Friday, December 6, 2013

What Happens With Obamacare Subsidies When Your Income Changes Midyear

Oh, this will be loads of fun. From Kaiser Health News

... Let’s say you land a job in July with a $60,000 annual salary [after being on unemployment], but it doesn’t offer health insurance. At that point, you’d need to inform the marketplace about your change in circumstance.

“The key is to reach out immediately when things change,” says Brian Haile, senior vice president for tax policy at Jackson Hewitt Tax Service.

At your new salary, you’d no longer qualify for a premium tax credit, and you’d have to pay the full premium. At tax time, the government will reconcile the amount that you received in tax credits against your income for the year, in our example, roughly $38,000, including six months of salary and six months of unemployment insurance.

If the amount you received in tax credits is higher than it should have been based on your annual income, you’ll have to pay back the difference. But under the law your liability is limited if your income is less than 400 percent of the federal poverty level. Someone like you with income between 300 and 400 percent of poverty ($34,470 to $45,960 in 2013) would be liable to repay no more than $1,250.