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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.
Question: If I select a HSA individual plan can I also qualify for a subsidy for the premiums?
Answer: I haven’t read anything definitive on this question from the IRS. If anybody else has please let me know. You have the option to apply your subsidy toward the purchase of a Bronze plan which the HSA is, but I doubt the IRS will not allow a double tax benefit. They may come to some accommodation for a partial reduction of the HSA contribution.
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Max - where do you see that the HSA contribution deduction is an add-back for MAGI? All I have seen is that you start with AGI and add back non-taxable social security and non-taxable interest income. No adjustments for HSA, IRAs, etc. Thanks -
Excellent comment.
Funding the HSA is not the same as paying premiums for an HSA-compatible plan. A person does not have to fund an HSA to have an HSA-compatible plan, but cannot fund an HSA unless enrolled in an HDHP plan. The tax credit applies to premiums not HSA funding. Any money that funds an HSA must be counted in the household MAGI for purposes of calculating the tax credit, which, for some persons near the top of the 400% FPL limit, would cause the credit to disappear.
The HSA compatible plan, however, has such a low premium (depending on age, of course) in the Bronze tier that it generally does not qualify for ADVANCE tax credits, even if the MAGI test is not a killer. The good news is that when doing one’s 2014 income tax return in 2015, any unused portion of the tax credit a person is eligible for is fully refundable.
So if you don’t get it in advance, you’ll get it in arrears.