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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.

Will I have to Repay the Subsidy?

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Question:nMy partner and I are not married, but we live together and we have three children together. In March, I lost my job and with it, our health insurance. Without my income, we qualified for premium assistance subsidies because we had a low estimated annual income. I just took and job (August). I immediately reported our income change to my Covered CA agent. My fear is that at the end of the year our annual income will put us over the limit for qualifying for subsidies and we will be penalized for the five months that we received them. Is that how the system works?

Answer: If your 2015 adjusted gross income exceeds the premium assistance threshold of 400% of the federal poverty level (FPL) ($114,000 for a family of 5), you would end up repaying the IRS for all the subsidy you received for the year. Assuming your income was less than that, you will still repay a portion of what you were have been overpaid. Here’s the repayment schedule:

  • Less than 200% FPL ($57k in your case), the amount of the repayment is limited to one-half of $600
  • At least 200% but less than 300% ($85k in your case), the amount of the repayment is limited to one-half of $1,500
  • At least 300% but less than 400% (114K in your case), the amount of the repayment is limited to one-half of $2,500

You did the right thing by reporting your income change to Covered California as soon as possible to limit the overpayment amount.


Prudence, there is no penalty or repayment due for Medi-Cal benefits in this case.

Thanks Phil ! My husband got the Medi-cal since he lives apart with me. He thought his hosuehold size is One and receive Medi-cal. Will he repays the subsidy with any additional penalty ? Also, he will reach 65 years old in 12/2015 to apply for Medicare.

Prudence, you are not eligible for premium assistance if you filed Married/Separate. If you file jointly, you will be a 2-person household and eligible for a subsidy based on your income.

re : hosuehold size; For a living apart married couple, husband has no income and did not file income tax. what is household size ? One ? Wife has income and filed Married/Separate with No dependent and have medical insurance from employer.

Jayne, be careful. If one’s AGI income exceeds 100% of Federal Poverty Level - $95,000 in your example - any premium assistance received that year must be repaid IN FULL. The $1,250 limit to which you referred would only apply to those whose final AGI is below 400% AGI.

What is so interesting about this to me is that the system is just asking for people to under report their income.

I ran some rough numbers. For a family of 4 with an income of $95,000 the subsidy is $404 per month. If that income is dropped down to $65,000 the subsidy is $696 per month. That works out to a difference of $3,504 over a year in subsidies.

If the only penalty is to pay $1,250, why wouldn’t someone under report? They would still save $2,254 in a year. (That is assuming that they do stay under the cap income for receiving a subsidy.) That is quite a big savings. Maybe I’m missing something regarding the penalty? Or perhaps the income reporting?

(Also, why can’t the government just say you owe $1,250 and not “one-half of $2,500? Seems silly.)

Thanks Max ! I filed 2014 Income Tax Return as Married, Separate and I have no dependent. My husband has no income for years. He has no dependent. He did not file income tax for 2014. I was told by my accounting filing service that I can not file Married, Separate for 2015 tax return even though we live separately and do not file divorce. Either we file Divorce and file tax as 2 single individual in 2015 or file Married, Joint in 2015. Kindly advise !

My husband and I are married. Due to our long time marriage problem, he has moved out and lived with his relative since 2014. We live separately and did not file for divorce or legal separation. If we plan to live together. Should he cancel Medi-Cal and sign up for CC. He lost his job for years and receive no income Medi-Cal since 2014. He will be 65 years old in December 2015. I filed 2014 tax as Married,Separate. I have no children/dependent. I have medical insurance thru my job and yearly income is $50,000. Please advise if he makes a mistake to apply medi-cal or I have to pay his penalty. or if file divorce may have less headache. Thank you for your assistance !

The all-important question was not asked or answered: When you file your income tax return, do you file “Married, Joint” or do you file single? How are your dependents claimed?

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