSS OF THIS POLICY DOES NOT ENTITLE YOU TO A SPECIAL ENROLLMENT PERIOD TO PURCHASE A HEALTH BENEFIT PLAN THAT QUALIFIES AS MINIMUM ESSENTIAL COVERAGE OUTSIDE OF AN OPEN ENROLLMENT PERIOD. THIS POLICY INCLUDES A PRE-EXISTING CONDITION EXCLUSION PROVISION.