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Covered California and Obamacare related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.

Subsidies Recovery at Tax Time

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Question: Our family income for 2013 is likely to be very low, since we started a new business earlier this year — probably between 100 and 250% of FPL. I expect however that our income in 2014 will be higher, likely exceeding 400% of FPL, the level at which the subsidies phase out. A couple of questions: 1. If our 2013 income is low enough to qualify us for Medi-Cal (instead of subsidies) for 2014, can we still purchase health insurance on the exchange? Is there any good reason to do so? For example, I’ve heard that many providers don’t accept Medi-Cal and that the quality of care available may be subpar. 2. I know that if we get subsidies for 2014 based on our 2013 income, they will have to be paid back during tax time if our 2014 income makes us ineligible. But what about the reverse? Suppose we subscribe to a plan in the exchange and pay for it in full, but it turns out that we were in fact eligible for a subsidy based on our actual income. Can we then claim this subsidy amount as a credit when we file our 2014 taxes? Many thanks for your help.

Answer: (1) If your income qualifies you for Medi-Cal, you can choose not to apply for Medi-Cal and enroll in Covered California without premium assistance. And no, there is no good reason to do this, since you would be passing up virtually free coverage for unaffordable coverage - end of story. (2) If you enroll in a Covered California qualified health plan and your premium assistance is underpaid, you can recover what you were due at tax time.


Bonnie, the previous tax returns are used as reference points. What ultimately counts is your estimate of your 2014 income. If it is significantly different form your 2012 tax return AGI that’s OK.

If I apply for coverage before the end of 2013 any subsidy that I might qualify for would be based on my 2012 income, correct? What if my 2013 income is substantially lower (which I know it will be?). Should I wait until after I file my 2013 income tax return before applying for coverage?

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