Q. What happens if I get advance payment, my income then goes up, and I no longer qualify for that amount?
A: You will need to reconcile what was paid with the amount you were actually entitled to receive. If you get more than you were entitled to, you will owe it back in the form of additional federal taxes. There are some caps on the amount a person has to pay back, based on their income. If, for example, you are at 300 percent of the FPL, the maximum amount you would have to pay back is $2,500. If you are under 200 percent, the maximum amount is $600. If you receive advance payments, but at the end of the year, your income is over 400 percent of the poverty level, there is no cap on the amount you owe.
Q. What's the biggest challenge for consumers and the exchanges with these subsidies?
A: The learning curve. Over time, Americans have gotten very used to things like 401(k) accounts, IRAs, penalties for early withdrawal and the kinds of documents they need to keep. But it takes a while because there are a variety of different rules and they are complicated. Keeping records will be important – both for consumers and the new marketplaces – because consumers whose income changes during the year may find they are either owed more in tax credits, or have to pay some back.
Related, earlier KHN coverage: In Addition To Premium Credits, Health Law Offers Some Consumers Help Paying Deductibles And Co-Pays
Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communications organization not affiliated with Kaiser Permanente.
Tue, Jul 23 2013