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.
How do I update my subsidy information?
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:
- An increase or decrease in income
- Marriage or divorce
- The birth or adoption of a child
- You start a job with health insurance
- You gain or lose your eligibility for other health care coverage
- A change in residence
What happens if I don’t update my subsidy information?
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:
- If you received too little tax credit, you will receive a tax refund
- If you received too much, you will owe the IRS money
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.2Furthermore, 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
Consider your premium tax credit options
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:
- Get it now – Elect to have the health insurance company apply all or some of the estimated tax credit to your monthly premium. This option is known as the advanced premium tax credit.
- Get it later – Claim the tax credit when you file your federal income tax return.
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 www.healthedeals.com to explore your options.