Question: I have a Covered California policy with premium tax credits because the employer coverage was unaffordable (more than 9.69% of income for employee-only). In September, I picked up a second part-time job. Now my employer’s insurance would be less than 9.69% of my total income. I can’t sign up for my employer plan until next June. What should I do? When I file my taxes will I be required to pay back my subsidy?
Answer: As long as Covered California determined you were not eligible for affordable job-based coverage when you initially applied, that determination will hold for the remainder of the year. The IRS refers to this as a “safe harbor,” and won’t require you to go back and re-compute the affordability of your job-based coverage at year end when you file your taxes.
As for 2017, you should report your income change to Covered California as soon as possible. They will determine your new eligibility for premium tax credits, based on your higher income, and adjust the level of subsidy going forward. In June, you can enroll in employer coverage and cancel Covered California coverage.