What’s better take the Subsidy – APTC now or at tax time? 

Advantages

Certainly the BIG advantage, is lower, more affordable premiums during the year.  Plus, you might qualify for Enhanced Silver Benefits!  Which lowers Co-Pays, Deductibles and the OOP Out of Pocket Maximum.

tax.credit.two.ways.to.take.it

IRS.Gov Publication 5120 Take all, some or none of advance subsidies.

Covered CA Brochure – Subsidy NOW or Tax Time?

Disadvantages

If you took more creidt than what your tax return 1040 and 8962 show, you have to pay back the excess or a maximum amount.

You are mandated to report changes in expected MAGI income within 30 days.

Take it later
Take it Later

Explanation of Advance Premium Tax Credit  –

Take Credit now or later

  

Federal Poverty Level &
Program Chart

Medi-Cal?  Covered CA Subsidies?  Enhanced Silver?
MAGI Income Chart

Related Pages in Tax Credit and FAQ Section

1095 A – Proof of Coverage from Covered CA  – shows amount of tax credit you rec’d during the year, that was paid to the Insurance Company to reduce premiums.

CHCF What is the premium tax credit?

IRS.Gov FAQ’s on the Premium Tax Credit

Publication 5120 –Your Credit, Your Choice – Get it Now or Get it Later   English | Spanish

Publication 5121 –Need help paying for health insurance premiums?   English

Publication 5152 –Report changes to the Marketplace as they happen  English | Spanish

What if you don’t tell Covered CA in advance that you want the credit, can you still get the deduction when you file taxes, as long as you got your coverage though Covered CA?

Three Tax Considerations during Covered CA Open Enrollment

  1. Advance credit payments lower premiums – You can choose to have all, some, or none of your estimated credit paid in advance directly to your insurance company on your behalf to lower what you pay out-of-pocket for your monthly premiums.  These payments are called advance payments of the premium tax credit  (APTC) or advance credit payments.  If you do not get advance credit payments, you will be responsible for paying the full monthly premium.
    1. Possible SNAFU’s – Insurance Company asking for excess credits back… OC Register 7.27.2016
  2. A tax return may be required – If you received the benefit of advance credit payments, you must file a tax return to reconcile the amount of advance credit payments made on your behalf with the amount of your actual premium tax credit.  You must file an income tax return for this purpose even if you are otherwise not required to file a return.
  3.  
  4. Credit can be claimed at tax time – If you choose not to get advance credit payments, or get less than the full amount in advance, you can claim the full benefit of the premium tax credit that you are allowed when you file your tax return. This will increase your refund or lower the amount of tax that you would otherwise owe.

 

Questions and Answers on IRS.gov/ca for information about the premium tax credit.

IRS #Pub974 

Premium Tax Credit
IRS Publication 974

VIDEO What is APTC Advance Premium Tax Credit

 

aptc interactive assistant

Interactive Tax Assistant (ITA)

Am I eligible to claim the Premium Tax Credit? 

IRS FAQ on Premium Tax Credit

 

Tax #Estimators

 

 

ACA What You Need To Know  #5187 ACA What you need to know # 5187

Health Net VIDEO
How to get subsidies – pay less for coverage 

 
 
Kaiser Foundation reports that 27% of uninsured individuals are eligible to purchase a bronze plan with $0 premiums after subsidies in 2019.  Silver plans with cost-sharing reductions (CSR) for single individuals with incomes below 200% of the poverty level can be purchased for roughly $20 to $130 per month after subsidies, depending on an enrollees’ income. KFF *

9 comments on “Premium Subsidy Now or Tax Time?

  1. Should I file an appeal regarding lack of premium assistance for part of last year?

    Covered CA probably thought we were only a family of 2, which would make our income greater than the 400% line. They just needed to correct it to family of 3.

  2. A side observation- it seems to be a really weird system to navigate for someone who is self-employed and has unstable income.

    Actually, it’s weird for everyone, in the sense that no one really knows if their income will change suddenly for better or worse, and then they’ll have to resolve things retroactively with IRS.

    • That’s why they want you to report deviations of more than 10% of your estimated annual income within 30 days. See link for publication 5152 and job aid for reporting income above.

      • Haha thanks for your responses, I didn’t know about the monthly thing! Wow you are SO knowledgeable, it’s incredible. As a knowledgeable insurance agent, you’re basically a rocket scientist.

        Okay I’ll get the documents together and send them to you.

        Thank you so much,

        Mindy

  3. Hi Steve,

    I just got my my taxes done this past week and found out that i had to do a repayment and ended up losing $357.00 on my federal tax return. I was wondering if you could make an adjustment on income so i don’t have to take as large of a discount so this doesnt happen in the future, thank you

    ~Tom

Leave a Reply

Your email address will not be published.