Yagents and RayNY are correct. In tax terms "a refundable credit" means you can collect it even if you owe no taxes. It does not mean you are refunded the amount that is in excess of your premium. "Advanceable" means they will pay the insurance company month-by-month ahead of time rather than make you wait for your taxes to be filed. So, you can get it as an advance, or get it at tax time (even if you owe no taxes, you get it as a refund), you can use all of it ahead of time, part of it, or none of it as an advance. But you will not get more subsidy than the amount of the premium for your QHP.
Question from a Client & I'd Like Some Feedback
- Thread starter cadylou
- Start date
- 4,132
"So, you can get it as an advance, or get it at tax time (even if you owe no taxes, you get it as a refund), you can use all of it ahead of time, part of it, or none of it as an advance. But you will not get more subsidy than the amount of the premium for your QHP. "
So the choice of bronze means they forfeit a portion of the subsidy? Again not how it was explained in my neck of the woods.
Subsidy = x
insured choses a gold plan or more expensive silver plan
x + $ = to pay premium.
2nd cheapest sliver plan X+ 0 = premium.
Bronze plan X> premium = excess subsidy to be given as a tax credit.
Yes? No? Maybe?
is that how you all have been told?
So the choice of bronze means they forfeit a portion of the subsidy? Again not how it was explained in my neck of the woods.
Subsidy = x
insured choses a gold plan or more expensive silver plan
x + $ = to pay premium.
2nd cheapest sliver plan X+ 0 = premium.
Bronze plan X> premium = excess subsidy to be given as a tax credit.
Yes? No? Maybe?
is that how you all have been told?
We've been told you can buy-up and pay the excess, or you can buy-down, in which case the subsidy might even pay all of the bronze premium for you. But you cannot get more subsidy than the amount of the premium for the QHP plan you have chosen, whether you use the advance feature or you use the "at tax time" feature.
- 4,132
Then if there is an income adjustment + or - at year end?
If income is greater than first declared.. they take some of the subsidy back.
If income is less than declared... you're out of luck?
Again just asking as this was not how it was presented in WA.
If income is greater than first declared.. they take some of the subsidy back.
If income is less than declared... you're out of luck?
Again just asking as this was not how it was presented in WA.
Lgilmore,
If income is less than estimated, they add the subsidy you should have received as a bonus on your tax return. (You can also claim a "life event" mid year to get the subsidy once your eligibility changes).
SHOULD HAVE RECEIVED. If your subsidy has been capped at the cost of your plan, your subsidy is capped at the cost of your plan, even if you're "eligible" for a higher subsidy.
If income is less than estimated, they add the subsidy you should have received as a bonus on your tax return. (You can also claim a "life event" mid year to get the subsidy once your eligibility changes).
SHOULD HAVE RECEIVED. If your subsidy has been capped at the cost of your plan, your subsidy is capped at the cost of your plan, even if you're "eligible" for a higher subsidy.
- 4,132
"Again just asking as this was not how it was presented in WA."
In fact, they encouraged agents to do it that way. To underuse the subsidy so they could have a buffer on the tax return.
I even asked about this at the time, and was told without doubt if they were given X subsidy, they got X subsidy no matter what plan they chose.
Interesting... Didn't make sense at the time, but you when does the government make sense?
Of course haven't run across a soul who doesn't use full subsidy anyway.
In fact, they encouraged agents to do it that way. To underuse the subsidy so they could have a buffer on the tax return.
I even asked about this at the time, and was told without doubt if they were given X subsidy, they got X subsidy no matter what plan they chose.
Interesting... Didn't make sense at the time, but you when does the government make sense?
Of course haven't run across a soul who doesn't use full subsidy anyway.
- 8,448
The carrier is supposed to report through HC.gov how much an applicant's premium is? HHS says they have no idea and are not privy to insurance company enrollment, who has paid, who didn't have insurance before and what the monthly premium is. Back-end aint built.
Is your health insurance company supposed to report directly to the IRS how much your premium was for the year and also send you a copy? That's the only way the IRS would know. Otherwise, what you put on your tax form will have to be on our screwy government's honor system, LOL.
-ac
Is your health insurance company supposed to report directly to the IRS how much your premium was for the year and also send you a copy? That's the only way the IRS would know. Otherwise, what you put on your tax form will have to be on our screwy government's honor system, LOL.
-ac
- 599
The way I have understood the "buffer" you are talking about is:
Let's say the client qualifies for $300/month.
They can choose a cheaper plan at $275/month
At tax time, they find out they only qualify for $280/month. The cheaper plan "buffer" means that they still won't have to pay anything back. If they had picked a $300 plan, they would owe $240.
Unic, you're spot on with that scenario. Over here in NY, we've also been encouraged to have our clients who can afford to pay a little more, claim a little less subsidy.
At the end of the year, it's all reconciled. People are generally happier getting a bigger bonus, rather than seeing a reduction (or having a bigger tax bill!).
LGilmore, I give up. They're wrong, or you heard wrong, but to stop this dead horse from being beaten: here is some government text on the issue.
March 12, 2014 from the Congressional Research Office titled "Health Insurance Premium Credits in the PPACA." https://www.fas.org/sgp/crs/misc/R41137.pdf
Refer to page 7, the section titled "Calculation of the premium credit amount".
The first sentence: "The premium credit will be the lesser amount resulting from either: the cost of the exchange plan the taxfiler and dependents are enrolled in...(or the normal formula)."
At the end of the year, it's all reconciled. People are generally happier getting a bigger bonus, rather than seeing a reduction (or having a bigger tax bill!).
LGilmore, I give up. They're wrong, or you heard wrong, but to stop this dead horse from being beaten: here is some government text on the issue.
March 12, 2014 from the Congressional Research Office titled "Health Insurance Premium Credits in the PPACA." https://www.fas.org/sgp/crs/misc/R41137.pdf
Refer to page 7, the section titled "Calculation of the premium credit amount".
The first sentence: "The premium credit will be the lesser amount resulting from either: the cost of the exchange plan the taxfiler and dependents are enrolled in...(or the normal formula)."
RayNY, thank-you for finding that text. You are absolutely correct.
AllenChicago, the marketplace absolutely does know the premium for the plan you select. After all, when you are enrolling them today on hc.gov, you pick a plan, and the premium is clearly shown. Following is text from an IRS Q&A
Questions and Answers on the Premium Tax Credit
AllenChicago, the marketplace absolutely does know the premium for the plan you select. After all, when you are enrolling them today on hc.gov, you pick a plan, and the premium is clearly shown. Following is text from an IRS Q&A
12. If I get insurance through the Marketplace, how will I know what to report on my federal tax return?
The Marketplace will send you an information statement showing the amount of your premiums and advance credit payments by January 31 of the year following the year of coverage. For example, you will receive the 2014 information statement by Jan. 31, 2015, and can use this information to compute your premium tax credit on your 2014 tax return and to reconcile the advance credit payments made on your behalf with the amount of the actual premium tax credit.
The Marketplace will send you an information statement showing the amount of your premiums and advance credit payments by January 31 of the year following the year of coverage. For example, you will receive the 2014 information statement by Jan. 31, 2015, and can use this information to compute your premium tax credit on your 2014 tax return and to reconcile the advance credit payments made on your behalf with the amount of the actual premium tax credit.
Questions and Answers on the Premium Tax Credit
