Question: If a family’s estimated income for 2014 is just above the threshold of California Poverty Line that makes them eligible for premium assistance and cost sharing and in June 2014, it finds that its annual income is dropped below the poverty line making it ineligible for premium assistance and cost sharing. Please answer the following questions. a) Will this family’s health coverage be switched over to Medi-Cal in July 2014 or continued to the end of 2014? b) What will happen to its monthly premium assistance and cost sharing benefits availed of from January to June 2014? How those ones will be considered at the time of filing 2014 tax return? c) Also answer these question in vice-versa circumstances i.e a family’s estimated income comes under poverty line and in June 2014 its income increases making it eligible to premium assistance and cost sharing.
Answer: a) If this family were to report a change in income to the exchange that would make them eligible for Medi-Cal, for example becoming unemployed, they would be switched to Medi-Cal. The IRS would reconcile Advance Premium Tax Credits (APTC) received to that point on the family’s tax return. If the family’s income was below 100% of FPL for that year, there would be no recovery of APTC. (See previous entry on this subject). There is never any recovery of Cost Sharing Reductions (CSR). b) Conversely, increased income reported mid-year could move this family from Medi-Cal to subsidized exchange coverage. Again, the IRS would settle-up for the tax year.