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Health Care Reform:

Health Insurance & Affordable Care Act

Deciphering The Health Law’s Subsidies For Premiums

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Q. Can I decide not to take the credit as an advance payment?

A. Yes but you would need to make sure you have the cash to pay the premiums. If you get past 90 days and the premium is not paid in full, the regulations direct the insurer to terminate coverage.

Q. Do consumers have to file information about the insurance subsidies on their tax returns?

A. People getting subsidies in 2014 will report them on tax returns they file in April 2015.

Q. What kind of information will be reported to the IRS?

A: The exchanges will report the level of coverage chosen by an individual, total premium and the amount of premium credit made to the insurance company.

Q. Is a worker who gets job-based insurance eligible for a premium subsidy?

A. Only if the employer coverage is either not affordable or doesn’t provide minimum value. Those definitions mean the employee’s share of the premium for a policy that covers just the individual (not a family policy) cannot exceed 9.5 percent of household income. And the plan has to cover at least 60 percent of expected medical costs.

Q. Does the administration's decision to delay by a year the requirement that employers offer coverage or pay a fine affect the subsidies?

A. It does not affect rules on eligibility. But it may mean that more people are eligible. Employers no longer have the incentive to offer policies or make plans affordable because they are no longer at risk of a penalty.

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.

Tue, Jul 23 2013

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