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Covered California Q&A

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.


Is There a Penalty for Underestimating Income?

By on | 3 Comments

Question: Is there a penalty for under-projecting the income? Are they planning to charge interest on the subsidy difference? All I have heard is that one has to replay the subsidies, but nothing the interest or penalties. Also. I understand that in addition to the direct subsidy on the premium itself, one may qualify for a reduced co-payment and deductibles based on income. Assuming that is true, how will they claw that back if the actual income turns out to be more than the projected income. Based on the answers for the above, wouldn’t it make sense to always undershoot?

Answer: Correction: (I misread this question first time around.) There is no penalty for taking more advance tax credit than you are eligible for except to repay the excess advanced. The cost sharing reductions are not subject to repayment.

3 Comments

I earned too much in 2012 and 2013 to qualify for subsidies, but I was laid off last week, so for all I know my 2014 income might just be $11,700 in unemployment insurance. (I’m delaying the benefit claim until January so that I’ll pay a lower tax rate on it if my job search takes a long time.) How badly am I going to be hassled if I try to get subsidies and an enhanced silver policy?

Right. I misread the question. I corrected the answer. Thanks Deep.

The answer refers to taking LESS advance tax credit than eligible. The question is about taking MORE advance tax credit than one is eligible.

Please clarify.

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