Eligible for Subsidy? Maybe NOT.

I have been talking to people that have been misinformed about how their eligibility for a subsidy is calculated.  Some things to remember:

  • If you are married, you must file jointly to be eligible for a subsidy.
  • Income from all of your dependents must be included in household income.
  • Members of the household that are eligible for affordable employer coverage or public coverage (medicare/medicaid) are not included in the number of people in the household.
  • The subsidy is just a loan from the IRS.  If your subsidy is incorrect, the IRS will get it back from you one way or the other.

So, a very important takeaway is this: A family member’s income must be included in household income even though he may not be included in the number of people in the household because he is eligible for other coverage.  Let’s look at 3 specific examples I have come across.

  • Couple where the husband has Medicare and the wife is younger than 65 so isn’t eligible for medicare.  The husband makes 18k  and the wife makes 35k.  So, they make over 50k per year and it is a household of 1 since the husband has medicare.  Not eligible for a subsidy.  Another agent was trying to tell them that she only had to include her income.  This is not true.
  • In Illinois, a family of 4 with 2 kids 18 or younger where the household income is… let’s say… 70k.  Well below the threshold of 95k for a family of 4 subsidy, right?  Yes, but a family of 4 with a household income of 75k or less, the kids are eligible for AllKids.  Since the kids are eligible for this public insurance, they are no longer included in the household so the household is now 2 people.  At 70k, a family of 2 is not eligible for a subsidy.  Healthcare.gov did not even have this programmed correctly on their website until about the 3rd week of November.
  • A single person has a job making 30k a year at the beginning of the year.  They lose their job April 1 and remain unemployed the rest of the year.  This person applied for insurance on healthcare.gov and received a subsidy.  At the end of the year, they won’t have made enough to qualify for the subsidy.  If they remain on the major medical insurance with the subsidy for the entire year, they will have to pay most, if not all, of it back.  In this situation, they should have changed over to Medicare.  So, a person who is already down on their luck will have to figure out a way to pay back the subsidy with money they won’t have.

The moral of the story is: if you want to take advantage of a subsidy, make sure it is being calculated correctly and you know the rules, especially as your financial situation changes.

As always, more to come…

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