Why You Should Check on Your Health Insurance Subsidy Mid-Year

Millions of people receive a subsidy to help with the cost of their healthcare plan premiums, through the Advance Premium Tax Credit (APTC), but they could end up owing money back to the government if the credit isn’t calculated correctly. That’s probably not what you were hoping for, when you applied for a subsidy! So how does this happen, and what can you do about it?

The APTC is paid directly to health insurance providers to offset part of your premiums, and it’s based upon your expected earnings for the year. These earnings are calculated when you apply for a healthcare plan and subsidy each year during Open Enrollment. But in some cases, your income can be estimated too low, and therefore the APTC will overpay the health insurance provider. You won’t cover enough of your share each month, and this problem might be discovered during the following year’s Open Enrollment period. At that point, you might be informed that you must repay the subsidy overage.

This can happen when you receive a raise after your income is estimated, or if you work a lot of overtime. Or, your spouse might earn more than expected. You might simply get married at some point during the year, and suddenly your household income doubles or more.

Luckily, there is an easy way to fix this problem, so that you don’t end up owing months of back premiums. Just write down your expected income each year when the calculations are made during Open Enrollment. And throughout the year, double check to determine if your income is on track with those projections. If you’re earning more than expected, log into your online portal and change your income projection for the year. This way a new subsidy can be calculated, and you can avoid those overages which could trigger a large repayment demand later.

Of course, there are exceptions to this situation. If in doubt, discuss the matter with your healthcare plan’s customer support team to determine whether you might qualify for an excemption to repaying this debt. But because it’s always better to prevent a problem, rather than try to resolve it later, we recommend staying on top of your earnings throughout the year.

For more information on this topic, contact one of our health insurance specialists today. We can offer guidance and help you to avoid unexpected subsidy overages.