I miss the days when you just brought your doctor a chicken or something

November 6, 2023 10:38 AM

While going through Healthcare, gov for my yearly update, I fell into a quandary.

Last year I took the full amount of tax credit (because I'm too poor for $300 premiums) and ended up owing the IRS $1200 (at least they take payment plans). I do see where it reads "you may have to pay back if you use too much" but I can't find anywhere where you determine how much too much is.

I could call the HQ in London, KY and maybe I will.

I am make too much money for Medicaid and am not old enough for Medicare. I also have a fairly couple serious conditions that I need to watch.

Is there any insurance, or insurance work-around or me? I'm seriously thinking of writing my senator a nice note. (He's a good guy.)

posted by Rumi'sLeftSock to Work & Money (6 answers total)

I can't find anywhere where you determine how much too much is.

The amount of Premium Tax Credit you are entitled to depends on your household size, household income, where you live, which plans are available in your area, and which plan you are enrolled in. See this page for the full details.

Basically, the tax credit can be up to the cost of the second-cheapest “Silver” plan available in your area. However, if your household income is over 150% of the Federal Poverty Level (so, for a 1-person household in the contiguous US, if your income is more than about $22,000) then the credit is reduced by an amount that depends on your income.

Essentially, you are expected to pay a certain percent of your own income in place of the credit. For example, if your household income is double the Federal Poverty Level, you are expected to pay 2% of your own income, and the tax credit will be reduced accordingly. For households making more than 4× the Federal Poverty Level, this goes up to 8.5%.

(“Household income” here refers to the Modified Adjusted Gross Income (MAGI) reported on your federal income tax return.)
posted by mbrubeck at 11:23 AM on November 6, 2023 [3 favorites]

You estimate your income when you sign up. If you made more than expected (yay!) you may not qualify for as much premium subsidy (boo) and the IRS will recapture it at tax time.

I don't know about Kentucky, but in my state we have both Brokers and Healthcare Navigators that serve the same as private insurance brokers. They help you estimate what plan will be the best deal for you between subsidies, metal levels (premium vs. out of pocket costs) and service providers.
posted by Narrow Harbor at 11:28 AM on November 6, 2023 [2 favorites]

Two pretty simple things you can do:

#1. Make a note of the estimated income you entered into HealthCare.gov - right at the very start of the process. Maybe write it down in some prominent place in your house where you will see it every day. If your income ever goes above this level during the year, go into HealthCare.gov and report the change.

As you are going through the process of applying at HealthCare.gov, one of the pages gives you a warning about this and makes you sign something saying you definitely will go & update your income over the course of the year if it ever changes. But it's easy to forget this - especially months later.

The reason they want you to do this is exactly to avoid the scenario you encountered, where you end up owing a bunch at the end of the year.

Almost certainly this is indeed the reason you ended up owing - either your initial estimate of your income over the coming year was wrong (too low) OR you had some change over the course of the year that brought in more income than you were anticipating when you filled out the initial forms. Either is a very easy thing to have happen - you're trying to estimate your income for the upcoming 14 months and who can really do that?

#2. This time as you are going through the application process, enter an estimated annual income that is somewhat HIGHER than what you think it actually will be.

What this will do is make HealthCare.gov estimate your subsidies a bit on the low side. That means you will end up paying a little more on your monthly premium than otherwise, but then you will likely get a refund at the end of the year rather than owing. Also, if your income ends up being a bit higher than you anticipated when filling out the HealthCare.gov forms, then setting your income estimate a bit on the high side will allow for this.

At minimum, when estimating your annual (or monthly) income, be sure to err on the HIGH side - NOT the low side. Do you usually make between $2000 and $2500 every month? Ok, just put down $2500. Whatever you do, DO NOT put down $2000! Put down a high estimate.

>I do see where it reads "you may have to pay back if you use too much" but I can't find anywhere where you determine how much too much is.

To answer that specific question, you never enter the amount of your subsidy. That amount is calculated for you based on your income estimate and other factors you entered at the beginning of the application process at HealthCare.gov (household size, number of dependents, etc etc etc).

So the 'mistake' you made was certainly not in entering a too-high subsidy amount, but somehow in the way you estimated your annual income (or possible other contributing factors such as number of dependents, household size, etc). The way to address this is as I outlined above - make sure this income and other relevant info is accurate, or if there is uncertainty in your estimate, make sure it has as buffer on the high side of planned income.

Whatever you do, don't underestimate your income. Similarly, don't claim a dependent unless you're 1000% sure they will actually be a dependent when you file your taxes for the following year.

Good luck!
posted by flug at 12:54 PM on November 6, 2023 [2 favorites]

I disagree with the recommendation above to not count people who will not be dependents in a year as part of your current household. You should report your current income and current tax household size (i.e. you and spouse and dependents) when applying. You are asked to estimate what your current income will be; the Exchange will determine the tax credit they think you're entitled to based on your current household size and expected income. If your income or household size changes, report that to Kynect (the Kentucky version of Healthcare.gov) and they'll make the appropriate updates. You don't have to take 100% of the tax credit they say you're entitled to; tell the call center of you want to take less.

To your question about repayment, if your adjusted gross income when you file taxes is less than 400 percent of the poverty level, then you don't need to repay all of the excess credit that you received in advance; see https://www.irs.gov/instructions/i8962#en_US_2022_publink100010959:


Table 5. Repayment Limitation
IF the amount on Form 8962, line 5, is . . . THEN enter on line 28 . . .
for a filing status of
Single—. other status—
Less than 200 $325 $650
At least 200 but less than 300 $825 $1,650
At least 300 but less than 400 $1,400 $2,800
posted by Theiform at 1:37 PM on November 6, 2023

Kynect also has a calculator here that will tell you how much tax credit towards the cost of a monthly premium they'll give you if you want to see how differemt incomes (or household sizes) change the result
posted by Theiform at 1:49 PM on November 6, 2023

Response by poster: you're trying to estimate your income for the upcoming 14 months and who can really do that?

Not me when my hours fluctuate from 15-25 every week. And I'm supposed to get my courier (freelance/contractor) job back. I think that also threw a wrench in, although it was only $800.

Theiform: I'm not in Kentucky -- that is the HQ of government insurance. Or at least their help desk.I wish I could find one of those for my state.

Thank you all, for all the ideas and links. I will go over them carefully.
posted by Rumi'sLeftSock at 8:32 AM on November 7, 2023