The Subsidy or Tax Credit
of Healthcare Reform
Basically, the government will pay for part of the premium and you will pick up the rest. The amount the government pays initially is dependent on your estimate of what your annual income is expected to be during the year that you apply for health insurance.. If at tax time the next year, it turns out that you made less money than predicted, then you will get a tax credit. If you made more, then your taxes will increase to make up for the government’s overpayment on your subsidy. Whether or not you get a subsidy from the government is based on several things: your household income, number of dependents and you being on a Covered California exchange plan.
Factors that Go into Getting a Government Subsidy for Your Health Plan
How do I get my subsidy?
Most Californians will elect to get their subsidy up front each month. This means the full monthly amount of your subsidy will be deducted from your health insurance premiums. There are two other ways to receive your subsidy. You could deduct a partial amount (the percentage of your choice) from your premiums instead of taking 100% up front each month. This will not lower your monthly premium as much, but you could receive a lump sum payment for the remainder come tax time the next year. Or, you can pay the full amount of your monthly premium and just collect your subsidy at tax time the next year in one large lump sum payment.
What if I made too much money to qualify for a subsidy?
So what if I make more than 400% of the FPL? Why should I care about the Affordable Care Act? The reason you’ll care is not so you can get a subsidy, but so you can avoid the penalty. In your case there’s no carrot, but there is a stick, and the penalties get more and more severe as we get closer to 2017.
Find the Right Plan for You With Health for California
