While some incorrect information may be corrected by calling the Covered California customer service line, other errors can only be fixed by filing a dispute form. The data that can be disputed are coverage start and stop dates, health insurance premiums, monthly subsidy forwarded to the health plan, missing family members, or household members who should not be in the tax family 1095-A.
Posts related to calculating the Premium Tax Credit received through Covered California, subsidy, form 8962, MAGI household income.
In the second half of 2023 and continuing into 2024, we have seen some cases where the subsidy has mysterious disappeared. The estimated income is high enough for subsidies and nowhere near Medi-Cal range. The household member is enrolled in the selected health plan, but the subsidy has vanished.
When the income estimate was increased in their Covered California application, the subsidy was properly calculated for the remainder of the plan year. The first thing Sandi and Thom notice is that they lost the Silver 87 plan and with the higher income are now only offered a Silver 70. Another disturbing problem for them is that instead of $336.57 monthly premium, their new premium for the Silver 70 is $657.31. They went from paying $16 a month for a great Silver 87 plan to $658 per month for Silver plan that has higher copays, coinsurance, and deductibles.
No one at Covered California calls the IRS for information and the IRS does not send Covered California any of your information. No one at Covered California will ever see your federal tax return unless you provide it to them.
Lines 24 through 26 of Part II of form 8962 determine if the household is eligible for an additional Premium Tax Credit. In this situation, the final household MAGI was slightly lower than estimated income amount of the Covered California application. The result is that the household is eligible for an additional $23 in Premium Tax Credit. They were eligible for an annual subsidy of $16,832, but only received $16,809.
Column A. Monthly enrollment premiums is the full premium rate for the health insurance that the family members were enrolled in for the month. The important role this dollar amount plays is limiting your health insurance Premium Tax Credit subsidy. You can only receive a subsidy equal to the cost of the health insurance. If you are eligible for a subsidy of $2,500 per month, but enroll in a health plan that only costs $2,000 per month, your subsidy will be limited to $2,000.
Tom received unemployment insurance in 2021. Because of the unemployment insurance, Tom’s household income is 133 percent of the federal poverty level, regardless of his income. That 133 percent of the federal poverty level translates into $0 annual contribution for the second lowest cost Silver plan. Since the second lowest cost Silver plan premiums equaled $15,000 for the year that amount becomes the maximum subsidy allowed. Tom is eligible for an additional $2,318.40 ($15,000 – $12,681.40) in Premium Tax Credit because of the unemployment insurance benefit.
In this example, the annual amount of the SLCSP is $15,000. The consumer fair share dollar amount of $8,500 is subtracted from the $15,000 to yield a Premium Tax Credit amount of $6,500. The difference of $6,500 is divided by 12 to get a monthly Advance Premium Tax Credit subsidy of $541.67 per month.
Taxpayers who have already filed their 2020 tax return and who have excess APTC for 2020 do not need to file an amended tax return or contact the IRS. The IRS will reduce the excess APTC repayment amount to zero with no further action needed by the taxpayer. The IRS will reimburse people who have already repaid any excess advance Premium Tax Credit on their 2020 tax return.
The household contribution percentages progressively increase until they reach 8.5 percent when the Modified Adjusted Gross Income is at 400 percent of the FPL. There is no cap on the household income in order to receive the federal Premium Tax Credit subsidy. As long as the Second Lowest Cost Silver Plan exceeds 8.5 percent of the household income, there will be a subsidy to lower the cost.