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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.

Is There a penalty for OVER Estimating Your Income ?

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Question: I understand that if I under-estimate my income, I may have to pay back some portion of the subsidies that I have received. Is there any problem with over-estimating one’s income for the year. I am thinking of a case when your original estimate does not put your 18-under kids onto Medi-Cal, but your actual income would have.

Answer: Yes. There could be significant tax consequences for your household. When you pay your taxes for that year, and your income would have qualified your children for Medi-Cal, the entire amount that you drew in advance tax credits could be due with the filing of your return.


Brian, You’ll become eligible for Medi-Cal but won’t have to repay the CC subsidy, nor is there a penalty.

I am self employed if I estimate enough to qualify but end up at tax time with non qualifying to low income at tax filing will I have to pay back subsidies

Cyn, first, there is no penalty. Repaying some of what you’ve been given is not a penalty. If your actual income is below 128% of FPL - Covered California / Medi-Cal threshold - you repay nothing. If your actual income is over 400% of FPL you will have to repay all of the premium assistance you received. If your actual income is less than 400% FPL but more than 128% FPL you repay only a portion of the overage in premium assistance you received. In neither case do you repay the “cost sharing reductions” you got with you Silver 94 coverage.

Phil, I’m confused. I think I read that there is no penalty for overestimating my income, but here you are saying there is. I’m one of those self-employed people whose income is completely unpredictable. I overestimated to get covered california, and included my children, even though they have scholarships for their own health insurance at college. This granted me and my children health care with the silver 94 plan with Kaiser at the maximum premium assistance (I believe). But if I can’t make that much money this year, I’m still confused what will happen. You say they will give me a refund and not to worry about it, but if I make enough less that I drop below California Covered’s minimum requirement, making me ineligible for premium assistance, could I have to pay back the full price of health insurance? What should I do? I can only (barely) afford the minimum.

Children are eligible for Medi-Cal if household family income is under 250% of the Federal Poverty Level (FPL).

Keep in mind the clawback limits under section 36(b): http://www.law.cornell.edu/uscode/text/26/36B

“(2) Excess advance payments (A) In general If the advance payments to a taxpayer under section 1412 of the Patient Protection and Affordable Care Act for a taxable year exceed the credit allowed by this section (determined without regard to paragraph (1)), the tax imposed by this chapter for the taxable year shall be increased by the amount of such excess. (B) Limitation on increase (i) In general In the case of a taxpayer whose household income is less than 400 percent of the poverty line for the size of the family involved for the taxable year, the amount of the increase under subparagraph (A) shall in no event exceed the applicable dollar amount determined in accordance with the following table (one-half of such amount in the case of a taxpayer whose tax is determined under section 1 (c) for the taxable year): If the household income (expressed as a percent of poverty line) is: // The applicable dollar amount is: Less than 200% —- $600 At least 200% but less than 300% — $1,500 At least 300% but less than 400% — $2,500.

It’s hard for me to figure out a scenario in which family income would qualify a child for medicaid, while the family’s income also exceeds 200% of the poverty line — so I think the maximum clawback would be $600 in the scenario described.

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