Question About NOT Taking Subsidy HC.Gov

[Tkruger]

This was a new situation and before I venture down this path I want to ensure things will be done right.

Client self employed. There is a spread from a hundred K to fifty K MAGI that "could" occur for the current year based on a complex set of variables.

That being said, there's been numerous discussions about "claw-backs" on over payment of the "subsidy" associated with the TAX credit. However ponder this situation........

Group of four, both adults self employed. They go in not knowing what 14's numbers are and they apply at 50K this qualifies for the cost sharing in addition to the subsidy or tax credit. Hypothetically, Ded reduced to 0 and MOOP down for the family to a minimal amount. They opt to NOT take the tax credit knowing that there could be a potential large flux in their income.

Tax time comes in and they hit a hundred K. They didn't take advantage of the advanced tax credit but were forced to take the cost sharing.....

What is their liability?
If the income stays at 50K will they get a tax refund of the amount of the subsidy?
If the income exceeds that amount will said example require repayment for reduced MOOP and DED?

 

[Yagents]

No claw back of C.S.R. amounts.
Correct on refund of A.PT.C. at tax time if don't accept the offer of aptc. Or take $10 dollars of it.

 

[RayNY]

Yagents is right.

CSR is not subject to clawback, it's treated as an entirely different plan which has eligibility requirements for enrolling (certain estimated income level).

Any subsidy received could be clawed back if income is higher. If subsidy is not taken, obviously, it will not need to be paid back. If income is low (APTC eligible), but the APTC wasn't taken, the APTC will be bonused onto the tax return.

APTC=advanced premium tax credit="subsidy"
CSR=Cost Sharing Reduction (lower MOOP/Ded on those plans)

Disclaimer: while it seems like a good idea to have all of your clients qualify for CSR and not take a subsidy, do remember, there are SUBSTANTIAL penalties in place for intentionally mis-estimating income. $25,000 for just providing false info, up to $250,000 if it was "knowingly and willfully" provided to the exchange (both the individual, and assistor/broker/navigator/etc. can be fined).
http://www.cms.gov/CCIIO/Resources/...nloads/508-CMS-9949-F-OFR-Version-5-16-14.pdf <CMS final rule on civil monetary penalties for false info under ACA.

 

[Tkruger]

Yagents is right.

CSR is not subject to clawback, it's treated as an entirely different plan which has eligibility requirements for enrolling (certain estimated income level).

Any subsidy received could be clawed back if income is higher. If subsidy is not taken, obviously, it will not need to be paid back. If income is low (APTC eligible), but the APTC wasn't taken, the APTC will be bonused onto the tax return.

APTC=advanced premium tax credit="subsidy"
CSR=Cost Sharing Reduction (lower MOOP/Ded on those plans)

Disclaimer: while it seems like a good idea to have all of your clients qualify for CSR and not take a subsidy, do remember, there are SUBSTANTIAL penalties in place for intentionally mis-estimating income. $25,000 for just providing false info, up to $250,000 if it was "knowingly and willfully" provided to the exchange (both the individual, and assistor/broker/navigator/etc. can be fined).
http://www.cms.gov/CCIIO/Resources/...nloads/508-CMS-9949-F-OFR-Version-5-16-14.pdf <CMS final rule on civil monetary penalties for false info under ACA.

Thanks Y and Ray! RE: Disclaimer, there is no intent on directly or indirectly under/over estimating income. It's good you bring that to light for any other agency pondering that route.

 

[RayNY]

I didn't mean to imply you, or anyone here, would do that. We all know better. I just hear brokers talk about skirting the rules so often it's worth including the reason not to in this case.