Do you qualify for a subsidy with ACA?

As we get closer to the start date for enrollment with the Affordable Care Act (October 1st), many people are starting to learn the ins and outs of how this will affect them.  Estimates are that 2/3 of North Carolinians will qualify for some form of subsidy under the new law.

How do I know if I qualify for a subsidy?

The subsidy calculation will be based on your household Modified Adjusted Gross Income (MAGI) which can be found on line 37 on your 1040 tax form.  This is NOT your total income of your household.  This number reflects certain deductions based on your tax return.  ACA uses the Federal Poverty Limit to determine who qualifies for a subsidy.  You can see if you may qualify by visiting our ACA Subsidy page.  If you have access to affordable coverage through work, you may not qualify for a subsidy.

How is the subsidy applied?

If you qualify for a subsidy, the health insurance company you enroll with will notify the government that you have enrolled and qualify for a subsidy.  You will pay your portion of the premium (total premium minus subsidy) to the insurance company and in turn the insurance company will receive the balance from the government.

What happens if my income changes?

For those whose income fluctuates yearly, a “claw back” could impact them.  If your income changes (either increases or decreases), thus causing a change of your subsidy eligibility; the government could claw back the subsidy when you file your taxes.  This process is called “reconciling.”  If you no longer qualify for a subsidy one year but received it, the government will add what you should not have received to your income tax bill.  On the other hand, if you did not receive the full subsidy you qualified for; that amount you did not receive would be added to your tax return.  In the event that your income does change (increases or decreases) you will have the opportunity to go into the system to adjust the subsidy during the year to ensure that you aren’t over or under receiving your allotment.

Click here to learn more about the subsidy and if you qualify.

 

 

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