What Happens if Your Health Insurance Subsidy is Incorrect?

Those of you who receive a subsidy to help cover your health insurance premiums are probably aware that it was calculated based upon household size and income. But you might not be aware that errors are sometimes made in calculation, usually due to income not matching what was expected for the year. What happens if your health insurance subsidy was incorrect?

First, let’s review the calculation for subsidies. Each year, you choose a healthcare plan (or automatically re-enroll in your current plan), and you enter your expected income information for the following year. Your subsidy is calculated and is then released to your health insurance provider each month to cover part of your premiums.

But because these calculations are based on projected income, they can occasionally be wrong. If your income changes during the year, and exceeds a certain level, your health insurance subsidy could be overpaid. This often happens when you get a raise, change jobs, or work a lot of overtime. And the upsetting part, for many people, is that they don’t discover this overpayment until they reapply for insurance coverage at the end of the year. At that point, you might have been overpaid by hundreds or even thousands of dollars.

Yes, in many cases you will be responsible for repaying that overpayment!  Certain limits do apply, according to IRS rules, you might not be responsible for the entire balance of overpayment. But there’s no need to take the risk. If your circumstances (income or household size) change throughout the year, make sure to log into the health insurance portal to update your information. Your subsidy will be recalculated, and an overpayment can be prevented.

And as always, give us a call if you have questions about your health insurance policy, subsidy, or anything else regarding your coverage. We will help you understand these procedures, so that you don’t have to endure unpleasant surprises with regard to your healthcare plan.

Posted by PGIA
2 years ago / March 15, 2022

Filed Under: Health Insurance Tips