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Claim Subsidy for Off-Exchange Plans?

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Question: Can I purchase a qualifying “metal” plan outside of CoveredCA (e.g. directly from a carrier or through a broker) for 2014 and claim a premium subsidy when I file 2014 taxes in April 2015, if my 2014 MAGI qualifies me for a subsidy? May I retroactively claim at 2014 tax filing time a rebate on overpayment of other expenses (copays, deductibles, etc.) on Enhanced Silver plans, if my 2014 MAGI would have qualified me?

Answer: No. A person cannot retroactively qualify for tax credits on a health plan purchased outside of the Exchange. The exchange determination of subsidy eligibility entails more than simply verifying income, for example there’s residency, household size. and employment status as well, things the IRS can’t do as part of your tax return.


At least for me, the state is asking for copies when it would be much safer to verify the information from their own computers, DMV and Dept of Rev. Putting copies on their website is just inviting identity theft. One of the first things businesses learn is to offload sensitive information to non-web accessible servers. They better do that soon.

The system should be driven by majority of people, not the exceptions. The IRS/SSA Does has what it needs, including income, household size and recent addresses. And for a federal credit what difference does it make what state someone is in or their employment status ? Let the exceptions use the state site, let rest of us use tax returns. IRS only is more efficient, effective and economical.

The requirement for buying inside the exchange to be eligible for subsidy is meant as a carrot for the consumer and also meant as a carrot/stick for the insurance companies. i.e you play in the exchange you get the customers+subsidy; else no deal.

Because of the roll-out issues, I think they are considering making some temporary minor exceptions to this in the Federal exchange — but I hope it is only for this year.

Exchange is the only place where the insurance companies can be compared side by side, without any of the distracting idiosyncrasies they load the policies up with to explicitly make comparison difficult. The benefits are somewhat standardized, and they are forced to compete for your business. The hope is this would make the prices more competitive.

If the subsidy were to be available outside of the exchange, the insurance companies would just stay out of the exchange long enough for the whole exchange experiment to fail. Once you are in their website, they are under no obligation to inform you of other cheaper/better choices.

CIGNA, and United Health are deliberately staying out of the exchange. I think United Health primarily was in corporate.

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